JOB OPPORTUNITIES TASK FORCE

Advocating better skills, jobs, and incomes

  

Provide Childcare Subsidies

 for Low-Income Working Parents in Maryland

 

 

The Problem:  Without state childcare subsidies, many low-income working parents are faced with attempting to pay for market rate childcare.  Market rate childcare is simply unaffordable for low-income working parents.   As a result, parents are faced with placing their children in substandard care or not taking a job.

 

Policy solution:  Restore $25 million in funding to the state’s childcare subsidy program, Purchase of Care (POC), in order to eliminate waiting lists for the program.

 

Background:

 

The Need for Childcare Subsidies

 

All children in Maryland deserve access to quality child care services, regardless of income.  Seventy-five percent of children in Maryland under 12 have mothers in the workforce.  Child care is a critical need for families, especially those that have left welfare for employment.

 

            While relatives often provide care at no or low cost, many working families pay market rate for childcare.  However, paying the market rate for childcare is simply unaffordable for most low-income families.  In Baltimore City in 1999, the average cost of childcare in a childcare center was $4,359, higher than the annual cost that year of in-state college tuition.

 

            Quality early education experiences ensure that children enter school ready to learn.  Three nationally recognized studies indicate that investing early in a child’s education pays tremendous dividends.  Research shows the state can expect a return of $7 on every $1 invested in early childhood education.

 

The Purchase of Care Program

 

Maryland provides child care subsidies to low-income families through the Department of Human Resources/Child Care Administration Purchase of Care (POC) program.  When fully funded, the POC program ensures that low-income families are able to access licensed, quality childcare.

 

 

Families can use POC vouchers in licensed child care centers, registered family child care homes, and certain unregulated informal child care settings, including care provided by a relative, care provided in the child’s home, or care provided for less than 20 hours a month.  The local DSS office gives an eligible family a voucher for each child needing care.  The family purchases child care directly from the provider, paying any

difference between the cost and the amount that the voucher pays.   In order to receive a subsidy for child care through the POC program, families must meet income requirements.

 

Services are provided to families in the following order of priority: 1) families who have applied for, or who are receiving, public assistance; 2) families who are attempting, through work activities, to transition off of public assistance; and 3) families who are working, attending public school, or in training and who are at risk of becoming dependent on public assistance, who also have an income within established Purchase of Care income guidelines.  Within each category, first priority is given to the families of children with disabilities.

 

The Impact of Cuts to the Purchase of Care Program

 

The FY 2004 POC budget was approved at $109,173,616.  This represented a $25 million reduction from FY 2003.  POC and other child care programs suffered disproportionate cuts in the 2003 Session.  The FY 2005 allowance for the POC program is $111.8 million.

 

The Department of Human Resources, in an effort to contain costs, instituted a waiting list for POC vouchers in January 2003.  As of December 2003, there are over 11,000 children on the waiting list for Purchase of Care Vouchers.  Currently, the POC program is primarily serving families who have applied for or who are receiving public assistance.   Prior to funding cuts, there was no waiting list for POC vouchers.  The department also proposes to save $11.2 million in FY2005 by increasing co-payments paid by POC clients.

 

Policy Solution:

 

            Waiting lists for the POC program should be eliminated.  Restoring the $25 million cut from the POC program in the FY2004 budget will allow eligible families who apply for the program to receive POC vouchers.