HD11 - Child Day Care Voucher Program Evaluation

  • Published: 1991
  • Author: Department of Social Services
  • Enabling Authority: House Joint Resolution 61 (Regular Session, 1988)

Executive Summary:
The 1988 General Assembly through House Joint Resolution No. 61 and House Bill 30 - Item 464 directed the Virginia Department of Social services (VDSS) to implement and study a voucher system and a resource and referral program for subsidized child care. The voucher system included the use of a coupon representing payment authorization and payment at market rates on the basis of enrollment. Resource and referral services included provider recruitment and education, parent information and education, and public awareness.

The objectives of the evaluation were to determine:

• the feasibility and effectiveness of the voucher payment system;

• the feasibility and effectiveness of resource and referral activities;

• whether the Voucher Program as a whole enhanced parental choice, parental responsibility, client self-sufficiency, and client/child access to affordable quality day care;

• which, if any, features of the program are applicable to other parent groups; and

• the fiscal impact of serving voucher/fee clients and other related populations.

Four sites were selected for the pilot: Norfolk, Manassas, Smyth County and one combined site consisting of Montgomery and Pulaski counties and Galax. These pilots received $158,399 in state funds for administrative and direct service costs and $879,797 state and local dollars for child care subsidies. The pilots started to provide subsidies under the Voucher Program on July 1, 1989.

The Voucher Program provided day care subsidies for 616 children of 400 low-income working families. Parents were primarily women in their late 20's heading single-parent households. They generally had one or two children under 9 years old. They worked full-time at service or manufacturing jobs and had average monthly incomes of $857. About half also received food stamps, and about 13 percent had received ADC in the past twelve months. Day care providers were primarily centers and family day care homes. Data collection on the parent, child and provider participants form the basis of this report.

Payment Mechanism

Pilots experimented with a "voucher" coupon format, paid published market rates, and when possible paid by enrollment. By the end of the program, Norfolk developed a payment authorization coupon which looked like a check and which clients took to providers. They felt the coupon was well received by both clients and providers. Regardless of payment authorization format, all pilots paid providers after services were rendered and after invoices with attendance records were submitted.

Published rates for centers and, when available, for family providers represented market rates. When published rates were not available for family and in-home providers, pilots used local agency set rates. Pilots raised their set rates either before or during the Voucher Program in order to more closely reflect market rates. Use of market rates greatly facilitated the recruitment of family day care providers. They also served to encourage center participation.

Where possible, pilots paid providers on the basis of enrollment rather than by attendance. However, most pilots had difficulty fully implementing payment on the basis of enrollment. A variety of parent work hours and provider payment expectations caused difficulty in defining and predetermining "enrollment." Parents, agencies, and some providers were also reluctant to commit themselves to payment by enrollment. Despite these difficulties, pilot staff observed that payment on the basis of enrollment encouraged center participation and did save staff time by simplifying payment authorization calculations and reducing paperwork on child attendance.

Resource and Referral Service

All pilots developed resource and referral programs. Provider recruitment techniques included: mass media campaigns, distribution of information, and word of mouth. Aided by these effective recruitment tools, and the incentive of market rate, pilots increased the number of locally approved providers in their areas by 183 percent. Concurrent with the recruiting process, all potential family providers were screened by day care service workers. Provider and parent education included formal training programs, development of resource libraries, and distribution of educational materials. Service staff also gave providers one-on-one training through approval processes and informal communication. Parents received information on available providers and educational materials on how to select quality providers.

Formal training sessions were attended by about 40 percent of the providers, and attendees found these sessions very helpful. Resource library materials were also developed, but not as heavily used. Parents who received educational materials generally used them to help find a provider. On the whole, the resource and referral activities were more easily implemented than the payment mechanisms.

Client-Focused Issues

Parental choice, access to affordable quality day care, parental responsibility, applicability to other client groups, and client self-sufficiency were other issues the voucher data were expected to address. The major findings related to these issues are:

• Parents were allowed to select any regulated provider, but choice was heavily dependent on provider availability.

• Pilots improved access to quality providers by paying published rates on an enrollment basis, through provider training, and by teaching parents to look for quality care.

• Parents took responsibility for their day care by checking out and selecting their own provider, submitting proof of income eligibility, and making copayments.

• Resource and referral activities and the payment mechanisms tested are applicable to all client groups.

• Resource and referral activities attracted both parents interested in day care regardless of their eligibility for subsidies or the availability of subsidies. At the end of the Voucher Program, there were 441 families on waiting lists in the six pilot agencies.

• Clients lived close to poverty, but when they received day care subsidies and sometimes other benefits like food stamps, they were self-sufficient.

• Parents realized their ability to work and remain independent was primarily due to the day care subsidies they received, ,and they were very grateful for this help.

Cost Analysis

The fiscal data from the pilots were used to analyze the cost of providing services, assess statewide costs, examine the fiscal effect of not providing day care subsidies, and estimate the cost of payment by enrollment.

Total provider fees per service month averaged $296 per family, and $192 per child. The state and local share was $250 per family and $162 per child. The balance was co-paid by the parents. Varied local agency program goals and resources confounded the relationship between administrative costs and service levels. However, the differences in per child subsidies are explained by variations in type of day care services and provider fees.

Dollars needed for day care subsidies on a state-wide level far exceed the current annual $6.5 million appropriation for each year of the biennium. Based on voucher day care service and payment mix, it would cost $327 million to serve all potentially eligible children in the state. This is the cost of serving the 141,964 eligible children at an average per child rate of $192 per service month. (The number of eligible children is estimated from a special run of 1980 census data of working mothers with household incomes less than 70 percent of the state median income adjusted for 1990 children.) After allowing for client co-payment at the rate suggested by current day care policy, and after adjusting for the 10 percent local match, the state share would be about $240 million.

Some hypothetical adjustments for a more narrowly defined eligible population, such as only clients under 50 percent of the state median income and only children under 9, could conceivably bring the estimate down to about $62 million annually.

Data also show that clients can co-pay at rates higher than current policy requires and still benefit from the program. Even with increased co-payments, the cost of day care subsidies is high. The cost of not providing subsidies for these families is also high. If parents do not receive subsidies, they either have to find free day care or quit their jobs, sometimes going on public assistance. The 47 families who went on public assistance after their day care subsidies were terminated (either for lack of government funds or job loss) received an average of $482 per month in public assistance and food stamp benefits. This was an average of $46 per month more than they received in day care subsidies and food stamp benefits during the Voucher Program. However, because they had higher than average day care subsidies and food stamp benefits during the Voucher Program, this was actually $134 more than the average voucher family received in day care subsidies and food stamp benefits during the program.

Based on experience with the program implementation, payment mechanisms and resource and referral activities the following studies and changes are recommended:

RECOMMENDATION 1: The Department should design and implement a statewide structure for resource and referral activities that:

(a) centralizes resource and referral activities that benefit from economy of scale, such as recruitment and training materials for providers and clients.

(b) seeks other funds and sets aside a portion of Fee System funds, Dependent Care Grant, and new federal child care block grant for centralized development of educational materials.

(c) allows for the effective one-on-one service provided by qualified staff at local agencies to providers and clients.

(d) provides resource and referral services to all families seeking information on child day care.

RECOMMENDATION 2: The Department should adopt or examine the following areas of current policy:

(a) continue to use the market rate (as defined by federal policy) for all clients to the extent possible as a motivator to increase the pool of providers.

(b) clarify child day care policy on pay by enrollment to expand upon the pilot's experience in the Voucher Program, and to include experience of other local agencies which are requesting exception to the co-payment policy.

RECOMMENDATION 3: The Department should conduct a comprehensive cost benefit analysis to establish the relative cost of serving or not serving segments of the eligible population:

(a) convene an inter-agency task force comprised of representatives from the Department, the Council on Child Day Care and Early Childhood Programs, and Department of Planning and Budget for this comprehensive analysis.

(b) identify the fee system client population that is best served either because they have the greatest need or the greatest potential for self-sufficiency. Factors to consider in the analysis could include the relative value and cost of public assistance, other sources of funding, and tax credits, as well as the issues of relative cost of living and number of family members requiring child care.

RECOMMENDATION 4: The Department should take further actions to maximize use of current appropriations and to ensure equity and adequacy of existing funds:

(a) change existing day care policy to require clients to co-pay at higher rates.

(b) test the use of voucher with pre-payment of fees and development of appropriate monitoring and auditing procedures. The tests should allow for the measurement of change in administrative and direct service time. It should also be conducted on a small population to control for unknown fiscal effects.

(c) explore the option of partnerships with employers to augment and maximize day care funding in light of initiatives in the work place to provide day care.

(d) seek additional funding, given that even after adjusting for changes in client co-payments, and limiting client population, current funding levels are insufficient to meet the client need. The new federal child care block grant could be a major source of funds.

(e) document the use of unregulated providers by non-fee system day care populations as part of the evaluation of the JOBS program-to determine the effect on price, access to and quality of day care.