In 1988, the Congress enacted sweeping changes to the nation’s welfare system by passing the Family Support Act (FSA). A central purpose of FSA was to transform Aid to Families With Dependent Children (AFDC) into a transitional program by strengthening existing work requirements and guaranteeing child care subsidies to welfare recipients while they participate in education and training activities. To accomplish this, FSA created the JOBS program, which was designed to help AFDC families to obtain the education, training, and work experience to become independent from welfare. Under the JOBS program, states may make available to participants a broad range of services and activities. States are required to provide certain components, including high school or equivalent education, basic and remedial education, education for those with limited English proficiency, job skills training, job readiness training, and job development and placement. States must also offer two of the following four optional components: job search, on-the-job training, community work experience, and work supplementation. FSA also required states to guarantee child care for JOBS participants and employed AFDC recipients. Under FSA, states are accorded substantial flexibility in the design and implementation of their JOBS programs. Although about $1 billion in federal funds has been made available for JOBS each year, states must commit their own resources by providing matching funds to acquire the federal dollars allocated to them. Recognizing the state financial role in JOBS, FSA generally allows states to operate their programs to the extent that “State resources . . . permit.” Moreover, although FSA mandates participation in JOBS for AFDC recipients between 16 and 59 years of age, it allows exemptions for certain individuals, such as those caring for children under age 3. FSA also allows states to limit participation by those with child care needs by deferring participation, granting “good cause,” creating waiting lists, reassigning priorities, and taking other measures. Finally, FSA defines minimum participation standards for states to meet. To meet these requirements, states only have to serve a portion of their nonexempt AFDC recipients. As welfare recipients move into the workforce, they often must pay for the child care that enables them to work, and the cost of child care remains an employment barrier to many of them. Recognizing the importance of child care to helping welfare recipients obtain training and employment, leave welfare, and stay employed, the Congress has created four child care programs since 1988: Guaranteed child care for employed recipients of AFDC, JOBS participants (discussed above), and recipients in other approved education activities; Guaranteed child care for 1 year after leaving the welfare rolls for employment (known as Transitional Child Care); Child care subsidies for working poor families who are not currently receiving AFDC but who would be at risk of becoming eligible for AFDC without such subsidies (known as at-risk child care); and Monetary support, provided under the Child Care and Development Block Grant, to working, low-income families with incomes up to 75 percent of a state’s median income. The first three of these programs require states to commit their own resources to obtain the federal dollars allocated to them; the fourth requires no state matching funds. In fiscal year 1994, federal and state governments spent over $2.5 billion on these four programs. Taken together, these subsidy programs have made an important contribution to states’ efforts to move some mothers off welfare to have them begin work, as well as to keep some working poor families off welfare. Most state JOBS programs in our nationwide survey reported providing child care subsidies or help arranging child care to all or almost all participants who needed assistance (see table 1). However, to a great degree, their ability to do so stemmed from two key FSA provisions that serve to limit participation in JOBS by AFDC recipients who might need child care. One provision exempts large numbers of AFDC recipients, many of whom would potentially need child care assistance if they took part in JOBS. These FSA exemptions provide one way of managing the influx of clients who may need child care to participate. The most recent Department of Health and Human Services (HHS) data show, for example, that nationally in 1993 75 percent of the female AFDC recipients exempted from participation in JOBS were exempt because they were caring for children under the age of 3. A state may also limit JOBS participation on a case-by-case basis if child care is not available. Our analysis of HHS data showed that 50 percent of nonparticipants have a child under age 3, while only 20 percent of participants have a child under age 3. To determine what portion of adult AFDC recipients JOBS is serving, we obtained the most recent HHS average monthly data available. These data showed that the seven states we visited were serving 169,891 welfare recipients in their JOBS programs, only 15 percent of their total adult AFDC caseload. Table 2 shows JOBS participants as a percentage of the total AFDC population for each of these states. Nationwide, HHS data showed that 541,995 welfare recipients were participating in JOBS programs, about 13 percent of total adult AFDC recipients in any given month. The number of AFDC recipients who participate in JOBS is also constrained by state funding. Although spending for child care assistance has been growing and states must guarantee child care for participants, FSA allows states to operate the JOBS program as state resources permit. The amount of funding that states provide for child care to match federal funding competes with other state budget requirements, such as providing funds for building highways and prisons. Providing fewer state matching dollars limits the total dollars available for child care services, which in turn, limits the number of JOBS participants who can be given child care subsidies. Five of the seven states we visited reported insufficient funds for child care. Some officials explained that because of the level of matching funds, they must limit those who can participate in their JOBS programs to women with minimal child care needs or those who have made child care arrangements that are free. In Florida, JOBS participants have third priority for child care funds, after children at risk of abuse or neglect and children of parents who have left the welfare rolls for employment or who still receive AFDC because of low earnings. Florida, therefore, simply exempts AFDC recipients with child care needs from participating in JOBS when funding is not available. Texas officials stated they have very meager funds for child care and therefore attempt to enroll participants who can find free child care or who have school-aged children and can participate during school hours. Five of the seven states we visited were able to provide information on the number of JOBS participants’ children currently receiving child care. For fiscal year 1994, these five states reported providing child care to 207,104 children of JOBS participants. These children, however, represent only a small portion of the states’ total number of children on AFDC. For example, during April, May, and June of fiscal year 1994, Michigan provided child care to an average of 13,999 children of JOBS participants each month.During this same quarter, Michigan had an average of 323,823 children under age 13 on its AFDC rolls. (See app. III for additional data on the number of children served and the associated cost.) Although FSA guarantees child care to welfare recipients while they are participating in JOBS, and our survey showed that most JOBS programs are providing some child care assistance to current participants, a number of barriers hinder finding child care for participants. Some of these barriers are common to the general population of individuals searching for appropriate child care, while others are related to how the JOBS program may be structured in a state. These barriers can delay AFDC recipients’ participation in the JOBS program. Nationally, we found in our survey that, irrespective of funding issues, a general lack of child care in the community—as well as a lack of child care that is affordable for participants—contributes to some JOBS programs’ inability to provide child care assistance. Like the general population, JOBS participants seek child care from a variety of sources, such as centers, family child care homes, and relatives, and encounter similar problems in finding appropriate child care. In our visits, we found that some JOBS participants have difficulty finding care for infants, special-needs children, children before and after school, and sick children. In addition, some JOBS participants have difficulty finding child care that is accessible, given a lack of reliable public or private transportation, and available during nonstandard hours of work. (See app. IV for additional information on barriers.) Officials in every state we visited reported a shortage of care for infants, six states reported a shortage of care for special-needs children, and three states reported a shortage of before- and after-school care. In Texas, where a shortage of infant care already exists, officials believe recent quality improvements to state licensing regulations will cause some providers to discontinue their infant programs rather than comply with the new regulations. Michigan officials said the state has a shortage of infant and special needs-related child care in the inner cities and a shortage of all types of child care in rural areas. Moreover, a suburban county child care specialist in Michigan said the current supply of child care providers cannot handle the expected influx of the 3,000 new clients in that county required to participate in the state’s welfare reform program begun in October 1994. The specialist stated the supply shortage may push participants to use care not regulated by the state. In addition, caseworkers told us that an urban school district in Michigan has only one location that offers before- and after-school care. Even when before- and after-school care is available, county officials told us that children may not have transportation between their homes and the care facility during these nonschool hours. Washington State officials noted that some children of JOBS participants have multiple special needs, which increase providers’ reluctance to care for them. Minnesota officials stated they find it hard to locate providers who are qualified to provide care to special-needs children or those who will provide care on days that children are sick. One JOBS participant we spoke with noted that some JOBS training classes have strict attendance requirements and having a provider who will care for a sick child can make the difference between passing and failing such a class. One of the most pressing problems limiting access to child care was transportation difficulties. In our nationwide survey, 77 percent of those JOBS programs unable to provide subsidies or help arranging child care to all participants who needed assistance indicated that participants had problems getting to their child care provider. Officials in the seven states we visited also said transportation was a problem in accessing child care. We were told that many JOBS participants do not have reliable private transportation to get their children to child care providers and then to get themselves to work or school. Moreover, some communities lack the necessary public transportation to get participants where they need to go. A child care specialist in a rural Ohio county noted that participants in rural areas are “all going in different directions” to find work. When participants do not all commute in the same direction, carpooling and drop-offs at child care centers are very difficult to arrange. Officials of all seven states we visited indicated that finding care during nonstandard hours of work, such as on nights and weekends, is a problem for participants. Many participants find jobs in the service industry, working at hotels, restaurants, hospitals, and discount department stores where nonstandard hours are common. In fact, service occupations with a high proportion of shift workers are projected to produce more new jobs than any other sector over the next decade, and the trend of service businesses operating during nonstandard hours is expected to continue, according to a recent Department of Labor report. However, few child care providers operate during nonstandard hours, according to a nationally representative sample of child care centers and regulated family child care homes. When welfare recipients encounter these types of difficulties in finding child care to participate in the JOBS program, caseworkers told us they exempt them or assign them a “not job-ready” status. Their participation in the JOBS program is then delayed until they can—sometimes with the help of caseworkers—make suitable child care arrangements. In addition to the barriers to finding child care faced by the general population, JOBS participants may encounter other difficulties. The JOBS program in their states may not have enough child care program staff to help them locate care. And child care providers in their communities may not offer care that is flexible enough to meet JOBS participants’ part-time program hours. In Washington State, for example, caseworkers said their high caseloads prevent them from taking the time to discuss child care in-depth. Similarly, Nevada does not serve all mandatory JOBS participants because of limited staffing. At one point, Michigan stopped serving the child care needs of JOBS participants in school because the volume of cases was too high for the available staff to handle. Participants have difficulty finding care flexible enough to support their part-time JOBS participation hours and have problems coordinating school hours, study hours, and provider availability hours, officials in four states told us. HHS fiscal year 1993 data show that most JOBS participants are in education/training or work activities for 20 hours or less per week and thus need only part-time child care. Yet state officials told us many child care centers require clients to pay for full-time care regardless of the number of hours the child is present. And in other cases, providers are less willing to accept part-time clients when they can get full-time clients. In an urban Washington State county, for instance, more and more providers are willing to take only full-time clients, caseworkers said. Insufficient child care subsidies for the working poor affects JOBS participants’ and other welfare recipients’ ability to achieve self-sufficiency. We reported in December 1994 that our analysis predicts that child care subsidies will make a substantial difference in the probability of poor and near-poor mothers working. Officials in five of the seven states we visited also said they believe that clients have quit working because they could not afford child care (once subsidies terminated) and that child care plays a major role in clients’ returning to welfare rather than moving toward self-sufficiency. Moreover, a recent study by the Greater Minneapolis Day Care Association found that almost one-quarter of the families waiting for child care subsidies left jobs or job-related training and turned to AFDC for economic survival. A recent report by the National Research Council also noted that a lack of subsidies may create major barriers to families’ work efforts. After welfare recipients enter the workforce, Transitional Child Care (TCC) is guaranteed for a maximum of 12 months after AFDC payments end. If a state does not have other funds to continue the subsidies beyond the 12-month period, the former welfare recipients must bear the full costs of child care even if their earnings have not increased during the 12 months. A few states we visited give TCC clients priority placement on their waiting lists for direct income-based subsidies for the working poor provided by the Child Care and Development Block Grant (block grant), so that when the 12 months of TCC terminate, the children’s subsidy can be replaced smoothly by block grant funding. For example, Ohio officials stated they provide continuous child care services by automatically moving JOBS participants from TCC benefits to subsidies for the working poor. Similarly, Florida gives transitional clients priority for block grant child care funds for the working poor in an effort keep these clients from returning to welfare. In one state, however, officials said they were concerned that favoring former welfare clients over other working poor families that have never been on the welfare rolls sends the wrong message about the need to cycle through the welfare system to obtain child care subsidies. Because block grant child care funds for the working poor are capped and require no state matching dollars, only a limited number of applicants can be served unless the state provides additional funds. Five of the states we visited maintain long waiting lists of eligible working poor families for which they have no child care funding. Florida has 19,000 people on its working poor waiting list; Washington, 3,000; Minnesota, 7,000; Texas, 36,000; and Nevada, 7,000. Texas officials in one regional office said that their waiting list would be much longer if they did not regularly purge names from it. Clients must call every 60 days to renew their position on the list. Michigan and Ohio do not keep waiting lists in part because of the difficulty of locating the families should funding become available. The child care needs of AFDC recipients—whether or not they are participating in a JOBS-like program—and of newly working former welfare recipients are expected to grow, given welfare reform proposals and state initiatives that increase work requirements for more mothers of children receiving AFDC and that limit the length of time families can remain on AFDC. If the Congress or states expand their welfare-to-work requirements and also reduce or eliminate the allowable exemptions from working, more AFDC recipients will have to find child care to work or enroll in school, training, or work programs. Meeting greater demand for child care may be difficult for states across the nation, especially since JOBS-related child care funding and the supply of certain kinds of child care are already limited in some states. Infant care, part-time care, and care during nonstandard work hours will be particularly needed if a large influx of welfare recipients must move quickly from the welfare rolls into the workforce. Finally, locating appropriate child care at a price former welfare recipients may be able to afford will continue to be a problem once they enter the workforce. Although postwelfare subsidies can play a critical role in keeping former recipients from returning to welfare, the subsidies for child care are either time-limited or unavailable to many because of the long waiting lists for receiving assistance. Even if changes are not made to AFDC at the national level, these difficulties could affect the reform initiatives that continue to be implemented in the states. As states move to expand work requirements, they may have to reconsider funding priorities and push to develop new sources of child care to meet the needs of welfare recipients and the working poor alike. In commenting on a draft of this report, HHS stated that our survey results showing that 73 percent of state JOBS programs are providing all or almost all participants with child care assistance should be viewed in the context of the programs’ ability to limit how many participants with child care needs they will accept. HHS also commented that because participant pools are partly determined on the basis of child care availability, it may not be appropriate to look at the experience of JOBS programs to draw conclusions about the child care needs of recipients who are not JOBS participants. We agree with HHS that the child care needs of current JOBS participants may not be representative of welfare recipients not participating. Our work shows that the success of JOBS programs in providing child care assistance to current participants stems from the states’ ability to limit participation to a small portion of welfare recipients and their ability to determine the amount of funding they will provide for child care. HHS raised other points that they believed should be clarified (see app. V) and provided technical comments that we addressed in the report as appropriate. We are sending copies of this report interested Members of Congress and to the Secretary of Health and Human Services. Copies will be available to others on request. If you have any questions concerning this report or need additional information, please call me on (202) 512-7215. Other GAO contacts and contributors to this report are listed in appendix VI. To assist the Congress in its deliberations on welfare reform and child care, we examined (1) the extent to which child care needs of welfare recipients in JOBS are are currently being met, (2) whether any barriers exist to meeting the child care needs of JOBS participants, (3) the effect of child care subsidies on former welfare recipients’ move toward self-sufficiency, and (4) the potential implications of welfare reform for child care availability and continuity. To find out how the ages of JOBS participants’ children differ from nonparticipants’ children, we analyzed HHS’ 1993 National Integrated Quality Control system data. These data include participants in the JOBS program as well as participants in the Food Stamp Employment and Training Program. We based our analysis on 1993 data because they were the most current available when we did our analysis. We limited our analysis to female parents or stepparents who receive AFDC. In 1993, these cases accounted for about 80 percent of all AFDC cases. To determine the extent to which JOBS programs were able to provide child care assistance to current participants, we asked a number of child care-related questions as part of a nationally representative computer-assisted telephone survey of over 400 local JOBS program officials conducted between June and August 1994. We reported complete survey results on the characteristics of JOBS participants in May 1995. Because most JOBS services are provided at the county level, we selected a random sample of counties for our survey. We derived a nationwide listing of counties from 1990 Census data and selected an overall sample of about 450 counties. Before selecting this sample, we stratified the counties into the following four groups: Large urban—Counties comprising the 10 cities with the largest populations of children in welfare households. Metropolitan with central city—Counties containing the central city for a metropolitan statistical area. Metropolitan—no central city—Counties in metropolitan statistical areas that do not contain a central city. Nonmetropolitan (rural)—Counties that are not part of a metropolitan statistical area. We selected all the counties from the large urban category and random samples of counties from each of the other three groups. Table I.1 shows the total number of counties and the number sampled in each stratum. After selecting the sample, we used the Public Welfare Directory to determine the name, address, and telephone number of the JOBS program administrators responsible for programs in sampled counties. While preparing and conducting our interviews, we found that 36 rural counties and 1 nonrural county in our sample did not offer JOBS programs.Therefore, we adjusted our initial sample to exclude these counties. We obtained responses from nearly all of the program administrators for the counties in our adjusted sample (411 of 416). We used these responses to produce national estimates for the JOBS program. Response rate (percent) Because the estimates from this survey are based on a sample, each is subject to sampling error. Table II.11 in appendix II shows the maximum sampling error for estimates presented in each question. We computed the sampling errors at the 95-percent confidence level. Therefore, the chances are 95 out of 100 that the actual percentage being estimated falls within the range defined by the estimate, plus or minus the sampling error. To obtain detailed information on (1) how the JOBS child care program was implemented, (2) whether any barriers exist to meeting the child care needs of JOBS participants, (3) the effects of child care subsidies on former welfare recipients’ move toward self-sufficiency, and (4) the potential impact that welfare reform proposals might have on child care availability and continuity, we visited 12 counties in 7 states. We selected these counties using the following criteria: Response to key survey question—Within the seven states, we chose some counties that answered “all or almost all,” some counties that answered “about half,” and some that answered “few or none” to the question, “Of all your JOBS participants who needed child care assistance in May 1994, what proportion were receiving it?” We defined assistance as providing child care funding or help with arranging child care. In this way we were able to ensure that the counties visited would encompass a wide range of abilities to provide child care assistance to JOBS participants. County type—We chose some urban, some suburban, and some rural locations. Geographic distribution of states—We chose counties in states from several areas of the United States. During our visits, we interviewed officials responsible for the states’ child care programs, child care licensing, JOBS program, and financial reporting. At the county level, we also interviewed officials responsible for implementing child care programs, child care licensing, and the JOBS program. In addition, we interviewed representatives of child care resource and referral agencies as well as JOBS participants. Tables II.1 through II.10 show our results from the child care-related data collected from our nationwide survey of over 400 county JOBS programs (see GAO/HEHS-95-93 for results of the full survey). These tables provide data on how child care services have been implemented and the extent child care is utilized under the JOBS program. The numbers in each table represent the GAO estimate of the percentage of all jurisdictions operating JOBS programs nationwide that would have given the designated response for that question. Table II.1 provides a snapshot of child care use during the month of May 1994. That is, for the question involved the survey focused only on child care services provided to current JOBS participants during the month of May 1994. Child care use can vary throughout the year. For example, care for school-aged children may increase during the summer months when school is not in session. Finally, table II.11 shows the maximum sampling errors at the 95-percent confidence level for the results shown in tables II.1 through II.10. Of all your JOBS participants who needed child care assistance, what proportion were receiving it? No participants needed child care For those JOBS participants not receiving child care assistance, was it because . . . Are clients with LESS NEED for child care served before others with more child care needs? Of all your JOBS participants that are currently assisted with child care, about how many . . . Receive financial help to pay for it? Do you assist with making child care arrangements? Does your program ever use a JOBS or non-JOBS caseworker as a child care specialist in arranging child care for participants? Is this specialist a JOBS caseworker or from another program? Numbers may not add to 100 because of rounding. Does your program . . . Have special sessions focusing only on child care needs or other child care information for either individual JOBS participants or groups of participants? Refer JOBS participants to a resource and referral agency? Serve as the designated resource and referral agency for the county or local area? Pay for JOBS participants to use legally exempt child care, other than relatives? What proportion of JOBS participants enter with child care arrangements already made? Child care available includes . . . State and local centers . . . Type of child care used by your JOBS participants . . . Amount (millions) Amount (millions) Amount (millions) Amount (millions) Data are for the CCDBG and at-risk categories combined. Minnesota provided data by state fiscal year, which runs from July 1993 through June 1994. The number of children served in each category represents the minimum number served in fiscal year 1994. In addition to those named above, the following individuals made important contributions to this report: James Wright provided design support; Shellee Soliday, Alexandra Martin-Arseneau, and Janet Mascia conducted interviews and provided support in data analysis and in writing the report; Nancy Crothers assisted in report design; Robert DeRoy conducted the computer programming and provided statistical advice on the survey analysis. Welfare to Work: Participants’ Characteristics and Services Provided in JOBS (GAO/HEHS-95-93, May 2, 1995). Welfare to Work: Measuring Outcomes for JOBS Participation (GAO/HEHS-95-86, Apr. 17, 1995). Child Care: Recipients Face Service Gaps and Supply Shortages (GAO/T-HEHS-95-96, Mar. 1, 1995). Child Care: Narrow Subsidy Programs Create Problems for Mothers Trying to Work (GAO/T-HEHS-95-69, Jan. 31, 1995). Low-Income Families: Comparison of Incomes of AFDC and Working Poor Families (GAO/T-HEHS-95-63, Jan. 25, 1995). Welfare to Work: AFDC Training Program Spends Billions, but Not Well Focused on Employment (GAO/T-HEHS-95-51, Jan. 10, 1995). Child Care: Child Care Subsidies Increase Likelihood That Low-Income Mothers Will Work (GAO/HEHS-95-20, Dec. 30, 1994). Welfare to Work: Current AFDC Program Not Sufficiently Focused on Employment (GAO/HEHS-95-28, Dec. 19, 1994). Family Child Care: Innovative Programs Promote Quality (GAO/T-HEHS-95-43, Dec. 9, 1994). Child Care: Promoting Quality in Family Child Care (GAO/HEHS-95-36, Dec. 7, 1994). Child Care: Working Poor and Welfare Recipients Face Service Gaps (GAO/HEHS-94-87, May 13, 1994). Child Care Quality: States’ Difficulties Enforcing Standards Confront Welfare Reform Plans (GAO/T-HEHS-94-99, Feb. 11, 1994). Self-Sufficiency: Opportunities and Disincentives on the Road to Economic Independence (GAO/HRD-93-23, Aug. 6, 1993). Mother-Only Families: Low Earnings Will Keep Many Children in Poverty (GAO/HRD-91-62, Apr. 2, 1991). 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Summary: GAO examined the extent to which the child care needs of welfare recipients in the Job Opportunities and Basic Skills Training (JOBS) program are currently being met, focusing on: (1) whether any barriers exist to meeting JOBS participants' child care needs; (2) the effects of child care subsidies on former welfare recipients' move toward self- sufficiency; and (3) the potential implications of welfare reform for child care availability and continuity. GAO found that: (1) JOBS serves only about 13 percent of adult welfare recipients partly because many JOBS programs meet statutory exemption provisions; (2) insufficient state funds limit the number of welfare recipients with child care needs that can participate in JOBS; (3) when child care funding is unavailable, states either exempt welfare recipients or limit participation to those with school-aged children or those who can find free child care; (4) shortages of certain kinds of child care and the lack of reliable transportation can delay some JOBS participants' training or work and affect their continued participation; (5) welfare recipients that have secured work often lose their child care subsidy due to insufficient state funds, affecting their ability to become self-sufficient and often causing them to quit work; and (6) as states move to expand work requirements, they may have to reconsider funding priorities and develop new sources of child care to meet the needs of welfare recipients and the working poor.