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LEGISLATIVE UPDATE REGARDING SUBSIDY ISSUES
Funding
• The House Budget proposes to cut $3.9 million in state funds from the Subsidized Child Care Program. The reduction in state funds would be replaced with federal TANF funds; however, the TANF funds can only be used to serve employed families while the state funds can be used to serve eligible families from any of the five need categories. State funds are especially important in terms of being able to serve children who need child care to support child protective services, children with developmental needs and families in crisis since the federal funding sources do not cover these types of care.
• Neither the House nor Senate Budgets include the $15 million in non-recurring state funds that were approved by the General Assembly last year.
Eligibility
The current eligibility policy for the Subsidized Child Care Program allows families to receive subsidy services that earn up to 75% of state median income. The House Budget proposes to reduce the income guidelines to 200% of Federal Poverty Level. This change would impact families in the following ways:
• Approximately 9% of the children we serve are at or above 200% of the FPL.
• These families pay an average parent co-payment of $184 per family or $126 per child.
• These families account for about 7% of the current child care expenditures.
• It is estimated that 8,800 children would lose services.
• The funds spent to serve the 8,800 children whose families would lose services would only allow about 6,980 new children to be served at the lower income guidelines due to the lower parent fee that these parents pay based on their income. This means that 1,820 fewer children would be served with the same funding.
• Parents who lose care would be dramatically impacted by having to pay the full rate charged for their child’s care versus a portion of it.
Subsidy Allocation Formula
An Allocation Advisory Committee was convened by the Division during the past year as required by legislation to study the formula used to allocate state and federal subsidy funds to county departments of social services. The Advisory Committee recommended a new formula that would determine the amount of funds needed to serve eligible children in each county. The proposed allocation formula is as follows:
• Funds shall be allocated based upon the projected cost of serving children in a county under age 11 in families with all parents working who earn less than seventy-five percent (75%) of state median income.
• No county’s allocation shall be less than ninety-percent (90%) of their State Fiscal Year 2001-2002 initial child care subsidy allocation.
The above formula was included as proposed in the Senate Budget. The House Budget included the proposed formula; however, the income criteria was changed from 75% of state median income to 200% of Federal Poverty Level which means that counties would receive a reduced allocation.
