Welfare Reform:

States' Efforts to Expand Child Care Programs

HEHS-98-27: Published: Jan 13, 1998. Publicly Released: Feb 12, 1998.

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Pursuant to a congressional request, GAO reviewed states' implementation of child care subsidy programs, focusing on: (1) how much federal and state funding is being spent on child care subsidy programs and how they are allocating these resources among welfare families, families making the transition from welfare to work, and working poor families; (2) how states are trying to increase the supply of child care to meet the projected demand under welfare reform; and (3) the extent to which states are changing standards for child care providers in response to welfare reform.

GAO noted that: (1) the seven states it reviewed have used federal and state funding to increase overall expenditures on their fiscal year (FY) 1997 child care subsidy programs, with increases ranging from about 2 percent to 62 percent over FY 1996 expenditures; (2) six of the seven states also reported an increase in the number of children served under these programs, although detailed data on the extent of this expansion are not available; (3) all seven states expected to meet the FY 1997 child care needs of families required to work under welfare reform and those of families transitioning off welfare; (4) states vary, however, in the extent to which they will provide subsidies to nonwelfare, working poor families, and all seven states are unable to fund child care for all families meeting the federal eligibility criteria who might benefit from such assistance; (5) to allocate their limited resources, states are controlling access to their child care programs through various state-defined criteria or by the manner in which they distribute subsidies to families; (6) the seven states' ability to meet child care needs beyond FY 1997 is unknown and will depend partially on future state funding levels for child care as well as changes in demand for child care subsidies resulting from welfare reform's work participation requirements; (7) to meet the future demand for child care among welfare families required to work and to address existing difficulties with finding certain types of child care, states have initiated various efforts to expand the supply of providers; (8) the seven states report that the supply of child care providers will generally be sufficient to meet the needs of welfare parents required to work; (9) however, in the future, additional providers may be needed as states comply with increasing numbers of welfare families become employed; (10) the seven states do not know whether their efforts to expand the supply of providers will be sufficient to meet the increased demand expected to result from welfare reform; (11) as state child care subsidy programs expand, some states are making incremental changes to strengthen their standards for child care providers; (12) some child care advocates and officials remain concerned that efforts to expand the supply of providers will result in larger numbers of children in care of unknown quality; and (13) the effect of welfare reform on states' efforts to protect children in child care still needs to be assessed.

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