Child Care-Jobs Equation:Milwaukee County AFDC/W-2

Brief Summary

Removing Barriers to Employment: The Child Care-Jobs Equation

by John Pawasarat and Lois M. Quinn, University of Wisconsin-Milwaukee Employment and Training Institute, May 1998

One of the critical concerns facing parents seeking employment is provision of adequate care for their children while they are at work. Employment and Training Institute surveys of central city Milwaukee female job seekers identified lack of child care as a primary barrier to employment, and a recent assessment of AFDC mothers with very young children found that most needed help finding and financing child care. It was expected that the influx of state and federal funds for child care support could increase the numbers of children receiving consistent, quality child care and that a number of central city residents might find family-supporting jobs offering child care to other families.

This study examined the utilization of child care subsidies by low-income parents in Milwaukee County over a 21-month period from January 1996 through September 1997, analyzed payments to 2,826 providers of care and 31,863 child care placements, and reviewed AFDC, food stamp and medical assistance records in December 1995, September 1996 and June 1997 in order to assess use and type of child care subsidized in the county. It also explored the experience of adults offering provisional, certified and licensed child care to gauge income received for this work.

Previous employment and training initiatives for the AFDC population have excluded mothers with young children because of the high cost of child care and low success rates of the population in finding employment. Most programs focused instead on those parents most likely to succeed in the labor force, that is, parents who had fewer children and older children, and were better educated. The use of child care in Milwaukee County in 1996 and 1997 reflected these concerns -- showing high costs for care for young children and large families and more consistent child care rates for single parents with more years of schooling, fewer children and older children.

The cost of providing subsidized child care has increased as AFDC families with younger children and more children were required to meet work requirements during 1996 and 1997. In January 1996, 2,515 families received subsidies totalling $1.3 million and averaging $513 per family. By July 1997, 3,832 families received subsidies totalling $2.9 million, at an average cost of $763 per family. In some cases the cost of providing child care to large families headed by a single parent may exceed the earnings of the mother. In 1996, 443 families received over $10,000 in subsidized child care from Milwaukee County and 18 of these families received subsidized care which exceeded $20,000 in annual costs. During the first nine months of 1997, costs were ever higher with 438 families exceeding $10,000 in care payments and 15 families exceeding $20,000 in payments for their children's care.
High turnover and high volume patterns of child care appeared to mirror the employment experience of many new entrants to the labor force, flooding the Milwaukee County payment and regulatory system with thousands of short-term child care placements. Previous analysis of employment patterns for AFDC recipients showed that 75% of new hires in second quarter of 1996 failed. Similar patterns can be seen in the consistency of care for children in day care settings where 69% of new care placements subsidized by Milwaukee County in the first half of 1996 failed to last into 1997.
Those few families able to maintain consistent care for their children had the characteristics of those most likely to remain off AFDC and hold sustained employment. Placements of children in low-income non-AFDC child care settings were tracked for sixteen weeks in February 1996 and February 1997. The parents of children who had consistent care for sixteen weeks were better educated (85% had 12 or more years of schooling) and most (68 percent) had a driver's license; 75% of the children in consistent care were aged four or older.

Barriers to Utilization

The study found substantial underutilization of child care support compared to the numbers of employed families eligible and projected to need assistance. State policies created under Wisconsin's new welfare initiatives may have contributed to much of the underutilization of child care support by employed parents in Milwaukee County.

State policies emphasized moving families off of AFDC and into work placements rather than providing services for non-AFDC low-income employed parents. As a result, by June 1997, 87% of families receiving low-income child care subsidies were current or former welfare recipients in 1996 or 1997.
For low-income families not on welfare, one administrative entity has been replaced with three levels of bureaucracy, with conflicting responsibilities, to supervise the provision of child care payments. Low-income families not on welfare and seeking child care subsidies must now become part of the W-2 welfare system. The five W-2 vendors register all families requesting child care support, the County's economic support unit verifies financial eligibility of families, and the County's day care unit approves and issues payments.
High turnover and the large volume of children and providers in non-licensed settings have flooded the county regulatory system with responsibility for 5,253 children placed at various times with 1,001 different certified providers and 3,393 children placed with 1,449 provisional providers during the study period. (The State of Wisconsin licenses day care centers and family providers, while Milwaukee County certifies non-licensed providers.) Many of these cases were previously in child care arranged informally with family and friends under the AFDC/food stamp indirect subsidies.
As partial reimbursements through indirect subsidies to parents for informal child care arrangements through AFDC grant calculations were ended, they were only partially replaced with the county direct subsidies program. Direct child care subsidies require more expensive regulated care, regulatory oversight and county payments to relative providers.
Child care copayment schedules are tied to family income rather than cost of care. These schedules tend to subsidize high cost, high volume child care use where the copayment can be ignored and penalize low-cost use for parents employed part-time or with school-age children.
Previous analysis of families leaving AFDC has shown that one-third are employed in part-time or temporary jobs. Single parents with part- time, evening and variable work hours may have difficulty arranging consistent child care, particularly care that meets present regulatory requirements and registration procedures.
The low rate of job retention and the concentration of AFDC parents in high turnover jobs in temp agencies, retail and service sectors increase the financial risk for the child care provider, particularly given potential difficulties in receiving timely authorization for care provided.

Child Care Subsidy Use Vs. Potential Demand

While the Milwaukee County AFDC caseload declined as expected in 1996 and 1997, receipt of Wisconsin child care subsidies for low-income families did not rise at a comparable rate. For those cases on AFDC, food stamps or medical assistance in December 1995 or eligible as a low- income family, use of child care subsidies was much less than predicted.

MILWAUKEE COUNTY FAMILIES EXPECTED TO USE CHILD CARE SUBSIDIES ACTUAL USAGE

25,125 single parent families on AFDC in December 1995 1 out of 15

5,629 single parent families receiving food stamps or medical assistance only in December 1995 1 out of 9

22,000 Milwaukee County low-income "working poor" families not on public assistance 1 out of 30

Most of the growth in subsidized child care was due to a gradual increase in the use of day care by low-income families from former AFDC and food stamp populations. Of 25,125 single parent families on AFDC in December 1995, only 545 families received low- income (non-AFDC) child care subsidies in January 1996 and 1,624 received subsidies in September 1997. The increases in low-income child care for former AFDC families were attributable to increasing numbers of new enrollees, particularly during the implementation of "Pay for Performance" during 1996. However, only 11% of the 10,926 single parent cases leaving AFDC by June 1997 received child care support in June-September 1997, while 89% received no support after leaving AFDC.
A non-AFDC group expected to be likely users of Milwaukee County subsidized low- income child care were those 5,629 single parents in food stamp and medical assistance cases who were expected to be working and were on assistance in December 1995. However, only 656 of these families received child care subsidies in January 1996. By September 1997, the number of families receiving child care support had dropped to 620. Most of these single parents were employed at least part-time, with 73% (2,701) of food stamp cases showing earned income in December 1995. However, only 42% reported monthly earnings above $1,000. Fewer than 1 in 5 of the food stamp and medical assistance cases with children under five years of age showed receipt of any child care subsidies from June-September 1997.
While child care appropriations were increased to accommodate eligible "working poor" families, very few non-welfare families actually received assistance. Only 503 of the estimated 22,000 low-income Milwaukee County families (with children aged 12 and under and not on any AFDC, food stamps or medical assistance in December 1995) were receiving child care subsidies in January 1996 and that number reached only 692 by September 1997.

Factors in Use of Subsidies--Age of Children, "Knowing the System," Education Level

Most families who left AFDC did not use the child care subsidy. Milwaukee County child care payments to families were matched with December 1995 AFDC single parent cases expected to work and tracked to assess their child care use during and after departure from AFDC as of June 1997, 18 months later.
Families with the youngest child of school age were least likely to use subsidized care. Over half of families with the youngest child aged 6-12 years left AFDC by June 1997 but of these, less than 1 out of 20 received a child care subsidy after leaving AFDC.

Of the 11,404 single parent families with the youngest child under four years, 47% left AFDC by June 1997, and of those who left, less than one out of five received day care subsidies after June. Only 20% of families with the youngest under 2 years received child care support and only 16% of families with 2-3-year olds received care after leaving.
Very few school-age children were in county-supported child care after their parents left AFDC. Of those receiving care support, most had younger brothers or sisters also in child care.

The low usage of child care subsidies by families leaving AFDC reflects in part the relatively low numbers of families finding full-time employment. An analysis by the Employment and Training Institute of single parent Milwaukee County cases leaving AFDC in September 1996 found that 34% showed no earnings during Fourth Quarter 1996 and another 27% showed earnings of less than $2,500 (or full-time minimum wage work).
Single parents with more than 12 years of schooling showed considerably higher use of child care subsidies (across age groups of children) and were most likely to leave AFDC and receive care afterwards. Families using low-income child care appeared to be better educated (more having 12 or more years of schooling), had older children and fewer children, were more likely to have a driver's license, and had prior employment experience. Those few who were successful in obtaining the child care subsidy were much more likely to move off AFDC.

Expenditures for Milwaukee County Child Care Subsidies

Expenditures were examined for the 21-month period from January 1996 through September 1997 to assess the type of care provided, consistency of care, and public assistance outcomes of families receiving child care assistance.

A total of 1,176 parents in the Learnfare program had child care subsidies of $5 million during 1996 and 1997 (up to October 1st). The Learnfare group showed the highest percentage of children enrolled full-time, the highest percentage in infant care and the highest percentage in licensed group centers. The high rates of reported consistent full-time care may, however, be a factor of state payment policies which guarantee licensed providers payment regardless of attendance since many children were reported as showing almost perfect attendance in child care.
Subsidies for families on AFDC under the JOBS programs or in their first two months of employment totaled nearly $8.1 million for 3,489 families in 1996 and $8.2 million for 3,052 families in 1997 (January-October). Much of this population received only short-term child care: 47% received fewer than 13 (out of 52) weeks of care in 1996 and 43% received fewer than 13 (out of 40) weeks of care in January-October 1997. A great deal of the high volume short-term care resulted under state policies which covered child care for the first two months of employment during AFDC after which time families remaining on AFDC or food stamps were expected to pay their own child care costs and deduct child care expenses (up to $200 a month for infant care) toward the calculation of their AFDC or food stamp allotments.
Low-income/transitional child care support was provided to 3,434 families during 1996 with payments totaling $15.7 million. Ten percent of these families received child care support of over $10,000 and accounted for 30% of payments for the low-income/transitional group; 15% of the cases had payments totaling less than $1,000. Child care payments for the first nine months of 1997 rose considerably to $17 million in subsidies for 3,983 families.

Child Care As a Job

It was anticipated that the many projected child caring opportunities would create jobs for mothers in the AFDC/food stamp population. Milwaukee County contracted with 2,561 individuals to provide care for 12,020 children during the period January 1, 1996 - October 1, 1997.

A total of 1,183 of these providers were in the provisional class of care pending certification or caring only for relatives. Another 802 certified providers (with fifteen or more hours of training) and 136 individuals who were state licensed family providers offered care. Licensed and certified individuals were more likely to earn 1996 payments of $12,000 or above.

TYPE OF CHILD CARE PROVIDER PROVIDERS EARNING OVER $12,000 IN 1996 COUNTY PAYMENTS

1,183 provisional providers 1 out of 100

802 certified providers 1 out of 5

136 licensed family providers 1 out of 3

In 1996 only 10 of 1,183 provisional providers contracting with Milwaukee County showed payments over $12,000 in the year. Of certified providers, 144 of 802 contracting in 1996 had income from Milwaukee County subsidies greater than $12,000. For licensed family providers, 46 of 136 individuals had payments greater than $12,000 in 1996.
Given the considerably higher income for family licensed care, it was anticipated that many certified providers would move into the licensed care class. However, only 15 of the 806 certified providers offering subsidized care in 1996 moved to licensed family care status. In 1997, only 11 of the 821 certified providers offering care were shown later as receiving payments as licensed family providers.

Licensed Group Care Highly Concentrated

Group care providers accounted for most of the child care expenses for subsidized care and received two-thirds of the $63 million spent during January 1, 1996 to October 1, 1997. Most of these payments were concentrated for 19 provider agencies with contracts totaling $24 million. For many providers the enrolled county-subsidized population approached or in some cases exceeded the capacity of their licensed centers. At the other end of the spectrum, 90 child care centers accounted for less than 15% of expenditures for group care in 1996 and 13% of expenditures for group care in 1997.

Availability of Care

Capacity and openings for licensed family and group care were examined for Milwaukee County. According to state records, licensed capacity in the central city increased significantly from 8,982 in February 1996 to 11,078 in January 1998 for group centers and from 904 to 1,104 for licensed family providers. The number of licensed group and family providers increased by 35 in the central city and decreased by 6 in the balance of the county.
In August 1997 to assess the availability of care in Milwaukee County, the Employment and Training Institute conducted a phone survey of licensed group and family child care centers offering full-time year-round care. Openings for child care totaled 1,124 in the central city, including 310 openings for infants. Family and group licensed providers reported 373 openings for infant care (310 openings in central city Milwaukee and 63 openings in the balance of the county). Central city providers reported 1,814 openings for children aged one and above.
Compared to the ETI February 1996 survey, openings for infants decreased by 96 in August 1997 in central city Milwaukee. The greatest decreases occurred in zipcode areas 53206, 53212 and 53209. The largest increases in openings for infants occurred in zipcode 53216, which showed 21 more openings than last year.
Central city group day care providers reported a 14% overall vacancy rate; providers in the balance of the county showed a 23% vacancy rate in August 1997.

Employment and Training Institute Home Page

Page last updated on 2009
Employment and Training Institute
School of Continuing Education
University of Wisconsin-Milwaukee
Direct comments to: eti@uwm.edu

MILWAUKEE COUNTY FAMILIES EXPECTED TO USE CHILD CARE SUBSIDIES	ACTUAL USAGE
25,125 single parent families on AFDC in December 1995	1 out of 15
5,629 single parent families receiving food stamps or medical assistance only in December 1995	1 out of 9
22,000 Milwaukee County low-income "working poor" families not on public assistance	1 out of 30

TYPE OF CHILD CARE PROVIDER	PROVIDERS EARNING OVER $12,000 IN 1996 COUNTY PAYMENTS
1,183 provisional providers	1 out of 100
802 certified providers	1 out of 5
136 licensed family providers	1 out of 3

Page last updated on 2009 Employment and Training Institute School of Continuing Education University of Wisconsin-Milwaukee Direct comments to: eti@uwm.edu

Page last updated on 2009
Employment and Training Institute
School of Continuing Education
University of Wisconsin-Milwaukee
Direct comments to: eti@uwm.edu