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[Background Material and Data on Programs within the Jurisdiction of the Committee on Ways and Means (Green Book)]
[Program Descriptions]
[Section 9. Child Care]
[From the U.S. Government Printing Office, www.gpo.gov]

 
                        SECTION 9 - CHILD CARE

                                CONTENTS

Introduction
Employment and Marital Status of Mothers
Child Care Arrangements Used by Working Mothers
Child Care Costs
Supply and Characteristics of Child Care Providers
	Supply of Providers
	Wages of Child Care Center Staff
	Staff Turnover
Child Care Standards and Quality
	Regulation and Licensing
	Research on Child Care Quality
The Federal Role
	Background and Overview
	Major Child Care Programs
	Child Care and Development Block Grant
Child Care Tables
	Child Care and Development Fund
	Families and Children Served, Type of Care, and Payment Type
	State Income Eligibility Limits
	Trends in Child Care Expenditures
	State CCDF Allocations
References

INTRODUCTION

	Child care is an issue of significant public interest for 
several reasons. The dramatic increase in the labor force participation 
of mothers is the most important factor affecting the demand for child 
care in the last quarter century. Currently, in a majority of American 
families with children--even those with very young children--the mother
is in the paid labor force. Similarly, an increasingly significant 
trend affecting the demand for child care is the proportion of mothers 
who are the sole or primary financial supporters of their children, 
either because of divorce or because they never married. In addition, 
child care continues to be a significant issue in debates over how to 
move welfare recipients toward employment and self-sufficiency; 
mothers on welfare can have difficulty entering the labor force 
because of child care problems. Finally, the impact of child care on 
the children themselves is an issue of considerable interest, with 
ongoing discussion of whether children benefit from participation in 
programs with an early childhood development focus.
 	Concerns that child care may be in short supply, not of good 
enough quality, or too expensive for many families escalated during the 
late 1980s into a national debate over the nature and extent of the 
Nation's child care problems and what, if any, Federal interventions 
would be appropriate. The debate culminated in the enactment of 
legislation in 1990 that expanded Federal support for child care by 
establishing two new child care grant programs to States. The 
programs--the Child Care and Development Block Grant (CCDBG) and the 
At-Risk Child Care Program--were enacted as part of the Omnibus 
Budget Reconciliation Act of 1990 (Public Law 101-508). These programs 
were preceded by enactment of a major welfare reform initiative, the 
Family Support Act of 1988 (Public Law 100-485), which authorized 
expanded child care assistance for welfare families and families 
leaving welfare. In 1996, as part of welfare reform legislation (the 
Personal Responsibility and Work Opportunity Reconciliation Act, 
Public Law 104-193), these programs were consolidated into an expanded 
Child Care and Development Block Grant (sometimes referred to as the 
Child Care and Development Fund), which provides increased Federal 
funding and serves both low-income working families and families
attempting to transition off welfare through work.
	This chapter provides background information on the major 
indicators of the demand for and supply of child care, the role of 
standards and quality in child care, a summary description of the 
major Federal programs that fund child care services, and reported 
data from the largest of those sources of dedicated funding, the Child 
Care and Development Fund (CCDF).

EMPLOYMENT AND MARITAL STATUS OF MOTHERS

	The dramatic increase in the labor force participation of 
mothers is commonly regarded as the most significant factor fueling 
the increased demand for child care services. A person is defined as 
participating in the labor force if she is working or seeking work. 
As shown in Table 9-1, in 1947, just following World War II, slightly 
over one-fourth of all mothers with children between the ages of 6 and 
17 were in the labor force. By contrast, in 2002 over three-quarters 
of such mothers were labor force participants. The increased labor 
force participation of mothers with younger children also has been 
dramatic. In 1947, it was unusual to find mothers with a preschool-age 
child in the labor force--only 12 percent of mothers with children 
under the age of 6 were in the labor force. But in 2002, over 
64 percent of mothers with preschool-age children were in the labor 
force, a rate more than 5 times higher than in 1947. Women with 
infant children have become increasingly engaged in the labor market 
as well. Today, 60 percent of all mothers whose youngest child is 
under age 2 are in the labor market, while in 1975 approximately one-
third of all such mothers were labor force participants.
	The rise in the number of female-headed families also has 
contributed to increased demand for child care services. Single 
mothers maintain a greater share of all families with children today 
than in the past. Census data show that in 1970, 11 percent of families 
with children were headed by a single mother, compared with  24 percent 
of families with children in 2003. While the number of two-parent 
families with children increased only slightly between 1970 and 2003 
(25.8 and 27.1 million, respectively), the number of female-headed 
families with children almost tripled, increasing from 3.4 million 
families in 1970 to 9.9 million in 2003. These families headed by 
mothers were a major source of growth in the demand for child care.
	Mothers' attachment to the labor force differs depending on 
the age of their youngest child and marital status, as Tables 9-2 
and 9-3 show. Table 9-2 exhibits the labor force participation rates 
of various demographic groups of mothers with a youngest child over 
or under age 6. The table provides evidence of the increasing rate 
of working mothers, especially working mothers with preschool 
children.

TABLE 9-1--LABOR FORCE PARTICIPATION RATES OF WOMEN, BY PRESENCE AND 
AGE OF YOUNGEST CHILD, SELECTED YEARS, 1947-2002

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

 TABLE 9-2--LABOR FORCE PARTICIPATION RATES OF WOMEN WITH CHILDREN, BY 
MARITAL STATUS AND AGE OF YOUNGEST CHILD, SELECTED YEARS, 1970-2002

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

	Table 9-3 provides a detailed breakdown of the labor force 
participation of women for March 2002 by marital status and the age 
of the youngest child. Among those with children under 18, divorced 
women have the highest labor force participation rate (86 percent), 
followed by separated women  (80 percent). The labor force 
participation rate for never-married mothers with children under 18 
grew to over 75 percent in 2002, a 24 percent increase over the 1996 
rate. In 1996, never-married mothers trailed all other marital status 
groups (with children under 18) in labor force participation, but by 
1999 the participation rate for never-married mothers surpassed 
married women (70 percent) and widowed mothers (63 percent).  In 2002, 
the rates for all three groups remained relatively stable.

TABLE 9-3--LABOR FORCE PARTICIPATION RATES OF WOMEN WITH CHILDREN 
UNDER 18, BY MARITAL STATUS AND AGE OF YOUNGEST CHILD, MARCH 2002

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

	As Table 9-3 illustrates, labor force participation rates tend 
to increase regardless of the marital status of the mother as the age 
of the youngest child increases, at least up to the child's teenage 
years. Among all women with children under 18, 61 percent of those 
with a child under 3 participate,  69 percent of those whose youngest 
child is between 3 and 5 participate, and 81 percent of those whose 
youngest child is between 14 and 17 participate.
	In 2002, 72 percent of mothers participated in the labor 
force.  Among these mothers, Table 9-4 shows 50 percent worked full 
time and 18 percent worked part time (less than 35 hours per week). 
Forty-one percent of mothers with children under age 6 worked full 
time, and 18 percent worked part time.
	Table 9-4 reveals that how much mothers' work differs 
according to their marital status and the age of their children. 
It also indicates that changes have occurred between 1996 and  2002. 
The 1996 welfare reform law's new emphasis on work is likely to have 
affected the employment status of the never-married mother subgroup 
most significantly, and that is reflected in the table. Overall, 
the percent of all mothers (with children under 18) employed full 
time grew from 48 percent in 1996 to 50 percent in  2002. Within the 
subgroup of never-married mothers, the 3 year period was accompanied 
by a much larger increase in full-time employment. In 1996, 36 percent 
of never-married mothers with children under 18 were employed full 
time. By  2002, the figure had increased to 51 percent. The percent 
of never-married mothers working full time with children under 
age 6 had grown comparably, increasing from 29 percent in 1996 
to 45 percent in 2002. Within the divorced mothers subgroup, there 
were increases between the years, but the differences are not nearly 
as large as within the never-married subgroup. In 2002, the percent 
of all divorced mothers employed full time with children under 18 
remained almost 69 percent, steady since 1999, and a 2 percentage point 
increase since 1996; for those with children under 6, 61 percent 
worked full time in 2002. The employment status of married mothers 
remained generally stable or declined slightly since 1996, depending 
on full- or part-time status, and age of children.

TABLE 9-4--PERCENT OF MOTHERS BY FULL1- OR PART-TIME EMPLOYMENT 
STATUS, MARCH 1996 AND 2002

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

	
CHILD CARE ARRANGEMENTS USED BY WORKING MOTHERS

	Data on the types of child care arrangements used by families 
with working mothers are collected periodically by the U.S. Census 
Bureau. The most recent U.S. Census Bureau statistics available on 
child care arrangements are based on data collected by the Survey of 
Income and Program Participation (SIPP) for April-July 1999. Because 
the interview questions obtain information about both paid and unpaid 
substitute care used while the mother works, it provides information on 
categories of care that generally are not considered child care, such 
as care provided by the father, or care by a sibling.
	The 1999 data indicate that the types of child care 
arrangements used by families while the mother works vary depending 
on the age of the child, as well as the mother's work schedule (full- 
or part-time), marital status, and family income. Table 9-5 shows the 
distribution of primary child care arrangements provided for 
preschoolers (children under age 5), by marital status and mother's 
work schedule. In the 1999 SIPP survey, parents were asked to estimate 
the number of hours a child spends in any of several care arrangements 
during a week, rather than to identify the child's "primary" care 
arrangement while the mother worked. In Tables 9-5 and 9-6, the 
primary child care arrangement is based on the arrangement in which a 
child spends the most hours in a typical week. In the case of a child 
who spends equal time between arrangements, the child would have more 
than one primary arrangement.
	Table 9-5 shows that about one third (34 percent) of families 
of preschoolers with working mothers in 1999 primarily relied on care 
in another home by a relative, family day care provider, or other 
nonrelative, compared to almost one quarter (24 percent) of families 
whose primary arrangement was an organized child care facility. These 
data resemble the 1995 survey results, but mark a change from the 
fall 1994 survey results, which revealed that over 30 percent of 
families used organized child care as their primary arrangement. 
However, some of the decline in the use of organized child care 
facilities and increase in care out of another's home may have 
reflected a change in the 1995 survey, which more clearly defined 
care types, by asking specifically about family day care providers 
(providers caring for more than one child outside the child's home), 
as distinct from organized group day care. Relative care, either in 
the child's home or the relative's home, was used by almost 30 percent 
of families of preschool children with employed mothers. Over one-
fifth of families with young children did not rely on others for help 
with child care arrangements while the mother worked, but instead 
used parental care (21 percent), especially care by fathers (almost  
18 percent).  Less than 4 percent of families relied on care provided 
in the child's home by a nonrelative.

	Preschool children of part-time employed mothers were much 
more likely to be cared for by a parent (32 percent), than by an 
organized child care facility (18 percent), and also more likely to 
be cared for by a relative, family provider, or nonrelative in another 
home (28 percent). Mothers employed full time were  most likely to 
use organized day care centers (21 percent), a grandparent 
(13 percent), or family day care provider (13 percent) than any other 
form of care.
	Table 9-6 shows the types of afterschool arrangements used in 
1999 for school-age children by working mothers, as well as cases in 
which there were no arrangements specified. In 1999, 27 percent of 
children age 5-14 were being cared for after school in the child's 
home, whereas in 1995 this figure was almost 20 percent. Of those 
children age 5-14 with employed mothers in 1999, 13 percent were 
cared for by a sibling (4 percent by a sibling under age 15). 
Afterschool care by fathers continues to increase. In 1999, 
23 percent of children were primarily cared for by fathers during 
afterschool time, compared to  21 percent in 1995, and 11 percent 
in 1993.  Children   reported to be in self-care or to be unsupervised 
by an adult for some time while their mothers

TABLE 9-5--PRIMARY CHILD CARE ARRANGEMENTS OF CHILDREN UNDER 5, 1999 

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

were working represented 18 percent of the children. It is not known if 
the children in the "no arrangement specified " category were 
unsupervised, or if other factors may account for their not being 
reported in a child care arrangement, such as travel time from school. 
	Table 9-7 shows the types of child care arrangements used in 
1999 for children under 5 by the economic well-being of the family. The 
19 percent of poor children being cared for in the child's home by a 
relative or nonrelative in 1999 represents a marked increase from 
9 percent reported in 1995. The percent of nonpoor children in this 
category remained unchanged at roughly 15 percent. Nonpoor children in 
1999 were slightly more likely than poor children to be cared for in 
another home. Poor families were slightly more likely than nonpoor 
families to not specify any regular arrangement.

TABLE 9-6-- CHILD CARE ARRANGEMENTS USED BY EMPLOYED MOTHERS FOR 
CHILDREN 5-14, SPRING 1999

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

TABLE 9-7--PRIMARY CHILD CARE ARRANGEMENTS USED BY EMPLOYED MOTHERS 
FOR CHILDREN UNDER 5, BY POVERTY STATUS OF THE MOTHER, SPRING 1999 

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

	Table 9-8 shows the primary arrangements used by working 
mothers for their preschool-aged children from for selected years from 
1977 through 1999. In general, the table does not show dramatic 
changes in the arrangements used during this time period.  However, 
there is a noteworthy rise in the share of children of single mothers 
who were cared for by fathers, from 1 percent in 1977 to more than 
10 percent in 1999.

TABLE 9-8--PERCENT OF CHILDREN UNDER 5 IN SELECTED CHILD CARE 
ARRANGEMENTS, SELECTED YEARS 1977-99

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

	In addition to data available from the U.S. Census Bureau, 
data from the 1999 National Survey of America's Families (NSAF), 
collected by the Urban Institute, can be used to examine primary child 
care arrangements used by children under 5 with employed mothers 
nationally, and across 12 individual States. Table 9-9 shows that 
nationwide, 39 percent of preschool children with employed mothers in 
1999 were in care for 35 or more hours per week (Urban Institute, 
2002). Almost one-quarter were in care for 15-34 hours per week, 
15 percent for 1-14 hours per week, and 22 percent spent no hours in 
nonparental child care.
	For preschool children with mothers employed full time, the 
number of children in full-time care (35 or more hours) increases to
48 percent. Children ages 3 and 4 were slightly more likely to be in 
full-time care than younger preschoolers (45 percent versus 
36 percent). Children in higher-income families were almost equally 
as likely to spend 35 or more hours a week in child care as lower-
income children (40 percent versus 38 percent), although higher-
income children are more likely than lower-income children to be in 
part-time care (41 percent versus 34 percent). Twenty-seven percent of 
low-income children are reported to spend no hours in nonparental care, 
compared to 19 percent of higher-income children.
	
TABLE 9-9--PERCENT OF CHILDREN UNDER FIVE WITH EMPLOYED MOTHERS IN 
DIFFERENT HOURS OF NONPARENTAL CARE, BY SELECTED CHARACTERISTICS, 1999

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

	According to the 1999 NSAF (Table 9-10), 28 percent of 
preschool children use center-based child care as their primary 
arrangement, while half that number (14 percent) are in family child 
care (Urban Institute, 2002). About 4 percent are primarily cared for 
in the child's home by a babysitter or nanny. More than a quarter 
(27 percent) of children under 5 are cared for primarily by a 
relative, either inside or outside the child's home, which is the 
same share of children in the care of a parent. The analysis of 
individual States revealed that there is considerable State variation 
in the use of specific primary child care arrangements.
	The Urban Institute's analysis also examined how child care 
arrangements vary according to both age of child and family income. 
The survey data indicate that nationally infants and toddlers are more 
likely to be cared for by relatives (30 percent) and parents (33 
percent) than to be in center-based care (18 percent) or family child 
care (15 percent). As preschoolers grow older (age 3 and 4), use of 
relative and parent care decreases (23 and 19 percent respectively), 
and center-based care becomes the most commonly used primary 
arrangement (42 percent). Use of family child care remains relatively 
steady at 12 percent for 3- and 4-year-olds.

TABLE 9-10--PRIMARY CHILD CARE ARRANGEMENTS FOR CHILDREN UNDER FIVE 
WITH EMPLOYED MOTHERS, BY SELECTED CHARACTERISTICS, 1999 

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

	At the national level, children under age 5 in families below 
200 percent of poverty are less likely than higher-income children to 
use center-based care as a primary arrangement (23 percent versus 30 
percent). Relative care and parent care are used most frequently by 
lower-income families (29 and 33 percent respectively), and more often 
than by higher-income families, of which 26 percent use relative care 
and  24 percent parent care. Lower- and higher-income families are 
almost equally likely to use family child care as their primary 
arrangement (12 and 15 percent respectively).
	In addition to looking at the primary child care arrangements 
for children under 5, Urban Institute researchers used the 1999 NSAF 
to examine the number of nonparental arrangements used to care for a 
child, and the hours that are spent in each type of arrangement. As 
shown in Table 9-11, nationally, 40 percent of such children under 
5 combine more than one child care arrangement each week (Urban 
Institute, 2002). Of those, 9 percent combine three or more 
arrangements. The remaining 60 percent have only one child care 
arrangement. Children under age 3 are less likely to have multiple 
child care arrangements than 3- and 4-year-olds (34 percent versus 
47 percent). Children aged 3 and 4 are more than twice as likely to 
be in three or more care arrangements. Of the children in multiple 
arrangements, most use a combination of formal and informal care, 
regardless of age or income. Children from lower- and higher-
income families are almost equally likely to be in multiple child 
care arrangements (41 and 39 percent respectively). As seen with 
primary arrangements, there is considerable State variation in the 
use of multiple arrangements.

   TABLE 9-11--NUMBER OF NONPARENTAL CHILD CARE ARRANGEMENTS USED 
   BY CHILDREN UNDER FIVE WITH EMPLOYED MOTHERS, BY SELECTED 
   CHARACTERISTICS, 1999 
   
   
   
   
   [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

   
   
CHILD CARE COSTS

	Research studies have found that the majority of families 
with working mothers and preschool children purchase child care 
services. The tendency to purchase care and the amount spent on care, 
both in absolute terms and as a percent of family income, generally 
varies by the type of child care used, family type (married or single 
mothers), and the family's economic status.    
	The most recent data on child care expenditures by families 
are from the Survey of Income and Program Participation for the 
spring of 1999. These data show that 54 percent of families with 
employed mothers paid for child care for their preschool-aged 
children. And, as shown in Table 9-12, families with higher incomes 
were more likely to purchase care than families with lower incomes. 
For example, 63 percent of families with monthly incomes of $4,500 
or more purchased child care in the spring of 1999, while only 
42 percent of families with monthly incomes of less than $1,200 
purchased care.
	The median weekly cost per family for all preschool-aged 
children was $69 in 1999 for those families that purchased care 
(Table 9-12). Married-couple families in which a husband is present 
devoted a smaller percentage of their income to child care 
(6 percent) than single-parent families (including married, without 
a present spouse) (12 percent), but their child care expenditures were 
nonetheless greater ($75 per week) than those of single-parent 
families (about $60 per week).
	Table 9-12 also shows that, while poor families spend fewer 
dollars for child care than higher income families, they spend a much 
greater percentage of their family income for child care. Thus, poor 
families spent only $55 per week, but this amount represented almost 
29 percent of their income. By contrast, half of nonpoor families 
spent at least $70 per week on care, but this amount was only about 
7 percent of their income. A Spring 2000 survey of the cost of child 
care for a 4-year-old in urban child care centers across the country, 
conducted by the Children's Defense Fund (Schulman, 2000) found that 
in every State, the average child care tuition exceeds $3,300 per 
child, and is over $5,000 per child in 20 States (with 11 States 
over $6,000).

TABLE 9-12--USE OF PAID CHILD CARE ARRANGEMENTS FOR CHILDREN UNDER 
AGE 5 AMONG FAMILIES WITH WORKING MOTHERS, MEDIAN WEEKLY CHILD CARE 
EXPENDITURES, AND PERCENT OF FAMILY INCOME SPENT ON CARE, BY POVERTY 
STATUS AND FAMILY INCOME, SPRING 1999

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

SUPPLY AND CHARACTERISTICS OF CHILD CARE PROVIDERS

SUPPLY OF PROVIDERS

	The variety of child care arrangements used by families has 
been discussed above.  However, the studies of arrangements do not 
include estimates of the number of available providers. A 
comprehensive study of licensed centers, early education programs, 
center-based programs exempt from State or local licensing (such as 
programs sponsored by religious organizations or schools), and 
licensed family day care providers has not been conducted since the 
U.S. Department of Education's Profile of Child Care Settings Study 
was released in 1991. That study reported that approximately 80,000 
center-based early education and care programs were providing services 
in the United States at the beginning of 1990 (Kisker, Hofferth, 
Phillips, & Farquhar, 1991).
	A less extensive, but more recent study, focusing only on 
regulated child care centers, was released by the Children's 
Foundation in February 2002. The study reported that the number of 
regulated child care centers in the 50 States, the District of 
Columbia, Puerto Rico, and the Virgin Islands totals 113,298 
(Children's Foundation, 2002). This is a 2 percent increase from the 
Foundation's 2001 study total, and nearly a 24 percent increase from 
the total published by the Children's Foundation's first study of 
centers in 1991. The 2002 study notes that the definition of regulated 
child care center varies by State or territory. In 29 States, the 
number of regulated child care centers includes nursery schools, 
preschools, prekindergartens and religiously affiliated centers. 
In the remaining States and territories, the definition is less 
inclusive. For example, some States exclude nursery schools or 
religiously affiliated centers in their count.
	The Children's Foundation also conducts studies on family 
child care providers (as opposed to centers). Their 2000 report 
indicates that there are 304,958 regulated family child care homes, 
of which 266,798 are family day care homes (caring for up to 6 
children) and 38,160 are large group child care homes (in which 
providers generally care for 7-12 children). It is assumed by child 
care researchers that the number of unregulated family day care 
providers far exceeds the number of regulated family providers, though 
it is difficult to determine by how much. At the time of the 
aforementioned Profile of Child Care Settings Study of 1991, the 
number of regulated family day care homes represented an estimated 
10-18 percent of the total number of family day care providers.
	The U.S. Census Bureau also collects data on the number of 
child care businesses in the United States. For a historical look at 
child care businesses in the early 1990s, a 1998 report used Census 
of Service Industries (CSI) data to provide information on the number 
and characteristics of child care businesses in 1992 (Casper &
O'Connell, 1998). "Child care businesses" are defined as organized 
establishments engaged primarily in the care of infants or children, 
or providing prekindergarten education, where medical care or 
delinquency correction is not a major component. Not included in this 
definition are babysitting services or Head Start Programs that are 
coordinated with elementary schools. Based on the Census of Service 
Industries data, the number of incorporated child care centers grew 
from 51,000 in 1992 to 62,054 in 1997.

WAGES OF CHILD CARE CENTER STAFF

	No single data source provides comprehensive information on 
wages of child care workers. However, occupational data collected by 
the Department of Labor, when complemented by survey information 
gathered by organizations interested in child care issues, begin to 
paint a picture of the status of child care wages in the United 
States.
	The Bureau of Labor Statistics (BLS) collects wage data for 
764 occupations, as surveyed by the Occupational Employment 
Statistics (OES) Program. However, readers should be aware that the 
occupational categories create a misleading division in the child 
care work force. Center-based child care staff are described by the 
OES survey as either "preschool teacher" or "child care worker," 
distinguishing the former as an individual who instructs children up 
to age 5 in developmental activities within a day care center, child 
development facility, or preschool, and the latter as a person who 
performs tasks such as dressing, feeding, bathing, and overseeing play 
of children. This division of tasks does not necessarily occur in 
actual child care settings, and therefore the survey's occupational 
group assignments, and wage distinctions made between those groups, 
should be interpreted with some caution. Nevertheless, the OES survey 
provides a general sense of wages within the child care field. Based 
on BLS data and OES survey results from 2000, the median hourly wage 
of a center-based "child care worker" was $7.43, and for a "preschool 
teacher," $8.56.  The average, or mean wages, for center-based "child 
care workers" and "preschool teachers" in 2000 were slightly higher, 
at $7.86 and $9.66 respectively.
	Table 9-13 shows the average wages for childcare workers and 
preschool teachers by State in 2000, based on State Occupational 
Employment and Wage data from the Bureau of Labor Statistics.

TABLE 9-13--AVERAGE WAGES FOR CHILD CARE WORKERS AND PRESCHOOL 
TEACHERS, 2000

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

STAFF TURNOVER

	Like many low-wage industries, turnover among the child care 
work force has been historically high. The National Child Care
Staffing Study (NCCSS), most recently updated in 1997, has tracked 
worker turnover and stability beginning with its initial study in 
1988. In 1988, center directors in the sample reported a 41 percent 
average rate of annual turnover of teaching staff. In 1992, they 
reported average annual turnover of 26 percent for the year prior to 
the survey interview. By 1997, the rate had risen to 31 percent for 
all teaching staff, and one-fifth of centers reported losing half or 
more of their teaching staff in the previous year. The 10 percentage 
point decrease in turnover rates between 1988 and 1997 should be 
analyzed with caution, however, as the sample size of the NCCSS study 
dropped from 227 to 158.  According to the study directors, a 
disproportionate number of the centers reporting the highest turnover 
in 1988 had closed by the time of the 1997 survey, leaving a sample 
of centers with potentially lower than average turnover rates for 
their areas. The issue of stability among centers themselves is not 
specifically addressed in the NCCSS study, however its authors do 
mention increasing reports of centers closing due to an insufficient 
supply of trained teachers. Better job opportunities and higher wages 
in other fields have been identified as recent major causes of 
turnover. Ninety-three percent of directors reported taking more than
2 weeks to find replacements for departing teaching staff and over 
one-third (37 percent) reported taking over a month to do so. The 
effect of staff turnover on children is one of several topics that 
continue to receive attention during discussions of how to measure 
child care quality.

CHILD CARE STANDARDS AND QUALITY

REGULATION AND LICENSING

	Regulation and licensing of child care providers is conducted 
primarily at the State and local levels, although the extent to which 
the Federal Government should play a role in this area has been a 
topic of debate for many years (see below). Licensing and regulation 
serves as a means of defining and enforcing minimum requirements for 
the legal operation of child care environments in which children will 
be safe from harm. There is no uniform way in which States and/or 
territories regulate child care centers, preschools, nursery schools, 
prekindergartens, and/or religiously affiliated child care centers. 
All States and territories do, however, require these center-based 
types of care (as opposed to family child care providers) to be 
regulated through licensing or registration. In the case of family 
day care providers, most States exempt certain providers--typically 
those serving smaller numbers of children from licensing or 
regulation. As mentioned in the earlier discussion of child care 
supply, the Children's Foundation survey found that there were 304,958 
regulated family child care providers in the States and territories 
in 2000. If estimates from the 1990 child care settings study are 
applied, this number may represent only 10-18 percent of all family 
child care providers, with the remaining facilities being unregulated. 
The count of centers that are regulated (meaning licensed or 
certified) totals 113,298 according to the Children's Foundation 
2002 study.    
	Table 9-14 presents information on State licensing standards 
for child care centers, as collected by the Children's Foundation 
(2002). The table shows the number of States for which a select 
requirement or standard for child care centers applies, and in turn,
how licensing standards vary across States. Note that all State 
variations in policy are not reflected in the table, and therefore 
totals by category will vary. Licensing standards are just one area 
that researchers continue to focus on when examining child care 
quality to determine whether higher licensing standards are associated 
with higher quality child care and better child outcomes.

TABLE 9-14--NUMBER OF STATES WITH SELECTED CHILD CARE LICENSING 
REQUIREMENTS FOR REGULATED CHILD CARE CENTERS, 2002

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

RESEARCH ON CHILD CARE QUALITY

	As women's labor force participation has grown over the past 
several decades, concerns about child care quality have increased. 
Highly publicized research on early brain development in infants and 
young children (under age 3) has drawn attention to what role child 
care may play in children's cognitive and social development. The 
relationship between quality of child care and outcomes for children 
is of increasing interest to parents, researchers, and policymakers.  
A growing body of research examines questions such as how to define 
the elements that correspond to quality child care, how to measure 
those elements, and ultimately, their effects on children both in the 
short- and long-term.
	One comprehensive longitudinal study of connections between 
child care and early childhood development is part of an ongoing 
project conducted by a team of researchers supported by the National 
Institute of Child Health and Human Development (NICHD, 1999 and 
2002), of the National Institutes of Health. The broad goal of the 
NICHD study, started in 1991, is to collect data on an ongoing basis 
from a sample of children and their families (located in  10 areas 
across the United States) to answer a range of questions about the 
relationship between child care characteristics and experiences, 
and children's developmental outcomes. The children and families in 
the study's sample vary in socioeconomic background, race, family 
structure, and type of child care used. The study design takes into 
account characteristics of the family and its environment to gain a 
more complete picture of the contribution that child care 
characteristics and experiences themselves make to children's 
development, above and beyond the contribution of the family 
environment. Even so, not all characteristics are observed, and 
completely disentangling all of the characteristics (both of the 
parents and the child) is difficult, if not impossible, in such a 
study. Children in the study are not randomly assigned to child care 
settings of varying degrees of quality, but are instead placed in 
settings of their parents' selection. The selection of care in and 
of itself may reflect contributing variables--characteristics of the 
parents, children, and environment--that are not fully observed in 
the study. Likewise, a child's developmental outcomes in a particular 
setting may reflect the child's characteristics as much as the 
setting's quality. Although the NICHD study attempts to distinguish 
among some of these factors, the ability to interpret the results is 
somewhat constrained by selection bias.
	In general, family characteristics and the quality of the 
mother's relationship with her child were shown to be stronger 
predictors of the child's development than were the characteristics 
of child care in the NICHD study. Family characteristics such as 
income and mother's education were strong predictors of children's 
outcomes, for both children cared for solely by their mothers and 
children in extensive nonparental child care. The study did find a 
modest but consistent association between quality of nonparental 
child care over the first 3 - 4� years of life and children's 
cognitive and language development, regardless of family background. 
In this case, quality child care was defined as positive care giving 
and language stimulation; i.e., how often providers spoke to 
children, asked questions, and responded to children's questions.
	The NICHD researchers also analyzed to varying degrees the 
more structural elements of child care in centers--elements that are 
generally regulated to varying degrees by the States (see Table 9-14), 
such as child-staff ratio, group size, and teacher training and 
education. The researchers used recommended guidelines developed 
jointly by the American Public Health Association and the American 
Academy of Pediatrics to evaluate the degree to which standards were 
being met by centers used by families in the study. Twelve percent of 
the study's children were enrolled in child care centers at 6 months, 
and 38 percent at age 3. Findings indicate that the children in the 
centers that met some or all of the guidelines had better language 
comprehension and school readiness than the children who were in 
centers that did not meet the guidelines. There were also fewer 
behavioral problems for children age 2 and 3 in the centers that met 
the guidelines.
	The researchers have continued to follow the children in the 
sample, assessing the children at 54 months (4� years) of age, with 
further plans to do so again in first grade. Like other studies that 
examine the relationship between child care and developmental 
outcomes, the NICHD research aims to determine not just whether there 
are concurrent and short-term effects of child care on children's 
development, but long-term effects as well.  According to the NICHD 
study, results from a 2002 analysis indicate that "early child care 
is associated with both developmental risks and developmental 
benefits for children's functioning prior to school entry, even after 
controlling for a host of factors including gender, ethnicity, family 
socioeconomic status, maternal psychological adjustment, and parenting 
quality.  The risk is that more hours in child care across the first 
4 � years of life is related to elevated levels of problem behavior at 
4 � years.  The developmental benefit is that higher-quality child 
care, quality that improves over time, and more experience in centers 
predicts better performance on measures of cognitive and linguistic 
functioning."(NICHD, 2002) 
	A 2003 article on the NICHD study findings indicates that the 
more time children spent in child care between birth and age 4 �, the 
more adults had a tendency to rate them (both at age 4 � and at
kindergarten) as less likely to get along with others, as more 
assertive, as disobedient, and as aggressive.  However, the 
researchers noted that for the vast majority of children, the levels 
of the behaviors reported were well within the normal range.  The 
researchers also did not find a threshold of child care hours above 
which the aforementioned problem behaviors were more likely to occur.  
(NICHD, 2003) 
	The NICHD study has not focused specifically on distinctions 
between the quality of care offered by family child care providers or 
relatives and that of center-based care. The most recent indepth 
observational study of quality of family child care and relative care 
was published in 1994 by the Families and Work Institute. The study 
examined the care offered by 226 providers in 3 different communities 
in California, Texas, and North Carolina (Galinsky et al., 1994). 
Nonregulated family care providers may be nonregulated because 
they care for few enough children to be exempt from State regulation 
requirements, or, as the 1994 study found in their sample, 81 percent 
of the  54 nonregulated providers were illegally nonregulated, due to 
the fact that they were actually providing care for a number of 
children over their State's limit. The quality of all types of family 
and relative care was determined according to measurements such as 
the setting's safety and the sensitivity and responsiveness of 
providers to the children. The study found that only 9 percent of the 
homes in the study sample were rated as good quality, 56 percent were 
rated as adequate, and 35 percent rated as inadequate. The researchers 
found that quality appeared to be higher when providers were trained 
and when they were caring for three to six children rather than one 
or two. As important, if not more so, in determining quality was 
whether the provider was committed to taking care of children, and 
had a sense that their work was important; participated in family
child care training; thought ahead about the children's activities; 
was regulated; and followed standard business and safety practices. 
In the case of relative care, an important factor in the quality of 
the child's experience was whether the relative caring for the 
children did so out of desire, necessity, or both.
	The Cost, Quality, and Child Outcomes (1995, 1999) in Child 
Care Centers study conducted by researchers from four universities 
beginning in 1993, analyzes the influence of "typical" center-based 
child care on children's development during their preschool years and 
into elementary school. The ``typical'' centers were represented by a 
random sample of 401 full-day child care centers, half of them for-
profit, half nonprofit, in regions of 4 States: California, Colorado, 
Connecticut, and North Carolina. Data on the quality and cost of 
services were collected, as well as data on the developmental 
progress of a sample of children in the selected centers.
	Findings from the first phase of the study were released in 
1995, and indicated that the quality of child care offered in over 
three-quarters of these "typical" centers in the United States did 
not meet "high standards" according to the Early Childhood Environment 
Rating Scale, which ranges from 1 ("low quality") to 7 ("high 
quality"). Eleven percent of centers in the sample scored below 3 
("minimally acceptable"). The researchers found that the quality of 
child care is primarily related to higher staff-to-child ratios, 
staff education, and administrators' previous experience. Teacher 
wages and education were also generally higher in higher quality 
centers. Like the NICHD study, the study also found that centers 
meeting higher licensing standards provided higher quality care.
	In addition to examining the status of quality in the centers, 
the researchers wanted to determine what effects, if any, the quality 
of care had on children's development. The study's initial findings 
in 1995 indicated that children's cognitive and social development 
are positively related to the quality of their child care experience. 
This proved to be the case even after taking into account factors 
related to family background and associated with children's 
development (such as maternal education); the children in the low-
quality care still scored lower on measures of cognitive and social 
development.
	The findings from the second phase of the study, released 
in 1999, indicate that there are long-term effects of child care 
quality on children's development. Similar to the NICHD results, this 
study indicated that the impact of child care quality on children's 
development was modest, but consistent, and applied even after taking 
into account child and family characteristics.	The extent to which 
the effects of quality child care and other early childhood program 
experiences "fade out" over time has long been an area of interest 
for researchers studying the connection between child care programs 
and children's development. One of the longest-running research 
studies in this area is known as the Abecedarian Project, which began 
in the early 1970s. The project design consisted of a controlled study 
in which 57 infants, all from low-income families in North Carolina, 
were randomly assigned to an experimental group that would receive 
year-round, all-day educational child care/preschool emphasizing 
cognitive, language, and adaptive behavior skills (Burchinal et al., 
1997; Campbell & Ramey, 1995). The control group of 54 infants 
received nutritional supplements and supportive social services (as 
did the experimental group), but did not receive the educational 
intervention emphasizing language, cognitive, and social development. 
The Abecedarian Project began in early infancy, and the children 
received the educational "treatment" for 5 years, a longer period than 
other programs. This study also differs from those discussed earlier 
in that it focuses solely on low-income children.
	Early findings of the project in the 1970s showed that from 
the age of  18 months through age 5 (the end of the program), 
children in the treatment group had higher scores on mental tests 
than children in the control group. In the primary grades through 
middle adolescence, children from the treatment group scored 
significantly higher on reading and math tests. Through age 15, the 
treatment group continued to score higher on mental tests, although 
the gap between the two groups had narrowed.
	More recently, the project's researchers completed a 
followup study of the project's participants (104 of the original 
111) at age 21 (Campbell, 1999). Results showed that the 21-year-
olds who had been in the treatment group had significantly higher 
mental test scores than those from the control group. Likewise, 
reading and math scores were higher for the treatment group, as had 
been the case since toddlerhood. Due to the longevity of the 
project, researchers also were able to look for differences in areas 
such as college enrollment and employment rates. The followup 
interviews revealed that about 35 percent of the young adults in the 
treatment group either had graduated from or were attending a 4-year 
college or university at the time of the assessment, compared to  
14 percent of the control group.
	A team of researchers from RAND evaluated the results of 
nine early childhood intervention programs, including the Abecedarian 
Project (Karoly et al., 1998). The RAND team determined that the nine 
early intervention programs evaluated in their study provided benefits 
for the participating disadvantaged children and their families. 
However, the Rand team pointed out that expanding model, resource-
intensive programs like the Abecedarian Project to a larger scale may 
not necessarily result in the same developmental benefits.

THE FEDERAL ROLE

BACKGROUND AND OVERVIEW

	The Federal Government entered the child care business during 
the New Deal of the 1930s when federally funded nursery schools were 
established for poor children. The motivation for creating these 
nursery schools was not specifically to provide child care for working 
families. Rather, the schools were designed primarily to create jobs 
for unemployed teachers, nurses, and others, and also to provide a 
wholesome environment for children in poverty. However, when mothers
began to enter the work force in large numbers during World War II, 
many of these nursery schools were continued and expanded. Federal 
funding for child care and other community facilities was available 
during the war years under the Lanham Act, which financed child care 
for an estimated 550,000-600,000 children before it was terminated in 
1946.
	The end of the war brought the expectation that mothers would 
return home to care for their children. However, many women chose to 
remain at work and the labor force participation of women has 
increased steadily ever since. The appropriate Federal role in 
supporting child care, including the extent to which the Federal 
Government should establish standards for federally funded child care, 
has been an ongoing topic of debate. In 1988 and 1990, four Federal 
child care programs were enacted providing child care for families 
receiving Aid to Families with Dependent Children (AFDC), families 
that formerly received AFDC, low-income working families at risk of 
becoming dependent on AFDC, and low-income working families generally.
	The establishment of these programs was the culmination of a 
lengthy and often contentious debate about what role the Federal 
Government should play in child care. Lasting nearly 4 years, the 
debate centered on questions about the type of Federal subsidies that 
should be made available and for whom, whether the Federal Government 
should set national child care standards, conditions under which 
religious child care providers could receive Federal funds, and how 
best to assure optimal choice for parents in selecting child care 
arrangements for their children, including options that would allow a 
mother to stay home. Differences stemming from philosophical and 
partisan views, as well as jurisdictional concerns, were reflected 
throughout the debate.
	Though the programs created in 1988 and 1990 represented a 
significant expansion of Federal support for child care, they joined 
a large number of existing Federal programs providing early childhood 
services, administered by numerous Federal agencies and overseen by 
several congressional committees. The U.S. General Accounting Office 
(GAO; 1994) estimated that in fiscal year 1992 and fiscal year 1993 
more than 90 early childhood programs were funded by the Federal 
Government, administered through 11 Federal agencies and  20 offices. 
Of these programs, GAO identified 34 as having education or child care 
as key to their mission. The Congressional Research Service (CRS), in 
a memo to the House Committee on Ways and Means (Forman, 1994), 
identified  46 Federal programs related to child care operating in 
fiscal year 1994, administered by 10 different Federal agencies. 
However, CRS noted that some of these programs were not primarily 
child care programs; rather, they were designed for some other major 
purpose but included some type of child care or related assistance. 
Moreover, a majority of the programs were small, with 32 of the 46 
providing less than $50 million in annual funding. A 1998 GAO report 
(1998a) identified 22 key child care programs, of which 5 accounted 
for more than 80 percent of total child care spending in fiscal 
year 1997.
	In 1996, the 104th Congress passed a major restructuring of 
Federal welfare programs (Public Law 104-193), including a 
consolidation of major Federal child care programs (child care for 
recipients of Aid to Families with Dependent Children, Transitional 
Child Care Assistance, and the At-Risk Child Care Program) into an 
expanded Child Care and Development Block Grant (CCDBG). The child 
care provisions in the 1996 welfare reform law were developed to 
achieve several purposes. As a component of welfare reform, the 
child care provisions were intended to support the overall goal of 
promoting self-sufficiency through work. However, separate from the 
context of welfare reform, the legislation aimed to address concerns 
about the effectiveness and efficiency of child care programs. The 
four separate child care programs that were enacted in 1988 and 1990 
had different rules regarding eligibility, time limits on the receipt 
of assistance, and work requirements. Consistent with other block 
grant proposals considered in the 104th Congress, the child care 
provisions in Public Law 104-193 were intended to streamline the 
Federal role, reduce the number of Federal programs and conflicting 
rules, and increase the flexibility provided to States.
	The expanded CCDBG became the primary child care subsidy 
grant program operated by the Federal Government.  The welfare reform 
law of 1996 made available to States almost $20 billion over a 6-year 
period (1997-2002) in a combination of entitlement and discretionary 
funding specifically dedicated for child care, which was approximately 
$4 billion above the level that would have been available under the
previous programs. The expectation was that the work requirements for 
welfare recipients (many being single mothers) would create a greater 
demand for child care services.  Since passage of that law, States 
have spent increasing amounts of both Federal and State money on child
care.  Fiscal year 2003 funding for child care (and welfare) was 
extended at the 2002 level, without a reauthorization bill being 
approved by Congress. (Reauthorization bills passed the House, but not 
in the Senate in 2002 and 2003.)
	Although the CCDBG is considered the primary source of Federal 
funding for child care subsidies for low-income working and welfare 
families, two other Federal block grants have been contributing 
significantly to overall child care funding since passage of the 1996 
welfare law:  the Temporary Assistance for Needy Families (TANF) block 
grant, and the Social Services Block Grant (SSBG). Despite the 
increase in Federal resources for child care since 1996, concerns 
persist about the adequacy and quality of child care in the era of 
welfare reform. The number of eligible children receiving CCDBG 
subsidies was estimated by HHS to be as low as 15 percent in 1999.  
However, the saliency of that figure is diminished somewhat due its 
lack of currency, and the fact that it does not encompass child care 
subsidies provided directly in TANF or SSBG. Moreover, estimates of 
the number of eligible children served do not contend to reflect 
consumer demand for child care, leaving the issue of whether adequate 
child care funding exists open to debate.   
	Not at issue, however, is the fact that TANF contributions to 
child care, both in direct spending and in the form of transfers to 
the CCDBG, grew steadily from 1997 to 2000, and have remained 
significant but level in the years since ($3.7 billion in FY2002).  
Child care spending from the Child Care and Development Fund (the term 
used for both the mandatory and discretionary funding that supports 
the CCDBG) has been increasing every year (as shown in detail in 
Tables 9-26 through 9-29). 
	Throughout reauthorization discussions in 2002 and 2003, the 
funding level for child care has been one of the major points of 
debate. Welfare caseloads have declined since 1996, thus "freeing up" 
funds previously used for cash assistance for other services such as 
child care. However, advocates for increased child care funding 
contend that the decline in the welfare caseload has not translated 
into a decline in the low-income population that the Child Care and 
Development Block Grant was created to serve, regardless of welfare 
status. 

	With respect to the welfare population, the reauthorization 
debates of 2002 and 2003 also have focused on the effect that proposed 
increases in required hours of work and other activities by welfare 
recipients would have on the need for child care.  If, as is being 
debated as part of reauthorization, the hours of work and other 
entities required of welfare recipients are to be increased, child 
care funding will remain a key issue, as many argue that increased 
child care funding will be necessary to compensate.  This issue is 
compounded by the aforementioned argument that former welfare 
recipients in low-wage jobs have not necessarily lost their need for 
child care subsidies.

MAJOR CHILD CARE PROGRAMS

	Table 9-15 provides a brief description of the major Federal 
programs that currently support child care and related activities. One 
of the largest Federal sources of child care assistance is provided 
indirectly through the Tax Code, in the form of a nonrefundable tax 
credit for taxpayers who work or are seeking work. Other major sources 
of Federal child care assistance include the CCDBG, the SSBG under 
title XX of the Social Security Act, the TANF Block Grant, and the 
Child Care Food Program, which subsidizes meals for children in child 
care. Head Start, the early childhood development program targeted to
poor preschool children, also can be characterized as a child care 
program. Although Head Start primarily operates on a part-day, part-
year basis, programs increasingly are being linked to other all-day 
child care providers to better meet the needs of full-time working 
parents. Table 9-15 shows the most recent available funding or 
spending data for each of these programs.  In some cases, the 
available data are not for comparable years.  Moreover, it should be 
noted that programs such as the Child Care and Development Block 
Grant, Head Start, and the Child and Adult Care Food Program provide 
funding specifically dedicated for child care and/or development, 
whereas TANF and SSBG funding are used for child care at each State's 
option.  In recent years, States have chosen to use a significant 
portion of their flexible funds for the purpose of supporting child 
care services.  In fiscal year 2002, $3.7 billion in Federal TANF 
funding was spent either directly on child care or transferred to 
the CCDBG for use under that program.  In fiscal year 2001, over 
$200 million in SSBG spending supported child day care. 

CHILD CARE AND DEVELOPMENT BLOCK GRANT

	The Child Care and Development Block Grant (CCDBG) was 
originally authorized as an amendment to the Omnibus Budget 
Reconciliation Act of 1990, and in 1996 was reauthorized (through 
2002) and amended by the Personal Responsibility and Work Opportunity 
Reconciliation Act (Public Law 104-193). The program provides funding 
for child care services for low-income families, as well as for 
activities intended to improve the overall quality and supply of 
child care for families in general.

Financing
Under the original CCDBG Act, discretionary funds were authorized, 
subject to the annual appropriations process. As amended by the 1996 
welfare reform law, the program is funded by a combination of 
discretionary and entitlement amounts. The combined total of funds is 
sometimes referred to as the Child Care and Development Fund. The 
discretionary funds are authorized at $1 billion annually. However,
appropriations have surpassed the authorized level beginning in 
fiscal year 1999. Most recently, $2.1 billion was appropriated 
for fiscal year 2003.  These funds are allocated among States 
according to the same formula contained in the original CCDBG Act, 
which is based on each State's share of children under age 5, the 
State's share of children receiving free or reduced-price lunches, and 
State per capita income. Half of 1 percent of appropriated funds is 
reserved for the territories, and between 1 and 2 percent is reserved 
for payments to Indian tribes and tribal organizations. States are 
not required to match these discretionary funds. Funds must be 
obligated in the year they are received or in the subsequent fiscal 
year, and the law authorizes the Secretary to reallocate unused funds.
	The welfare reform law also provided entitlement funding to 
States for child care under the CCDBG. The annual amounts of 
entitlement funding were $1.967 billion in fiscal year 1997; $2.067 
billion in fiscal year 1998; $2.167 billion in fiscal year 1999; 
$2.367 billion in fiscal year 2000; $2.567 billion in fiscal year 
2001; and $2.717 billion in fiscal year 2002.  Further legislative 
action was taken (in lieu of a reauthorization bill) to extend 
fiscal year 2003 funding at the same level as provided in fiscal 
year 2002.The Secretary must reserve between 1 and 2 percent of 
entitlement funds for payments to Indian tribes and tribal 
organizations. After this amount is reserved, remaining entitlement 
funds are allocated to States in two components. First, each State 
receives a fixed amount each year, equal to the funding received by 
the State under the three child care programs previously authorized 
under AFDC in fiscal year 1994 or fiscal year 1995, or the average of 
fiscal years 1992-94, whichever is greater. This amount, which totals 
approximately $1.2 billion each year, is sometimes referred to as 
"mandatory" funds. No State 

TABLE 9-15-OVERVIEW OF FEDERAL PROGRAMS THAT SUPPORT CHILD CARE

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
 match is required for these funds, which may remain available for 
expenditure by States with no fiscal year limitation. Although no 
State match is required, to receive their full TANF allotment, States 
must maintain at least 75 percent of their previous welfare 
expenditures (referred to as their "maintenance-of-effort" 
requirements), including previous expenditures for welfare-related 
child care, in fiscal year 1994.
	After the guaranteed amount is distributed, remaining 
entitlement funds are distributed to States according to each State's 
share of children under age 13. States must meet maintenance-of-
effort and matching requirements to receive these funds. Specifically, 
States must spend all of their "guaranteed" Federal entitlement funds 
for child care, plus 100 percent of the amount they spent of their own 
funds in fiscal year 1994 or fiscal year 1995, whichever is higher, 
under the previous AFDC-related child care programs. Further, States 
must provide matching funds at the fiscal year 1995 Medicaid matching 
rate to receive these additional entitlement funds for child care. If 
the Secretary determines that a State will not spend its entire 
allotment for a given fiscal year, then the unused amounts may be 
redistributed among other States according to 
those State' share of children under age 13.

In addition to amounts provided to States for child care, States may 
transfer up to 30 percent of their TANF Block Grant into their CCDBG 
or SSBG Programs. Funds transferred into child care must be spent 
according to the CCDBG rules. However, States also may use TANF funds 
for child care without formally transferring them to the CCDBG.

Eligibility and Target Population Groups
Children eligible for services under the revised CCDBG are those whose 
family income does not exceed 85 percent of the State median. States 
may adopt income eligibility limits below those in Federal law. 
Because child care funding is not an entitlement for individuals, 
States are not required to aid families even if their incomes fall 
below the State-determined eligibility threshold. Federal law does 
require States to give priority to families defined in their plans as 
"very low income." Table 9-25 provides the CCDF income eligibility 
limits across the States and territories for families of three. To be 
eligible for CCDBG funds, children must be less than 13 years old and 
be living with parents who are working or enrolled in school or 
training, or be in need of protective services. States must use at 
least 70 percent of their total entitlement funds for child care 
services for families trying to become independent of TANF through work 
activities and families at risk of becoming dependent on public 
assistance. In their State plans, States must explain how they will 
meet the specific child care needs of these families. Of remaining 
child care funds (including discretionary amounts), States must ensure 
that a substantial portion is used for child care services to eligible 
families other than welfare recipients or families at risk of welfare 
dependency.

Use of Funds
CCDBG funds may be used for child care services provided on a sliding 
fee scale basis; however, Federal regulations allow States to waive 
child care fees for families with incomes at or below the poverty 
line. Funds also may be used for activities to improve the quality or 
availability of child care. States are required to spend no less than 
4 percent of their child care allotments (discretionary and 
entitlement) for activities to provide comprehensive consumer 
education to parents and the public, activities that increase parental 
choice, and activities designed to improve the quality and 
availability of child care (such as resource and referral services).

	Child care providers receiving Federal assistance must meet 
all licensing or regulatory requirements applicable under State or 
local law. States must have in effect licensing requirements 
applicable to child care; however, Federal law does not dictate what 
these licensing requirements should be or what types of providers they 
should cover. States must establish minimum health and safety 
standards that cover prevention and control of infectious diseases 
(including immunizations); building and physical premises safety; 
and health and safety training; and that apply to child care 
providers receiving block grant assistance (except relative 
providers).

Parents of children eligible to receive subsidized child care must be 
given maximum choice in selecting a child care provider. Parents must 
be offered the option to enroll their child with a provider that has a 
grant or contract with the State to provide such services, or parents 
may receive a certificate (also sometimes referred to as a voucher) 
that can be used to purchase child care from a provider of the 
parents' choice. Child care certificates can be used only to pay 
for child care services from eligible providers, which can include 
sectarian child care providers. Eligible providers also can include 
individuals age 18 or older who provide child care for their 
grandchildren, great grandchildren, nieces or nephews, or siblings 
(if the provider lives in a separate residence). Table 9-24 shows the 
percent of CCDF recipient children served by each form of payment 
type, by State, in fiscal year 2001. Certificates were overwhelmingly 
the form of payment most used, serving over 84 percent of CCDF 
children nationally. States must establish payment rates for child 
care services that are sufficient to ensure equal access for eligible 
children to comparable services provided to children whose parents 
are not eligible for subsidies.

The CCDBG contains specific requirements with regard to the use of 
funds for religious activities. Under the program, a provider that 
receives operating assistance through a direct grant or contract with 
a government agency may not use these funds for any sectarian purpose 
or activity, including religious worship and instruction. However, a 
sectarian provider that receives a child care certificate from an 
eligible parent is not so restricted in the use of funds.

Administration and Data Collection
At the Federal level, the CCDBG is administered by the Administration 
for Children and Families of the U.S. Department of Health and Human 
Services (DHHS). The Secretary is required to coordinate all child 
care activities within the agency and with similar activities in 
other Federal agencies. States are required to designate a lead agency 
to administer the CCDBG, and may use no more than 5 percent of their 
Federal child care allotment for administrative costs. States must 
submit disaggregated data on children and families receiving 
subsidized child care to DHHS every quarter, and aggregate data twice 
a year. The Secretary is required to submit a report to Congress once 
every 2 years. The most recent available data from DHHS as submitted 
by the States is from fiscal year 2001.

CHILD CARE TABLES

CHILD CARE AND DEVELOPMENT FUND

Tables 9-16 through 9-30 provide extensive information about the Child 
Care and Development Fund (CCDF) as reported by States to DHHS. 
Because the tables reflect funding from both the discretionary and 
mandatory portions of the child care funding pool, the term CCDF is 
used in the titles of the tables. The reader should note, however, 
that as mentioned in earlier parts of this chapter, all discretionary 
and mandatory child care funding referenced here is subject to the 
rules of the CCDBG.

FAMILIES AND CHILDREN SERVED, TYPE OF CARE, AND PAYMENT TYPE

The average monthly number of families and children served by the 
CCDF in the last half of fiscal year 2001 is shown, by State, in 
Table 9-16. Tables 9-17 and 9-18 reveal the percentage of children 
served nationwide by reason for care and by age of child respectively. 
The number of providers, by State and type, are displayed in Table 
9-19. The percentage of CCDF children served by each type of care, by 
State, follows in Table 9-20. Tables 9-21 through 9-23 reveal State-
by-State information on the breakdowns between type of care used by 
CCDF recipients, regulated and nonregulated care used, and relative 
and nonrelative care used. Table 9-24 shows the percentage of CCDF 
children served by each form of payment type.

TABLE 9-16-- CHILD CARE AND DEVELOPMENT FUND--AVERAGE MONTHLY NUMBER 
OF FAMILIES AND CHILDREN SERVED, FISCAL YEAR 2001

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

TABLE 9-17 --CHILD CARE AND DEVELOPMENT FUND--PERCENT OF CHILDREN 
SERVED BY REASON FOR CARE, FISCAL YEAR 2001

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

TABLE 9-19-- CHILD CARE AND DEVELOPMENT FUND--NUMBER OF CHILD CARE 
PROVIDERS RECEIVING CCDF FUNDS, FISCAL YEAR 2001

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

TABLE 9-20-- CHILD CARE AND DEVELOPMENT FUND--PERCENT 
OF CHILDREN SERVED, BY TYPES OF CARE, FISCAL YEAR 2001

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

TABLE 9-21--CHILD CARE AND DEVELOPMENT FUND--PERCENT OF CHILDREN 
SERVED IN REGULATED SETTINGS AND SETTINGS LEGALLY OPERATING WITHOUT 
REGULATION, FISCAL YEAR 2001

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

TABLE 9-22--CHILD CARE AND DEVELOPMENT FUND--PERCENT OF CHILDREN 
SERVED IN SETTINGS LEGALLY OPERATING WITHOUT REGULATION, BY RELATIVES 
AND NONRELATIVES, FISCAL YEAR 2001

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

STATE INCOME ELIGIBILITY LIMITS

States' income eligibility limits for families of three receiving 
Child Care and Development Fund (CCDF) subsidies, as submitted in the 
latest available State CCDF plans, are displayed in Table 9-25. Some 
States use a different limit for entering and exiting the system, as 
indicated in the table.

TRENDS IN CHILD CARE EXPENDITURES

	Tables 9-26 through 9-29 contain information about trends in 
child care expenditures under the CCDF and its predecessor programs 
(i.e., AFDC child care programs). All figures reflect expenditures 
made in the year indicated, as opposed to expenditures made from a 
given year's appropriation. Table 9-26 provides a summary of 
discretionary and mandatory expenditures on child care from fiscal 
years 1995 through 2001. Table 9-27 gives the mandatory fund 
expenditure trends by State from fiscal years 1995 through 2001. Total 
expenditures (mandatory and discretionary) are shown by State in 
Table 9-28. A detailed breakdown of CCDF expenditures made in fiscal 
year 2001 (the latest year available) by State is displayed in 
Table 9-29.

STATE CCDF ALLOCATIONS

Table 9-30 shows actual State allotments for discretionary and 
entitlement (mandatory and matching) funding for fiscal year 2002.

TABLE 9-23-- CHILD CARE AND DEVELOPMENT FUND (AND ADDITIONAL STATE 
EFFORTS)-- PERCENT OF CHILDREN SERVED IN ALL TYPES OF CARE, FISCAL 
YEAR 2001

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

TABLE 9-24-- CHILD CARE AND DEVELOPMENT FUND--PERCENT OF CHILDREN 
SERVED BY PAYMENT METHOD, FISCAL YEAR 2001

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

TABLE 9-25-- CCDF ELIGIBILITY LIMITS FOR FAMILY OF THREE

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

TABLE 9-26--SUMMARY OF DISCRETIONARY AND MANDATORY CHILD CARE AND 
DEVELOPMENT FUND EXPENDITURES, FISCAL YEARS 1995-2001

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

TABLE 9-27--FEDERAL MANDATORY CHILD CARE EXPENDITURES, BY STATE, 
FISCAL YEARS 1995-2001

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

TABLE 9-28 --TOTAL CHILD CARE AND DEVELOPMENT FUND EXPENDITURES, BY 
STATE, FISCAL YEARS 1995 - 2001  

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

TABLE 9-29 -- CHILD CARE AND DEVELOPMENT FUND EXPENDITURES, FISCAL 
YEAR 2001

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

TABLE 9-30 -- CHILD CARE AND DEVELOPMENT FUND STATE ALLOCATIONS - 
FISCAL YEAR 2002

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

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