Impact of Welfare Reform on Child Care Subsidies in Milwaukee County: 1996-1999 (Part Two)

University of Wisconsin- Milwaukee Employment and Training Institute, 1999

Expansion of Day Care Support in 1998 and 1999

Over the last three years Milwaukee County has substantially increased the number of children receiving day care support. The number of children receiving day care help more than doubled, from 4,371 in January 1997 to 11,496 in January 1999. The number of families receiving day care support doubled over the last three years: from 3,011 in January 1996, to 3,776 in January 1997, 5,224 in January 1998, and 6,876 in January 1999. These totals include payments made to "W-2" and low-income employed families and exclude payments for children in foster care and kinship care.

In 1998, 11,768 low-income families received $59,286,647 in day care support. Yearly child care payments averaged $5,038 per family, and ranged from $2 to $52,526. Monthly payments for day care for low-income families increased from $1.5 million in January 1996 to $5.2 million in January 1999. Average monthly payments to families rose as well from $510 in January 1996 to $759 in January 1999.

Table 1:
Day Care Support for Low-Income Families in Milwaukee County: Annual Payments
1996 1997 1998
Total Families Served7,9149,41611,768
Total Child Care Payments$26,706,666$37,021,628 $59,288,885
Average Payment Per Family$3,396$3,932$5,038

Table 2:
Day Care Support for Low-Income Families in Milwaukee County: Monthly Payments
January 1996 January 1997 January 1998 January 1999
Families Served3,0113,7765,224 6,876
Child Care Payments$1.5 million$2.1 million $3.5 million$5.2 million
Average Payment
Per Family
$510$549$670 $759

Family Use of Subsidized Child Care by Welfare Status

During 1998 11,768 families used child care subsidies for eligible low-income and "W-2" populations (not including children in kinship care or foster care). Almost all of the families served (93 percent) were in the welfare system, while only 7 percent did not appear to have been on public assistance.

Nearly two-thirds (63 percent) of families were in "W-2" in 1998. These 7,397 "W-2" families accounted for $39 million of the 1998 child care payments and made up an increasing share of families who were new users of subsidized child care in 1998. The next largest group consisted of former AFDC recipients not receiving "W-2" payments who made up 23 percent of families receiving the child care subsidies. Most of these former AFDC families (95 percent) remained on food stamps or medical assistance. Families on food stamps or medical assistance but not on "W-2" or AFDC made up 13 percent of the population receiving day care payments.

Biweekly
Childcare Expenditures by Type of Public Assistance

Table 3:
1998 Day Care Payments by Family Welfare Status
1998 Payments W-2 Cases AFDC, not in W-2 Only Food Stamps or Medical Asst. No Recent Welfare History TOTAL % of Total
$25,000 or more497 23610.5%
$15,000-24,99933486 30104603.9%
$10,000-14,999763 24010744 1,1549.8%
$5,000-9,9991,773525 2661232,68722.8%
$2,500-4,9991,876528 4012123,01725.6%
$1-2,4992,602702 6474384,38937.4%
TOTAL7,397 2,0881,453 83011,768100.0%

Families Receiving Day Care Subsidies

Costs Increase with Size of Family and Younger Children

Average payment costs per family for child care have increased substantially as families with young children (needing more expensive child care) are required to work in "W-2" subsidized positions. The larger number of children per family and the increasing number of hours of care per week per child have also raised costs for care per family. Costs per family increased when licensed providers were guaranteed full payment for full-time care (25 hours or more per week) based on enrollments rather than attendance. Average monthly family day care subsidies increased from $510 in January 1996 to $759 in January 1999.

Table 4:
1998 Payments to Milwaukee County Families
1998 Payments Families Percent
$1 - 999 1,854 15.7%
$1,000 - 1,999 1,835 15.6
$2,000 - 2,999 1,409 12.0
$3,000 - 3,999 1,250 10.6
$4,000 - 4,999 1,073 9.1
$5,000 - 9,999 2,680 22.8
$10,000 - 14,999 1,153 9.8
$15,000 - 19,999 348 3.0
$20,000 - 24,999 107 0.9
$25,000 - 29,999 39 0.3
$30,000 and above 20 0.2
TOTAL 11,768 100.0%

These increases are primarily a result of the costs of supporting day care for "W-2" cases and policies which guarantee full payment to day care centers based on enrollments rather than attendance. Payments for families with over $10,000 in child care subsidies (14.5 percent of cases subsidized in 1998) totaled $24 million in 1998 and accounted for 40 percent of all subsidies paid. Most of these high cost families are in "W-2" or were formerly on AFDC. Evidence of high turnover can also be seen in the large numbers of families with less than $2,500 in annual payments.

The average day care subsidy was $759 per family for the month of January 1999. This amount is equal to the total earnings of a minimum wage ($5.15 an hour) worker employed thirty-six hours a week. In many cases the average payments for child care for families in the "W-2" program exceeded the "W-2" cash payment made to the family. In January 1999, 1,414 families received "W-2" income support payments and day care support for their children. These families received "W-2" payments averaging $528 while their child care subsidies averaged $818.

Families remaining in subsidized "W-2" community service or transition programs show high day care costs particularly for larger families. By the end of January 1999 almost 700 mostly "W-2" families received day care subsidies which at an annual rate would exceed $20,000. For over half (56 percent) of the "W-2" families receiving day care support, their day care providers received a subsidy payment which was higher than the family's combined earnings and "W-2" payment. Another 2,453 employed families received food stamp benefits but no "W-2" payments in January 1999. About a third (31 percent) of these families showed lower total wages than the subsidy payments made to their day care provider.

Analysis of families using day care subsidies in the last two weeks of January 1999 showed almost a fourth (23 percent) of payments for children under age two. Over half (56 percent) of children under age two were in care for 50 or more hours a week and three-fourths (79 percent) were in care for 40 hours or more a week. The average weekly subsidy payment for these young children was $136. Most schoolage children were in day care less than 25 hours a week and their care payments averaged $85.

Table 5:
Children Receiving Day Care Subsidies: January 1999
Average Weekly:
Age of Child Number % Hours Payment
Under 12 mo. 1,253 10.1% 43 $137
1 year old 1,544 12.5 43 $135
2 year old 1,650 13.3 44 $114
3 year old 1,544 12.5 43 $114
4 year old 1,490 12.0 39 $110
5 year old 1,155 9.3 30 $ 99
6 year old 996 8.1 25 $ 90
7 year old 848 6.9 24 $84
8 year old 684 5.5 24 $ 86
9 year old 524 4.2 25 $86
10 year old 364 2.9 25 $ 83
11 year old 192 1.6 25 $ 76
12 year old 118 1.0 26 $ 75
TOTAL 12,369 100.0% 36 $109

CONTINUE

Return to Back to Part One | To Part Three | Employment & Training Institutte Home Page