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Cost, Affordability & Subsidy

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Quality child care is as costly as it is critical to the development and well-being of children.  Annual child care expenses for a family with two children can revival the cost of college tuition.  Despite research that documents the importance and benefits of quality child care – and the fact that many families require child care in order for parents to work – there is only limited financial support for such care.  Most parents must bear the cost of child care on their own.  That circumstance distinguishes early care from kindergarten through high school education for which there is universal public financing.   If individual children and the broader society are to reap the benefits of early childhood education, solutions must be found that make quality child care broadly affordable.

There are instances in which financial assistance is provided to poor and working families in need of child care.  Every state has a Child Care Assistance Program.  The primary purpose of those programs is to enable families to gain employment and remain employed.  Financial assistance is provided to families who meet income eligibility guidelines and with a parent who is working, in school or job training, caring for a child with special needs, etc.  Federal government funds flow to the states to support child care assistance programs and ensure that certain standards are met.  Child Care Assistance Programs can offer the added benefit of making higher quality care available to poor families who could not afford that care on their own.

Unfortunately the State of Missouri has one of the weakest Child Care Assistance Programs in the country.  Missouri’s eligibility requirements for Child Care Assistance are among the most stringent of all the states (you have to be poorer than families in all but four other state to qualify for assistance in Missouri) and the state’s assistance payments are the lowest.  In Missouri child care providers are reimbursed for providing services at only about half the market rate.  The federal standard for reimbursement of providers is at 75 percent of the market rate.  Missouri has not increased its child care reimbursement rate since 1999.  See the brochure on Missouri’s Child Care Assistance Program for more information.

Another issue with the Child Care Assistance program in Missouri has been what is called the “cliff effect.”  Assistance is provided on a sliding-fee basis up to a certain threshold and then, when family income reaches that set point which is only slightly above poverty level, all child care assistance benefits are lost.  This has put working parents in the position of having to forego modest salary increases to avoid losing child care assistance, which would leave them with less disposable income, even though they are working and progressing in their jobs.  Legislation passed in the 2010 Missouri legislative session that reduces this “cliff effect.”  In a 2007 publication, The Kansas City Partnership for Children offers an excellent analysis of the dynamics and impacts of the Missouri Child Care Assistance Program.

For many years child advocates in Missouri have broadly supported making the income eligibility for child care assistance less stringent and increasing the state’s reimbursement rates for child care providers.  The state has, however, remained one of the worst – often the worst – for the stringency of its eligibility requirements and its low reimbursement rates.  See the issue brief from the National Women’s Law Center, State Child Care Asistance Policies 2010: New Federal Funds Help States Weather the Storm, for comparative state data related to child care assistance programs.

The quality of child care is an issue closely related to cost.  It costs more to provide high quality programs and quality becomes hard to achieve –especially for poor families – if states do not invest in program quality improvement and reimburse providers at a reasonable rate.  Issues related to child care quality are discussed at another tab in this section of the Children’s Policy Forum web site.

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The Literature

    • Early Childhood Education in Missouri (pdf, 281.88 KB)
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      Full Title: Early Childhood Education in Missouri: How Well Are We Doing in Providing Licensed Early Childhood Programs and Subsidy to Those Who Need It?  Date: February 2006.  Pages: 6.  Publisher: Missouri Youth Initiative; Center for Family Policy and Research, University of Missouri-Columbia.  Keywords: county level data/statistics, quality, availability, subsidy, licensing, need/demand for child care, child care slots, poverty, low-income.

    • Making Quality Child Care Affordable for Illinois' Working Families (pdf, 573.12 KB)
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      Date: 2008.  Pages: 20.  Publisher: Illinois Department of Human Services (IL DHS).  Keywords: quality, affordability, cost, barriers, Illinois Child Care Assistance Program (CCAP), low-income, co-payment/copayment scale, sliding-fee scale, Federal Poverty Level, eligibility, subsidy, reimbursement rates, the cliff effect.

    • Missouri Early Childhood Profile (pdf, 466.45 KB)
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      Date: 2010.  Pages: 5.  Publisher: National Center for Children in Poverty (NCCP).  Keywords: early care and education policy, state data/statistics, demographics, access, Medicaid, SCHIP, public health insurance, EPSDT, income eligibility limit, child care subsidy, reimbursement rate, centers, Head Start, preschool/pre-school, pre-k/pre-kindergarten, parenting and economic supports, family economic security.

    • Missouri's Child Care Subsidy Program (pdf, 287.36 KB)
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      Full Title: Missouri's Child Care Subsidy Program: Benefits for Families, Business & Tax-Payers.  Date: January 2007.  Pages: 7.  Publisher: Partnership for Children.  Keywords: economic investment/impact, return on investment (ROI), income eligibility limits, child care assistance, provider reimbursement rates, quality rating system (QRS), data/statistics, Kansas City.

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