Child Care:

Current System Could Undermine Goals of Welfare Reform

T-HEHS-94-238: Published: Sep 20, 1994. Publicly Released: Sep 20, 1994.

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GAO discussed child care subsidies for low-income families, focusing on: (1) the effect of child care subsidy rates on the employment of low-income women; and (2) how well current child care subsidy programs are working for low-income families. GAO noted that: (1) child care subsidies can dramatically affect whether low-income women work; (2) despite significant funding from subsidy programs, only a small fraction of the eligible population are receiving child care subsidies; (3) the fragmented nature of the child care subsidy system produces unintended gaps in services and limits the ability of low-income families to achieve self-sufficiency; (4) as states deplete funds for welfare services, they use funds originally intended for the child care needs of the working poor to meet their entitlement obligations, putting the working poor at greater risk of welfare dependency; and (5) welfare reform's goal of economic independence for the poor could be undermined if the problems in the child care subsidy system are not adequately addressed.

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