 Arizona’s budget crisis has prevented thousands of needy families from receiving child care subsidies from the Department of Economic Security, reports the Arizona Republic. Many parents are forced to quit jobs right when income is most needed.
Arizona’s Department of Economic Security (DES) provides child care subsidies enabling low-income families not only to work, but to receive education and training to secure jobs or enhance their employment.
The Arizona Republic reports that DES has reached a landmark threshold in the number of children placed on its waiting list for services and subsidies: 10,000, up from the previous high in 2004. DES re-opened a waiting list in February 2009. As of June 30, 2009, there were approximately 4,600 children on the waiting list. Thus, in just a little over five months, the waiting list has ballooned by 117 percent.
The DES Child Care Program uses a sliding scale, based on income and family size. Assistance is provided to qualified households with income from 85% of the federal poverty level (or less) to 165% of the federal poverty level. (See Page 8)
Effective July 1, 2008, the upper income limit for a family of four to receive assistance was $34,992 per year.
Copayments are required of all assisted families, with some exceptions, such as families referred by child protective services and a few other programs. Copayment minimums for each full day of child care per child range from $1 to $10. (Effective April 1, 2009, discounts were eliminated for each additional child so that now the same copayment is required for each child, regardless of the number of children in the household.)
There are six fee levels used in the calculations; families at lower income levels pay a smaller copayment because they need to use a larger share of their total income for other basic needs.
In addition to the copayment, families are required to pay any difference in the charge for child care per day and the amount that DES pays.
In Fiscal Year 2009 (July 1, 2008 to June 30, 2009), the DES Child Care Program served a monthly average of 25,077 families and almost 46,000 children. Program spending was $194 million, partially offset by copayments totaling $15.7 million.
In Fiscal Year 2005 – the earliest year posted online by DES, the DES Child Care Program served a monthly average of 23,323 families and 43,135 children. Program spending was about $157 million, partially offset by $13 million in copayments.
In four years, the number of children assisted rose by 6.6 percent, while program spending rose by almost 24 percent and required copayments rose by almost 21 percent.
The dire economic situation and high unemployment rate (9.3 percent for Arizona in October; for the U.S., 10.2 percent in October and 10.0 percent in November) accentuate the difficulty faced by all families, but particularly low-income families, in providing quality child care for their children while they work, go to school or receive training. However, there are several other factors besides the recession to consider.
A 30-Year Perspective
Current program cuts affecting low-income families are a bitter pill in light of today’s economic realities. But, taking a longer view of the budget situation as it pertains to DES spending yields quite a different picture.
Arizona Economist Alan Maguire, president of The Maguire Company and a former Arizona state legislative economic analyst, explains in his preliminary report, “Understanding Arizona’s Fiscal History: A Review of Expenditures and Revenues in Arizona from 1980-2010,”that the state has experienced a significant shift in General Fund operations spending (the bulk of primary state spending) over the last 30 years.
“The largest increase in operating spending has been in corrections, followed by health and welfare spending, and the largest percentage decline has been in university spending,” Maguire noted.
Additionally, “Although corrections had a larger percentage change, the actual dollar amount shift in spending is much greater toward health and welfare,” he said. (“Health and welfare spending” in this instance also includes the Arizona Health Care Cost Containment System, which did not exist in 1980; it began in 1982.)
In other words, if Arizona in 2010 spent its General Fund for operating budgets in the same proportions as it did in 1980, support of health and welfare spending would be significantly lower today, while the percentage allocated to universities would be significantly higher. More of the General Fund is going to health and welfare today than was the case 30 years ago.
Maguire presented his report to Arizona business leaders and about one-third of the sitting Legislature at the November 2009 “Governing Arizona” conference sponsored by The Thomas R. Brown Foundations, which funds The Governing Arizona Project of The Communications Institute, parent organization of AnalysisOnline.
Click here for information on the Governing Arizona conference, here to read the full report, and here to see news coverage of the conference.
Perspective through 2016
Nationally, for all families, the need for child care can be expected to increase over much of the next decade, based on projections for the industry cited by the U.S. Labor Department’s Bureau of Labor Statistics.
From 2006 to 2016, “the number of children under age 5 is expected to increase at a faster rate than in previous years and many of them will continue to be raised in households with two working parents or a single working parent. Furthermore, growing numbers of parents will hold jobs that require work during the weekends, evenings, and late nights. As a result, demand will grow significantly for child care programs that can provide care not only during traditional weekday hours, but nontraditional hours as well,” the BLS notes.
Two primary types of child care comprise the child day care services industry: center-based care and family child care. Formal child day-care options include pre-schools, child care centers, and Head Start centers; and these are increasingly preferred by families over the other option, family child care providers offering services in their home for a fee. The latter type of child care, however, represents the majority of self-employed people in this industry, says the BLS.
Demand for Child Care: Factors Other than the Economy
On one hand, a factor that might seem to favor reduced need for child care going forward is that although the numbers of children (defined in ChildStats.Gov data as birth to age 17) are growing, their share as a percentage of U.S. population is declining:
Year Number % of U.S.
of Children Population
1950 47.3 million 31%
1960 64.5 million 36%
1970 69.8 million 34%
1980 63.7 million 28%
1990 64.2 million 26%
2000 72.4 million 25.6%
2009 74.9 million 24.2%
2010 75.2 million 24.2%
2020 81.7 million 23.9%
2021 82.3 million 23.9%
However, the situations into which these children are being born, in many cases, are different than in 1950, according to the ChildStats.Gov report, “America’s Children: Key National Indicators of Well-Being, 2009” (read the full 216-page report).
• More babies are being born to unmarried women, ages 15 to 44. The non-marital birth rate for this age group has increased annually since 2000 to 2002, when the rate was stable at about 44 births per 1,000 unmarried women (age 15 to 44). In 2007, there were 53 births per 1,000.
• In 2007, for the second consecutive year, the adolescent birth rate was 22.2 per 1,000 young women, ages 15 to 17. This continuing increase comes after steady decreases in the numbers of babies born to these teenage girls from 1991 to 2005, when the adolescent birth rate fell by almost half. Young women with babies, whether they want to continue their education or work, most certainly will need child care.
• The number of women entering the workforce continues to be much higher than in previous decades and the role of their income in sustaining their families is more dominant than in the past. According to the Almanac of Policy Issues, “in the 1940s, fewer than one in five women with children worked outside the home. By 1998, 65 percent of women with children under the age of six were in the labor force. The percentage was even higher among women with children between ages 6 to 17 (78 percent). Today, over half (55 percent) of these women provide most, if not all, of their family’s income.”
Immigration appears to be a force in the rise in the number of children, although this does not necessarily translate into a higher demand for child care services. ChildStats.gov tables reveal that Hispanic children are a growing share of all children in the United States, up from 9 percent in 1980 to projections of 23 percent in 2010 and 27 percent in 2021. However, the use of parental-only care (with no child care, either home-based or center-based) is highly preferred by Hispanic parents.
Hispanics are second to white parents in their dominant use (over 55 percent) of parental-only care. For children in 4th through 8th grade, parental-only care drops slightly (to around 50 percent) for both whites and Hispanics; Hispanics differentiate themselves in using activities (sports, Scouts, religious activities) as a form of supervision only half to two-thirds as often as whites and Asians. Black parents’ use of activities as supervision is in about the same proportion as Hispanic parents, according to ChildStats.gov.
Policy Actions and Educational Philosophy Increase Child Care Demand
Demographics, cultural trends, and economics alone do not account for all of the increase in the demand for child care. The evolution of educational philosophies and certain policy actions, such as welfare reform and federal block grants also have had a hand in boosting demand for child care services.
States increasingly have adopted early-education initiatives, which may be linked to some child care programs, notes the U.S. Labor Department. As education research reveals more about the early learning potential of babies and toddlers, the interest in early education and more formal, structured child care has escalated.
In addition, the federal Child Care Development Block Grant (CCDBG), passed in 1990, was merged with child care funding for families receiving welfare as part of the 1996 welfare law, notes the Almanac of Public Policy. It required that states spend at least four percent of their CCDBG spending on child care quality. Providers receiving CCDBG funds were required to meet certain health and safety standards.
Also, other federal initiatives have increased demand for child care by making it better and more attractive to parents – even hard to resist, and a way for households to gain higher levels of income while feeling greater assurance their children were in good hands, even educationally challenging situations. The 21st Century Community Learning Centers initiative provided federal funding to help schools stay open longer and offer more recreation and learning-based activities. The dependent care tax credit offset up to 30 percent of child care expenses for families, up to $2,400 per year for one child and $4,800 per year for two or more children.
A heightened government role in child care can have several positive attributes (improving quality and access, for example); but it also spurs demand and increases parents’ reliance on government support to execute a function (caring for one’s children) that previously may have been predominantly a role of the immediate or extended family members. This increased reliance comes at a price when government funding and support falters, as is now the case in Arizona and many states across the nation. Having been dependent on these government-incentivized programs, families may be unable to immediately substitute satisfactory alternatives. A disturbing 2.6 percent of children (K-3) and 22.2 percent of older children (4-8th grades) look after themselves when not in school, with no child care supervision at all, according to ChildStates.gov’s findings.
Looking to the Future
The cost of child care is high; the Almanac of Public Policy pegs it at anywhere from $4,000 to $10,000 a year per child. Increased government regulations and standards, learning-based and recreational innovations, extended hours and, perhaps in the future, nontraditional child care to serve parents working weekends, nights and extended shifts, can all push the costs of child care even higher. Stagnating or failing incomes can make it more difficult, if not impossible, for many families to afford these costs, but certainly low-income households will struggle.
In Arizona, even before the latest rounds of budget cuts brought new difficulties to parents of hundreds, even thousands of children who need daycare subsidies, the Arizona Child Care Association was already criticizing state funding as too low to provide these families the help they need. In a 2007 Fact Sheet, the AZCCA cited a study by a National Women’s Law Center that found Arizona and four other states were at the bottom nationwide in their child care subsidy payment rates.
Specifically, “current State payments do not cover what over 6 out of the 10 licensed centers in Maricopa and Pima counties charge for young children,” the AZCCA noted; the document adds that parents who are eligible for the subsidies cannot afford to pay the difference between the amount the state pays and what the child care services cost.
The Center on Budget and Policy Priorities has documented the severe budget gaps that are expected to continue to plague states for at least a few more years. Arizona’s total FY 2010 budget gap (both before the budget was adopted and the mid-year gap), the CBPP said, was $5.2 billion, or 53 percent of the General Fund budget. For FY 2011, the CBPP projects Arizona’s budget gap will be $2.5 billion, or 25.7 percent of the FY 2010 budget.
The budget turmoil leaves poor families to choose between work or being present at home with their children, but unable to provide financially for their basic needs; and so they must ask, in these dire economic times, “Who will care for the children?”
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