SD5 - Funding of Child Day Care for Low-Income Families


Executive Summary:
House Joint Resolution 200 and Senate Joint Resolution 258 as passed by the 2000 Virginia General Assembly requests the Department of Social Services to study the funding of child day care for former Temporary Assistance for Needy Families (TANF) recipients and low-income families. Additionally, the Department was to recommend ways to ensure child day care needs are met so that the families can remain economically independent.

The success of Virginia's welfare reform initiative has resulted in significant and progressive reduction in the benefits paid under the TANF caseload. Between June 1995 and June 2000, TANF caseloads dropped from 70,797 cases to 30,452. There was a concomitant reduction in expenditures of more than 50 percent during that same period, dropping from $18,448,804 to $7,289,420 per month.

As expected, the decline in the TANF caseload reduced the demand for TANF-funded child day care and created an increased demand for Transitional Day Care and Fee Day Care subsidies. In order to estimate the need and demand for subsidized child day care, the Department of Social Services considered several dynamics. These included the frequency and duration of receipt of Transitional Day Care subsidies by former TANF recipients, the increase in the number of Fee Day Care subsidies, and the unmet need for child day care subsidies.

The Department of Social Services recommends that no additional new funds be appropriated for Fee Day Care subsidies. The Department recommends continued full utilization of current appropriations for child day care and development of policies to increase the number of families that can be served with existing funds. This recommendation is primarily based on the likely reduction in the size of the TANF grant when reauthorization is debated in Congress in 2002. Building a large subsidy program that cannot be sustained would lead to severe hardship for families that become accustomed to the subsidy.

Child care is an important component of welfare reform; however, it should not be an ongoing government support for working families. Rather, elected officials at the federal, state, and local levels must engage in discussions of alternate public policies to support low-income workers as they move from dependency on government interventions to self-sufficiency. Policies are needed that recognize and support families, community infrastructure, and comprehensive economic development programs.