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Journal Issue: The Next Generation of Antipoverty Policies Volume 17 Number 2 Fall 2007

Next Steps for Federal Child Care Policy
Mark H. Greenberg

Criticisms and Responses

This proposal may face two very different sets of critics. One set will likely assert that it is not needed, is not the best use of scarce resources, and is too expensive. The other set will contend that it does not do enough: it leaves too many families with only modest tax-based assistance, does not ensure that high-quality care will be available to all, and still leaves significant gaps in coordination between tax and subsidy policy.

The first set of critics may contend that there is no need to expand assistance because working parents are “getting by” using their current paid or unpaid arrangements, so that much of any expansion would simply provide a “windfall” by defraying existing expenses or encourage the “monetizing” of informal relationships. Expanding assistance, however, has multiple goals: promoting employment, offsetting expenses, and supporting healthy child development. A substantial body of research finds that increasing subsidy assistance would increase the likelihood and stability of employment.48 As noted, the Urban Institute has estimated that a similar proposal would result in 1.9 million additional working parents and a 14.5 percent reduction in child poverty. Expanding disposable income for low-income working families appears clearly desirable. Policymakers could avoid the risk of monetizing informal relationships by making such relationships ineligible for compensation, but doing so would seem a significant intrusion into parental choice. Although it is difficult to estimate reliably the extent to which enhanced capacity to purchase care would translate into higher-quality care, there is reason to believe the proposal would further that goal, too.

A second, related, objection may be that given the importance of promoting highquality early education and school readiness, the next available dollars should be used for prekindergarten or intensive high-quality early education programs rather than for child care. However, child care and early education should not be viewed as separate and unrelated entities. Child care for young children is necessarily early education, and public policy can improve its effectiveness as such; in light of the importance of promoting and supporting parental work, it is essential to ensure that child care settings can also be high-quality early education settings. State expansions of prekindergarten programs do not obviate the need for child care. Prekindergarten programs are not typically structured as full-day, year-round, and the most common state model for prekindergarten includes child care centers and other community-based settings as delivery sites.49 As prekindergarten programs expand, the issue is not whether they substitute for child care but rather how the two can be coordinated and integrated. Given that the most ambitious prekindergarten proposals rarely involve more than two years of classroom setting or full-year, full-day programming, policymakers necessarily must address how to ensure that safe, healthy, developmentally appropriate settings are available and affordable to families during the years and times when children are not in prekindergarten settings.

The third related objection may be that the proposed costs are too high, given other pressing national priorities. As noted, the benefits of the proposal would be substantial, and encouraging greater and more stable labor force participation while advancing school readiness and child well-being could yield important long-run savings. It is difficult to see how to bring down costs substantially other than by doing less—for example, assisting fewer families or reducing spending per family. Another way to reduce costs would be to limit implementation to a demonstration project in a set of states or to restructure the proposal as a state option. For example, states that agreed to meet its terms could qualify for open-ended federal matching funds for implementation. A demonstration program could provide lessons about costs, participation, and behavioral effects, but would delay implementation of national policy, perhaps by five to ten years. Providing for a state option could let the political process work in each state and allow for gradual national implementation but could result in even greater inequities than there are in the current structure.

Finally, just as the proposal may be criticized for doing too much, it may also be criticized for not doing enough. If the guarantee were limited to families with incomes below 200 percent of poverty, families with higher incomes would have only modest tax-based assistance despite their high child care costs. The proposed expansion of the CDCTC will still pay only a small fraction of the costs that many families face. The guarantee framework and expanded funding for the Early Care and Education Strategy Fund may be far short of what is needed for supplybuilding and quality-improvement activities. Phasing out direct subsidy assistance at 200 percent of poverty still results in a significant loss of assistance for many families as their income reaches and exceeds the cutoff; providing a refundable tax credit reduces but does not eliminate the severity of that loss.

I agree that the proposal falls short of fully addressing many concerns about the affordability, accessibility, and quality of care for low- and moderate-income families. It seeks to strike a set of balances, but if additional funding were available it would be possible to do more to address these concerns. As to coordinating subsidy and tax policy, there is an inherent tension because subsidy assistance is based on a percentage of family income and tax credits are based on a percentage of costs. The gulf between the two will be greatest for families that receive the greatest benefit from subsidies—that is, those in highcost areas, with younger children, or with several children. This proposal does not solve the problem, though it does move toward a better-coordinated national framework.50