Report to the Ranking Minority 

Member, Subcommittee on Human 

Resources, Committee on Ways and 

Means, House of Representatives 

United States General Accounting Office 

GAO 

May 2003 CHILD CARE 

Recent State Policy 

Changes Affecting the 

Availability of 

Assistance for LowIncome Families 

GAO-03-588 
Page i GAO-03-588 Child Care 

Letter 1

Appendix I Briefing Slides 5 

Related GAO Products 43 

Abbreviations 

CCDF Child Care and Development Fund 

TANF Temporary Assistance for Needy Families 

Contents 

This is a work of the U.S. Government and is not subject to copyright protection in the 

United States. It may be reproduced and distributed in its entirety without further 

permission from GAO. It may contain copyrighted graphics, images or other materials. 

Permission from the copyright holder may be necessary should you wish to reproduce 

copyrighted materials separately from GAO’s product. 
Page 1 GAO-03-588 Child Care 

May 5, 2003 

The Honorable Benjamin L. Cardin 

Ranking Minority Member 

Subcommittee on Human Resources 

Committee on Ways and Means 

House of Representatives 

Dear Mr. Cardin: 

With the Temporary Assistance for Needy Families (TANF) program 

taking effect in 1997, child care assistance became a significant strategy 

for helping welfare recipients move into the workforce and for helping 

other low-income families stay off welfare. Since 1997, states have used 

federal funds from the Child Care and Development Fund (CCDF) and 

TANF along with state funds to expand child care assistance programs. 

However, given the current budget problems in most states and the 

competing demands for TANF and state funds, it is possible that states 

have changed their child care policies and the availability of child care 

assistance to low-income families. 

As Congress considers reauthorizing CCDF and TANF, you asked us to 

answer these questions: 

1. What choices have states made for providing child care assistance to 

three groups of low-income families: (a) TANF families, (b) families 

transitioning off TANF, and (c) other low-income working families? 

2. Since January 2001, to what extent have states made key changes that 

affect child care availability and have those changes increased or 

decreased the overall availability of child care assistance in the nation? 

3. What changes to child care assistance programs are governors 

proposing for the next fiscal year? 

To answer your questions, we surveyed the child care administrators of 

the 50 states and the District of Columbia regarding their states’ child care 

assistance policies and current governors’ proposals affecting child care 

United States General Accounting Office 

Washington, DC 20548 
Page 2 GAO-03-588 Child Care 

assistance.1 The survey asked whether, since January 2001, states had 

made changes to key policies affecting the availability of child care 

assistance.2

 We received responses from all 50 states and the District of 

Columbia. In analyzing survey responses, we classified each specific 

policy change that a state identified as either increasing or decreasing the 

availability of child care assistance. Policy changes that allow more 

families to enter and remain in a state’s child care assistance programs 

were classified as increasing availability, while policy changes that limit 

entry or length of stay in the programs were classified as decreasing 

availability. We conducted our review from January through April 2003 in 

accordance with generally accepted government auditing standards. 

On April 24, 2003, we briefed your staff on the results of our survey. This 

report formally conveys the information provided during that briefing. 

(See app. I.) In summary, we found: 

A vast majority of states have made all three groups of families—TANF 

families, families transitioning off TANF, and other low-income working 

families—eligible for child care assistance. However, half of the states do 

not provide child care assistance to all the families who apply and are 

eligible for such assistance under the states’ eligibility policies. States 

often give TANF and transitioning families higher priority than other lowincome working families when program resources are insufficient to cover 

all who apply. 

Since January 2001, two-thirds of the states made key changes that affect 

the availability of child care assistance while the other one-third 

maintained their policies. Of the 35 states that made key changes:3

• 23 made changes tending to decrease the availability of assistance, 

• 9 made changes tending to increase the availability of assistance, and 

• 3 made a mix of changes. 

 1

In reporting our survey results, we refer to the District of Columbia as a state. 

2

We chose January 2001 as our comparison point because state fiscal conditions began to 

deteriorate at about this time. 

3

We grouped states simply on the basis of the type of changes made, that is, on whether the 

state made changes that likely increased, decreased, or had a mix of effects on the 

availability of child care assistance. We did not assess the relative impact on availability of 

the various policy changes that states made. 
Page 3 GAO-03-588 Child Care 

While these changes would appear to have decreased the availability of 

child care assistance overall compared with 2001, we could not determine 

the actual outcomes in numbers of children served and their welfare status 

because data on these outcomes are not readily available.4

Governors’ budget proposals for fiscal year 2004 present a mixed picture 

for child care assistance funding. Child care officials in 29 states identified 

governors’ budget proposals that contained measures that would either 

maintain (11 states), decrease (11 states) or increase (7 states) funding for 

child care assistance, if adopted. The child care officials in the remaining 

states either reported that the state did not have a governor’s budget 

proposal currently addressing child care assistance (17 states) or did not 

provide information on the proposals (5 states). 

We provided a draft of our findings to officials at the U.S. Department of 

Health and Human Services’ Administration for Children and Families, 

which oversees state CCDF programs; however, they were not able to 

provide comments on the draft within the short timeframe allowed. 

We are sending copies of this report to relevant congressional committees 

and other interested parties and will make copies available to others upon 

request. The report will also be available on GAO’s Web site at 

http://www.gao.gov. If you or your staff have any questions about this 

 4

In assessing whether the policy changes likely increased or decreased the overall 

availability of child care assistance in the nation, we related each group of states to its 

share of the nation’s population of children in poverty. According to 2001 Census Bureau 

data on children under 125 percent of the poverty level, the percentage for each group is: 

(1) states that made no policy changes affecting availability—36.5 percent; (2) states that 

made changes decreasing availability—41.5 percent; (3) states that made changes 

increasing availability—16 percent; and (4) states that made a mix of changes—6 percent. 
Page 4 GAO-03-588 Child Care 

report, please contact me or Gale Harris at (202) 512-7215. Kathleen 

Peyman, Deborah A. Signer, and Luann Moy also made key contributions 

to this report. 

Sincerely yours, 

Marnie S. Shaul 

Director, Education, Workforce, and 

 Income Security Issues 
Appendix I: Briefing Slides 

Page 5 GAO-03-588 Child Care 

Appendix I: Briefing Slides 

1

Recent State Policy Changes

Affecting the Availability of

Child Care Assistance 

Briefing for Staff of

Rep. Benjamin Cardin

Ranking Minority Member

Subcommittee on Human Resources

Committee on Ways and Means

House of Representatives

April 24, 2003
Appendix I: Briefing Slides 

Page 6 GAO-03-588 Child Care 

2

With passage of welfare reform in 1996, child care assistance has become a 

significant strategy for helping recipients of Temporary Assistance for Needy 

Families (TANF) move into the workforce and for helping other families stay 

off welfare. 

The Congress provided states with more child care funding and with flexibility 

to allocate child care monies among three groups at risk: (1) TANF families 

participating in work-related activities, (2) families that recently transitioned off 

TANF (transitioning families), and (3) other low-income working families. 

Since 1996, many states have expanded their programs of child care 

assistance with funds from the federal Child Care and Development Fund 

(CCDF) and TANF; however, their policies may have changed somewhat in 

recent years, given state budget shortfalls and other factors. 

In view of the pending reauthorization of welfare and child care legislation, 

you asked us to provide information about states’ child care assistance 

programs for low-income families.

Introduction
Appendix I: Briefing Slides 

Page 7 GAO-03-588 Child Care 

3

Key Questions

1. What choices have states made for providing child care assistance to 

three groups of low-income families:

• families using TANF, 

• families transitioning from TANF (transitioning families), and

• other low-income working families?

2. Since January 2001, to what extent have states made key changes that 

affect child care availability and have these changes increased or 

decreased the overall availability of child care assistance in the nation?

3. What changes to child care assistance programs are governors proposing 

for the next fiscal year?
Appendix I: Briefing Slides 

Page 8 GAO-03-588 Child Care 

4

Scope and Methodology

Surveyed child care administrators in 50 states and the District of Columbia 

(D.C.).

• All states and D.C. responded. (In this briefing, we will refer to D.C. as a 

state when we present response totals.) 

• Some states did not answer all survey questions. 

• States responded between March 17 and April 11, 2003.

Review was conducted from January through April 2003 in accordance with 

generally accepted government auditing standards.
Appendix I: Briefing Slides 

Page 9 GAO-03-588 Child Care 

5

Scope and Methodology (continued)

Survey addressed 

• key policies that control the availability of child care assistance to families 

(Policy changes that tend to increase availability allow more families to enter into 

a state’s subsidy system, while policy changes that tend to decrease availability 

limit entry into or length of stay in the system);

• other policies on reimbursement rates and quality initiatives; 

• how current policies differ from policies in effect in Jan. 20011 (Policies 

scheduled to take effect in the next several months were also included);

• whether policy changes affected any of three groups of families: (1) families 

currently receiving TANF, (2) transitioning families, and (3) other low-income 

working families;

• governors’ budget proposals for child care assistance for states’ fiscal year 

2004. (We did not independently verify budget information provided.)

1We chose Jan. 2001 because state fiscal conditions began to deteriorate at about this time. However, we did not determine the causes 

of any child care policy changes reported by states; changes may be due to a variety of reasons, including adjusting program size to 

match available resources or shifting policy direction.
Appendix I: Briefing Slides 

Page 10 GAO-03-588 Child Care 

6

Scope and Methodology (continued)

Classification of state survey responses:

• Each specific policy change identified by a state was classified as either increasing or 

decreasing the availability of child care assistance for any of the three groups of 

families. We focused on changes in

• income eligibility thresholds and other eligibility factors;

• use of waiting lists and enrollment policies; and 

• copayments (the amount a family has to pay for care)—We classified rising 

copayments as making child care assistance less available. 

• For any policy set at the local level rather than the state level, the child care 

administrator responsible for the entire state’s child care assistance program was to 

respond about what was typically occurring at the local level. This occurred in three 

states for which respondents said policies were established at the local level and in 

some other instances where respondents provided information about policy variation 

among localities. 

• Technical changes, such as inflation adjustments in copayments and policy changes 

that were unlikely to increase or decrease the availability of child care, were not 

included in our results. 
Appendix I: Briefing Slides 

Page 11 GAO-03-588 Child Care 

7

Scope and Methodology (continued)

Limitations of survey results:

• States may have made policy changes since January 2001 but may not have 

identified the changes on the survey.

• The survey results address key policy changes that affect the availability of child care 

assistance. More comprehensive data, including the number of children served and 

which groups of families they are from, are needed to fully assess the effect of these 

policy changes. However, these data are not routinely available.

• The survey focuses on key policies that are established at the state level for the entire 

state (except in three states); it does not include local policies or factors that may also 

affect child care assistance programs.
Appendix I: Briefing Slides 

Page 12 GAO-03-588 Child Care 

8

Summary of Results

• A vast majority of states have made all three groups of families eligible for 

child care assistance. In half of the states, however, not all eligible families 

who apply for assistance receive it. States often give TANF and

transitioning families higher priority than other low-income working families 

when program resources are insufficient to cover all who apply. 

• Since January 2001, two-thirds of the states made key changes that affect 

the availability of child care assistance while the other one-third maintained 

their policies. Of the 35 states that made key changes, 

• 23 made changes tending to decrease the availability of assistance,

• 9 states made changes tending to increase availability of assistance,

• 3 states made a mix of changes.

While these changes would appear to have decreased the availability of 

child care assistance overall compared with 2001, the actual outcomes in 

numbers of children served and their welfare status is not known. 
Appendix I: Briefing Slides 

Page 13 GAO-03-588 Child Care 

9

Summary of Results (continued)

• Governors’ budget proposals for fiscal year 2004 present a mixed picture. 

Child care officials identified 29 state governors’ budget proposals that 

contained measures that would either maintain (11 states), decrease (11 

states), or increase (7 states) funding for child care assistance, if adopted. 

The child care officials in the remaining states either reported that the state 

did not have a governor’s budget proposal currently addressing child care 

assistance (17 states) or did not provide information on the proposals (5 

states). 
Appendix I: Briefing Slides 

Page 14 GAO-03-588 Child Care 

10

Background

CCDF and TANF Are Key Federal Funding Sources for 

Child Care

To support the work-focused goals of welfare reform, the 1996 legislation:

• Gave states, through the CCDF, flexibility to provide child care subsidies to 

families with up to 85 percent of state median income, if they are working or 

involved in education and training.1 Federal CCDF funds available in fiscal 

year 2002 totaled $4.8 billion.

• Gave states flexibility to transfer up to 30 percent of TANF funds to the 

CCDF or spend TANF funds, directly, for child care assistance.

• Encouraged states to spend their own funds for child care through matching 

and maintenance-of-effort requirements.

1While states are allowed to set income eligibility thresholds up to 85 percent of state median income, most states set thresholds at lower 

levels. In this report, we use the term “low-income” to refer to all families who are eligible for child care assistance in a state. However, 

some families who are eligible for child care assistance could be referred to as moderate-income families, especially in states with income 

eligibility thresholds as high as 85 percent of state median income. 
Appendix I: Briefing Slides 

Page 15 GAO-03-588 Child Care 

11

Background

Federal and State Child Care Spending

Grew through Fiscal Years 1997 - 2000

0

1

2

3

4

5

6

7

8

9

10

'97 '98 '99 '00

Billions of current dollars

Federal CCDF and TANF State match and maintenance of effort

Sources: Congressional Research Service analysis of CCDF and TANF expenditure data from the Administration for Children and Families, 

Department of Health and Human Services. While more recent data are available (through 2001 for CCDF and 2002 for TANF), they have not 

yet been analyzed to ensure comparability with data for previous years. However, preliminary analysis through fiscal year 2001 continues to 

show an upward trend. 
Appendix I: Briefing Slides 

Page 16 GAO-03-588 Child Care 

12

Background

States Have Flexibility to Determine Which Families 

Are Served

Under federal guidelines, states

• have flexibility to set child care policies and

• are not required to guarantee child care assistance to any family.

States can adjust their policies based on numbers of families applying and the 

funding available. 

• For example, states may change their income eligibility thresholds in order 

to match the number of families covered with funds available for child care 

assistance. 

These adjustments can determine

• which groups of families will be eligible and

• which eligible families will be served.
Appendix I: Briefing Slides 

Page 17 GAO-03-588 Child Care 

13

Background

Availability for Non-TANF Families Increased after 

1996

While there are not sufficient data to draw a national picture, some studies show that 

after 1996 many states used CCDF and TANF funds to increase the availability of child 

care subsidies to transitioning families and other low-income families. For example:

• A study of 17 state child care programs showed that the number of children 

receiving subsidies had increased greatly from 1997 to 1999, with much of the 

growth resulting from the use of TANF funds. As TANF caseloads were declining, 

states were expanding child care aid to help transitioning and low-income working 

families. See National Study of Child Care for Low-Income Families: State and 

Community Substudy Interim Report, Ann M. Collins et al., Abt Associates, 

Cambridge, MA (Nov. 2000).

• GAO research also found that states have reached beyond their welfare caseload to 

provide child care. In December 2001, 23 states were serving non-TANF families in 

numbers anywhere between 10 and 160 percent of the number of TANF families on 

cash assistance. See U.S. General Accounting Office, Welfare Reform: States 

Provide TANF-Funded Work Support Services to Many Low-Income Families Who 

Do Not Receive Cash Assistance, GAO-02-615T, (Washington, D.C.: Apr. 10, 

2002). 
Appendix I: Briefing Slides 

Page 18 GAO-03-588 Child Care 

14

Background

Changing Economic and Fiscal Conditions Can Affect 

States’ Policy Choices 

During the first 4 years (1997-2000) following implementation of TANF and 

CCDF,

• most states were experiencing healthy fiscal periods.

• TANF cash assistance caseloads declined sharply.

• states chose to use some of their TANF funds to increase the availability of 

supports, including child care assistance, for low-income working families.

Since January 2001,

• state fiscal conditions have deteriorated and most states have faced 

growing budget problems. 

• TANF cash assistance caseloads have grown in many states, and 

nationally, the decline in TANF caseloads slowed.

• states have faced choices about how best to use federal TANF funds and 

their own state funds to support program needs and goals.
Appendix I: Briefing Slides 

Page 19 GAO-03-588 Child Care 

15

Question #1 

States Are Evenly Split on Whether They Serve All 

Eligible Families Who Apply

• 25 states reported they currently 

serve all families who apply and 

are eligible under the states’ 

eligibility criteria.

• 26 states reported they currently 

do not serve all families who 

apply and are eligible under the 

states’ eligibility

criteria.

Wash.

Ore.

Calif.

Idaho

Nev.

Mont.

Wyo.

Utah

Colo.

N.Mex. Ariz.

Tex.

Hawaii

Alaska

La.

Okla.

Ark.

Kans. Mo.

Miss. Ala. Ga.

Fla.

S.C.

N.C. Tenn.

Ky.

Va.

Nebr.

S.Dak.

N.Dak.

Minn.

Iowa

Wisc.

Ill.

Mich.

Ind. Ohio

W.Va.

Pa.

N.Y.

Vt.

N.H.

Maine

Mass.

R.I.

Conn.

N.J.

Del.

Md.

D.C.

Serves all eligible families who apply Does not serve all eligible families who apply

Source: State child care officials' responses to GAO survey.
Appendix I: Briefing Slides 

Page 20 GAO-03-588 Child Care 

16

Question #1

States Generally Make All Groups Eligible, but

Low-Income Families Often Receive Lower Priority

Of the 49 states that responded to our survey question

• 48 said all three groups of families are eligible--TANF families, 

transitioning families, and other low-income working families

• Tennessee responded that only TANF families and transitioning families 

(for 18 months after leaving TANF) are eligible.

However, other factors also affect whether eligible families who apply for child 

care assistance actually get served.
Appendix I: Briefing Slides 

Page 21 GAO-03-588 Child Care 

17

Question #1

TANF and Transitioning Families Generally Have 

Higher Priority in States Not Serving All

Of the 26 states that do not serve all eligible families who apply:

• Fourteen states gave TANF families higher priority than the other two 

groups:

• Ten states reported three priority levels—TANF families first, transitioning 

families second, and other low-income families third. 

• Four states reported that TANF families receive highest priority and 

transitioning and other low-income families receive lower priority.

• Nine states reported giving TANF and transitioning families highest priority 

and other low-income families second priority. 

• Three states did not provide complete information.
Appendix I: Briefing Slides 

Page 22 GAO-03-588 Child Care 

18

Question #1 

With Some Exceptions, Low-Income Working Families 

Have Lowest Priority

In the 26 states not serving all eligible families, other low-income working 

families (those not on TANF or transitioning off TANF) are generally the 

lowest priority. 

• However, some families in this group do have high priority. For example,

• New York guarantees child care assistance to families in this group who 

could be eligible to receive TANF cash assistance but who have chosen 

not to receive it.

• Massachusetts gives immediate access to low-income military families 

who are deployed overseas.
Appendix I: Briefing Slides 

Page 23 GAO-03-588 Child Care 

19

Question #1 

Potential Outcomes for Lower Priority Families

When insufficient funds are available to serve all eligible families who apply 

for assistance, lower-priority families are most likely to 

• be put on a waiting list,

• be subject to freezes on enrollment of new families, or

• lose benefits while still eligible.

A change in priority can result in families losing benefits. For example,

• leaving TANF can result in losing child care assistance in two states 

(Montana and Indiana), and

• coming to the end of a state’s transition period 

• can result in losing child care assistance while still eligible in four states: 

Arkansas, Indiana, Nevada, S. Carolina 

• can result in no longer being eligible in three states: Nebraska, New 

Mexico, Tennessee.
Appendix I: Briefing Slides 

Page 24 GAO-03-588 Child Care 

20

Question #2 

Since 2001, 35 States Have Made Key Policy Changes 

While the Remaining 16 Maintained Their Policies

Thirty-five states made key changes affecting availability while the other 16 

did not. Of the states that made key changes:

• Twenty-three states made changes tending to decrease the availability of 

child care assistance.

• Nine states made changes tending to increase the availability of

assistance.

• Three states made a mix of changes.
Appendix I: Briefing Slides 

Page 25 GAO-03-588 Child Care 

21

Question #2

These Changes Would Likely, on Balance, Have 

Decreased Overall Availability of Aid Since 2001

Because more states made changes that tended to decrease availability of 

assistance than to increase it, the overall availability of child care assistance 

has likely decreased compared with its availability in January 2001.

23

16

9

3

0

5

10

15

20

25

Number of states

Made changes

decreasing

availability

Made no key

changes (16) or a

mix of changes (3)

Made changes

increasing

availability

Source: State child care officials' responses to GAO survey.
Appendix I: Briefing Slides 

Page 26 GAO-03-588 Child Care 

22

Question #2

Policy Changes Have Been Common, with Decreases

in Availability Predominating

15 10 5 0 5

Changed income eligibility thresholds to 

narrow or expand coverage

Changed other eligibility criteria to narrow or 

expand coverage

Started or eliminated waiting lists

Stopped or resumed enrolling new families

Increased or reduced copayments

14

5

9

9

10

Decreases

availability

Increases

availability

Source: State child care officials' responses to GAO survey.

Number of states making each change

Policy changes

Number of States that Changed Certain Policies Affecting the Availability of

Child Care Assistance Since January 2001

4

5

2

1

5
Appendix I: Briefing Slides 

Page 27 GAO-03-588 Child Care 

23

Source: State child care officials' responses to GAO survey.

aOhio is scheduled to implement these changes later in 2003.

Question #2 

Twenty-three States Made Changes that Decrease 

Availability of Child Care Subsidies

Pennsylvania ●

Ohioa ● ●

West Virginia ● ●

Washington ● ●

Texas ● ● ●

Tennessee ●

Oregon ● ● ●

North Dakota ●

North Carolina ●

Nevada ● ●

New Mexico ●

New Jersey ●

Nebraska ● ● ●

Montana ● ●

Missouri ●

Kentucky ● ● ● ● ●

Kansas ●

Indiana ●

Idaho ●

District of Columbia ● ●

Colorado ● ● ●

Connecticut ● ● ●

Arizona ● ●

Increased 

copayments

Stopped enrollment of new 

Started waiting list families

Changed other eligibility

factors to narrow coverage

Changed income eligibility thresholds to 

State narrow coverage

Type of change
Appendix I: Briefing Slides 

Page 28 GAO-03-588 Child Care 

24

Question #2 

Nine States Made Changes that Increase Availability 

of Child Care Subsidies

Wyoming ● ● ●

South Dakota ● ●

South Carolina ●

Oklahoma ● ●

New York ●

Massachusetts ●

Iowa ●

Georgia ●

Alaska ●

Reduced 

copayments

Resumed enrollment of new 

Eliminated waiting list families

Changed other eligibility

factors to expand coverage

Changed income eligibility thresholds to 

State expand coverage

Type of change

Source: State child care officials' responses to GAO survey.
Appendix I: Briefing Slides 

Page 29 GAO-03-588 Child Care 

25

Question #2

Three States Had a Mix of Changes

Alabama

• Increased availability by reducing the number of hours families are required to work in order 

to qualify for subsidies and by reducing the copayments of families with more than one child 

receiving assistance.

• Decreased availability in October 2002 by stopping enrolling new low-income working 

families in the child care assistance program. 

Louisiana

• In January 2001, changed its income eligibility threshold to make fewer families eligible, 

and in July 2002 changed it back to its prior level.

• In 2001, started and then stopped a waiting list for other low-income working families and 

lowered copayments.

Maryland

• In January 2002, expanded availability by changing its income eligibility threshold from 45 

percent to 50 percent of state median income.

• In January 2003, stopped enrolling new families, except TANF families and those who 

received TANF within 2 months of applying for child care subsidies. 
Appendix I: Briefing Slides 

Page 30 GAO-03-588 Child Care 

26

Question #2

Of the 18 States that Changed Income Thresholds, 

Most Reduced Coverage

While most states maintained the same income eligibility thresholds that they 

had in January 2001, 14 states decreased them, reducing availability for 

higher income families. For example, the thresholds

• Decreased for certain types of families—In July 2002, Nebraska 

decreased its maximum threshold for other low-income working families 

from 185 percent to 120 percent of the federal poverty level, while the 

threshold remains at 185 percent for transitioning families.

• Decreased for new applicants—In August 2001, New Mexico decreased 

its maximum threshold from 200 percent to 100 percent of the federal 

poverty level for all new applicants. In May 2003, New Mexico will change 

this threshold to 130 percent of the federal poverty level.

• Decreased due to inaction—Two states reported that their maximum 

income eligibility levels had declined in real terms because the state had 

chosen not to adjust income eligibility levels to account for inflationary 

increases. (Mo., N. Dak.)
Appendix I: Briefing Slides 

Page 31 GAO-03-588 Child Care 

27

Question #2

A Few States Changed Income Thresholds to Increase 

Coverage 

Four states increased maximum income eligibility thresholds to increase 

availability for higher-income families. For example,

• South Dakota increased its threshold for all families from 150 percent to 

200 percent of the federal poverty level in March 2002, and

• Wyoming, which has a threshold for initially qualifying for assistance and a 

threshold for continuing to receive assistance, raised both thresholds. It 

raised the first threshold from 150 percent to 185 percent and the second 

threshold from 185 percent to 200 percent of the federal poverty level.
Appendix I: Briefing Slides 

Page 32 GAO-03-588 Child Care 

28

Question #2

Some States Changed Other Eligibility

Factors Affecting Availability

Potential decreases:

Five states changed eligibility factors other than income levels that could 

decrease the number of families eligible to receive child care assistance. 

For example,

• Kentucky is adding a 20-hour work requirement for families receiving 

child care assistance. This change will affect transitioning families and 

other low-income working families.

• In Colorado, some counties have eliminated education as an activity that 

qualifies for child care assistance. This change can affect TANF, 

transitioning, and other low-Income working families.
Appendix I: Briefing Slides 

Page 33 GAO-03-588 Child Care 

29

Question #2

Some States Changed Other Eligibility Factors 

Affecting Availability (continued)

Potential increases:

Five states changed eligibility factors other than income levels that could 

increase the number of families eligible to receive child care assistance. For 

example,

• New York gave its counties the option of making 4-year college education 

an activity eligible for child care assistance coverage. This change 

affects TANF, transitioning, and other low-income working families.

• Oklahoma allowed 30 days of child care subsidy to families who had 

been receiving assistance while working but had become unemployed 

and were searching for a job. This change affects transitioning families 

and other low-Income working families. 
Appendix I: Briefing Slides 

Page 34 GAO-03-588 Child Care 

30

Question #2

Waiting Lists Are Somewhat More Common than 

Before

Since January 2001,

• Nine states started using waiting lists.

• In three of these states, transitioning families as well as other low-income 

working families could be put on the waiting list (D.C., Colo., Md.).

• In six other states, waiting lists were started for other low-income working 

families (Ariz., Conn., Ky., Mont., Nev., Pa.).

• Two states eliminated their waiting lists for other low-income working 

families by providing child care assistance to families on the lists (Alaska, 

Iowa). 
Appendix I: Briefing Slides 

Page 35 GAO-03-588 Child Care 

31

Question #2

Several States Have Stopped Adding New Families to 

Child Care Assistance Programs

Since January 2001,

• Nine states stopped providing subsidies to new families applying for child 

care assistance. 

• In two states, the change affected transitioning families as well as other 

low-income working families (D.C., Md.).

• In seven states, the change affected only other low-income working 

families (Ala., Ariz., Ky., Conn., Nev., N.J., Tenn.).

• One state resumed enrollment of new applicants into the assistance 

program--specifically other low-income working families (S.C.).
Appendix I: Briefing Slides 

Page 36 GAO-03-588 Child Care 

32

Question #2

Of 15 States that Changed Copayments, More 

Increased than Decreased What Families Must Pay

Copayments are the amounts of their own funds that states require families 

receiving child care assistance to pay to their child care providers. In many states, 

TANF families are exempted from paying copayments. 

Since January 2001,

• Ten states increased copayments 

• Five states increased copayments for all types of families, including TANF 

(Idaho, Mont., N.C., Wash., W.Va.).

• Four additional states increased copayments for transitioning and other lowincome working families (Ky., Nebr., Oreg., Tex.).

• Ohio has scheduled to increase copayments later this year.

• Five states reduced copayments 

• Three states reduced copayments for all types of families, including TANF 

families (Ala., Mass., Wyo.).

• Two additional states reduced copayments for transitioning and other lowincome working families (La., S.Dak.).
Appendix I: Briefing Slides 

Page 37 GAO-03-588 Child Care 

33

Question #2

A Few States Made Other Copayment Changes that 

Have a Mixed Effect

Three states reported other changes in copayments that could result in both 

increases and decreases.

• Connecticut increased copayments for some families but also created 

income disregards that would decrease copayments for some families.

• Alaska changed its basis for determining copayments from a percentage of 

cost of care to a percentage of gross income.

• Maryland, which bases copayments on a percentage of cost of care, raised 

copayments but placed a cap on these increases and reduced the highest 

percentage of cost of care that a family must pay.
Appendix I: Briefing Slides 

Page 38 GAO-03-588 Child Care 

34

Question #2

Other Policy Changes—More than Half the States 

Increased Reimbursement Rates for Providers

Reimbursement rates are the amounts a state pays to a child care provider to 

subsidize the care provided to children in families receiving assistance. The 

rate amount can affect whether families are able to find child care providers 

who will accept subsidies. 

Since January 2001, 

28 states increased reimbursement rates, 

nearly all in response to market rate surveys

Alaska, Ala., Ariz., Calif., Conn., Fla., Ga., 

Hawaii, Kans., Ky., Maine, Md., Minn., Nebr., 

N.J., N.M., N.Y., N.C., Okla., Pa., R.I., S.C., 

S.Dak., Tenn., Va., Wash., Wis., Wyo.

4 states decreased rates

Idaho, Mich., Nev., W.Va.
Appendix I: Briefing Slides 

Page 39 GAO-03-588 Child Care 

35

Question #2

Other Policy Changes—Twice as Many States

Increased as Decreased Spending on Quality Initiatives

Since January 2001, 

22 states reported increased spending on 

quality initiatives designed to promote 

quality child care

Ark., Calif., Fla., Ga., Hawaii, Ill., Iowa, Ky., La., 

Nebr., N.J., N.M., N.Y., Okla., Pa., R.I., S.C., 

Utah, Vt., Va., Wis., Wyo.

10 states reported

decreased spending on 

quality initiatives

Conn., Ind., Kans., Md., 

Minn., N.C., N.Dak., Tex., 

Wash., W.Va.
Appendix I: Briefing Slides 

Page 40 GAO-03-588 Child Care 

36

Question #3

Governors’ Budget Proposals Present a Mixed Picture 

for Fiscal Year 2004 

Fiscal 2004

In 29 states, child care officials reported whether their governors’ budget 

proposals for the upcoming fiscal year would change the level of funding for 

child care subsidies. 

In 17 states, child care officials reported that their governors did not currently 

have budget proposals addressing child care assistance, and in the 5 

remaining states, the child care officials did not provide information. 

11 propose decreases

Alaska, Ala., Conn., D.C., 

Md., Minn., Mont., N.C., 

N.H., Tenn., Wash.

7 propose increases

Ariz., Fla., Iowa, Kans., 

N.Mex., N.Y., Pa.

11 propose to keep 

funding about the same

as last year

Calif., Colo., Ga., Mass., 

Miss., Mo., N.Dak., Nebr., 

Ohio, Ore., S.Dak.
Appendix I: Briefing Slides 

Page 41 GAO-03-588 Child Care 

37

Question #3

Substantial Structural Change Proposed in California

• California's governor's budget proposes moving the funding and policysetting for child care assistance programs from the state-level to the countylevel. 

• If adopted, the proposal will likely result in changes to key policies 

addressed by our survey.
Appendix I: Briefing Slides 

Page 42 GAO-03-588 Child Care 

38

Observations

• Our survey results show that a significant number of states have changed 

their child care policies in ways that tend to decrease availability. At the 

same time, it is noteworthy that one-third of the states did not make key 

changes and several took steps to increase availability. Even so, the net 

effect would appear to be that states have decreased the availability of child 

care assistance overall compared with 2001—that is, these findings indicate 

that entry into and remaining in the child care assistance system may be 

less possible for families, particularly for families not associated with the 

welfare system. 

• To provide a more definitive assessment of changes in the availability of 

child care subsidies, additional data are needed, including more recent data 

on the number of children receiving subsidies, the welfare status of families 

receiving subsidies, and trends in spending levels. As a result, we consider 

these results suggestive rather than definitive until more is known about 

actual outcomes of changes in states’ child care assistance programs. 
Related GAO Products 

Page 43 GAO-03-588 Child Care 

Child Care: States Exercise Flexibility in Setting Reimbursement Rates 

and Providing Access for Low-Income Children. GAO-02-894. 

Washington, D.C.: September 18, 2002. 

Child Care: States Have Undertaken a Variety of Quality Improvement 

Initiatives, but More Evaluations of Effectiveness Are Needed. GAO-02-

897. Washington, D.C.: September 6, 2002. 

Early Childhood Programs: The Use of Impact Evaluations to Assess 

Program Effects. GAO-01-542. Washington, D.C.: April 16, 2001. 

Welfare Reform: States Provide TANF-Funded Work Support Services to 

Many Low-Income Families Who Do Not Receive Cash Assistance. GAO02-615T, Washington, D.C.: April 10, 2002. 

Child Care: States Increased Spending on Low-Income Families. GAO01-293. Washington, D.C.: February 2, 2001. 

Child Care: How Do Military and Civilian Center Costs Compare? 

GAO/HEHS-00-7. Washington, D.C.: October 14, 1999. 

Child Care: Use of Standards to Ensure High Quality Care. GAO/HEHS98-223R. Washington, D.C.: July 31, 1998. 

Welfare Reform: States’ Efforts to Expand Child Care Programs. 

GAO/HEHS-98-27. Washington, D.C.: January 13, 1998. 

Welfare Reform: Implications of Increased Work Participation for Child 

Care. GAO/HEHS-97-75. Washington, D.C.: May 29, 1997. 

Related GAO Products 

(130227) 

The General Accounting Office, the audit, evaluation and investigative arm of 

Congress, exists to support Congress in meeting its constitutional responsibilities 

and to help improve the performance and accountability of the federal 

government for the American people. GAO examines the use of public funds; 

evaluates federal programs and policies; and provides analyses, 

recommendations, and other assistance to help Congress make informed 

oversight, policy, and funding decisions. GAO’s commitment to good government 

is reflected in its core values of accountability, integrity, and reliability. 

The fastest and easiest way to obtain copies of GAO documents at no cost is 

through the Internet. GAO’s Web site (www.gao.gov) contains abstracts and fulltext files of current reports and testimony and an expanding archive of older 

products. The Web site features a search engine to help you locate documents 

using key words and phrases. You can print these documents in their entirety, 

including charts and other graphics. 

Each day, GAO issues a list of newly released reports, testimony, and 

correspondence. GAO posts this list, known as “Today’s Reports,” on its Web site 

daily. The list contains links to the full-text document files. To have GAO e-mail 

this list to you every afternoon, go to www.gao.gov and select “Subscribe to daily 

E-mail alert for newly released products” under the GAO Reports heading. 

The first copy of each printed report is free. Additional copies are $2 each. A 

check or money order should be made out to the Superintendent of Documents. 

GAO also accepts VISA and Mastercard. Orders for 100 or more copies mailed to a 

single address are discounted 25 percent. Orders should be sent to: 

U.S. General Accounting Office 

441 G Street NW, Room LM 

Washington, D.C. 20548 

To order by Phone: Voice: (202) 512-6000 

TDD: (202) 512-2537 

Fax: (202) 512-6061 

Contact: 

Web site: www.gao.gov/fraudnet/fraudnet.htm 

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470 

Jeff Nelligan, managing director, NelliganJ@gao.gov (202) 512-4800 

U.S. General Accounting Office, 441 G Street NW, Room 7149 

Washington, D.C. 20548 

GAO’s Mission 

Obtaining Copies of 

GAO Reports and 

Testimony 

Order by Mail or Phone 

To Report Fraud, 

Waste, and Abuse in 

Federal Programs 

Public Affairs