Child Care:

Employer Assistance for Private Sector and Federal Employees

GGD-86-38: Published: Feb 11, 1986. Publicly Released: Feb 21, 1986.

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In response to congressional requests, GAO examined the on-site, consortium, vendor, and voucher care options under which the government might provide federal employees with dependent care assistance. GAO: (1) summarized costs and benefits reported by private sector employers; (2) compared and contrasted the advantages and disadvantages of the four options; (3) described the federal government's current involvement; and (4) estimated the cost of such assistance for federal employees under various assumptions, including the level of subsidy, annual per-child costs, and number of children sponsored.

GAO found that consultants to private companies stress that: (1) no option is superior in all situations; and (2) in choosing among the various available options, many issues must be considered, including a particular employer's location, business characteristics, labor force composition and needs, and workplace goals. For employer-sponsored day care centers, the literature on annual operating costs showed a range of $1,579 to $4,901 per child. Surveys of employers revealed that most employers with child care assistance programs believe that they are beneficial for: recruitment; improved morale; reduced tardiness; reduced absenteeism and turnover; community image; tax avoidance; and work force productivity. GAO found that start-up costs ranged from $7,373 to open one center for 126 children to $478,100 to open another facility for 100 children. GAO estimated the average value of agency operating support at $1,300 a year per child. The most important obstacle to child care initiatives is the lack of available funding to meet the high estimated costs. Because a voucher or vendor program would reach larger numbers of employees and their children, its total costs would be higher. The lowest estimate, based on a 10-percent subsidy level, a $2,500 annual per-child cost, and restrictive eligibility criteria that would exclude 525,000 of the estimated 700,000 preschool children, would amount to $43.8 million in overall costs to the government each year.

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