Employment and Training Institute .

Research Update

Child Care Needs and Barriers to Employment

Employment and Training Institute surveys of central city Milwaukee workers have repeatedly identified two areas as barriers to employment: child care and transportation to jobs. The Institute has studied these issues indepth over the last 15 years to assist public policy makers in effectively addressing employment needs of unemployed and underutilized workers. When Aid to Families with Dependent Children (AFDC) was eliminated for most impoverished families, the federal government invested in large-scale infusions of support for child care subsidies for low-income employed parents. These TANF (Temporary Assistance for Needy Families) and CCDB (Child Care and Development Block Grant) funded programs, operated as the Shares program in Wisconsin, now provide $145 million per year in subsidies to Milwaukee County, the largest government jobs programs (i.e., for child care workers) in the metro area. Issues of costs, quality of care, and employment patterns of subsidized parents are critical to the integrity of the Wisconsin Shares program.

map of 5-year-olds in child care in Milwaukee Child Care Selected by Families in the Wisconsin Shares Child Care Subsidy Program (2006).
Participation in the Shares program was examined for the week of April 23, 2006 as a typical week during the school year when no school holidays were scheduled.

  • That week a total of 23,033 Milwaukee County children were receiving subsidized child care, with over 9,000 of the children of kindergarten age.
  • The vast majority of children were in state-licensed child care (58% in licensed group centers and 29% in licensed family centers), 4% were in Milwaukee Public Schools school-age programs, and 9% were in county-certified family care.

Analysis of Child Care Survey and Vendor Participation Patterns in the Wisconsin Shares Child Care Subsidy Program Operating in Southeastern Wisconsin Counties (2003)
Analysis of the results of the 2003 market rate surveys of child care providers in the 7 counties of southeastern Wisconsin identified serious limitations of the current "market driven" approach to establishing reimbursement payments for government-subsidized child care providers.

  • In Milwaukee County only 36 of the 721 licensed family providers receiving Wisconsin Shares subsidies reported having a single private pay client. Participation in the Shares program appears to adversely impact the existence of a private market as pricing reimbursement policies for subsidized child care permit fee schedules which are much higher than the private market, particularly in the poorest neighborhoods in Milwaukee County where almost all providers charge at or above the state's Maximum Community Rate (MCR) and almost none report private pay clients.
  • Further complicating the situation for the Shares family provider population in Milwaukee County is the apparent transformation of family providers into group providers without changing their state licensing status. Licensed family providers can legally provide care outside their residence and on a 24 hour per day or 3 shifts basis. As a result, for the week of July 13, 2003, 35% of family providers were caring for more than 8 children and most had infants in care.
  • Given the dominance of the Shares program and higher rates available, licensed group providers in Milwaukee County's poor neighborhoods no longer care for private pay families. None of the 122 licensed group providers in Milwaukee's poorest neighborhoods reported any private pay clients and only 11% of the 193 providers in the second poorest neighborhoods reported one or more private pay families.
Recommendations for improving the rate setting process were included in the report, at the request of Milwaukee County staff.

The Child Care Costs of Engaging the Welfare Population in Work: The Milwaukee Experience (2002).
Policies adopted for the child care effort met or exceeded federal recommendations. Children were moved into licensed care, family co-payments are very low or nonexistent, most care is supported at the maximum rates (i.e., set to support 75 percent of private market care slots), and waiting lists for subsidized care have been eliminated statewide. Capacity building investments and policy changes removed much of the financial risk in serving children of welfare recipients.

  • Inner city Milwaukee neighborhoods saw a doubling of state licensed group care and quadrupling of state licensed family day care capacity.
  • The majority of licensed family providers receive subsidy payments of $50,000 or more a year.
  • Many urban day care vendors now offer pickup and delivery transportation services as part of their subsidized care. In the City of Milwaukee, 54% of licensed family providers and 30% of licensed group providers offer door-to-door transportation delivery services for subsidized children. Safety during transport is a critical concern.

Key to the implementation of an almost universal work requirement for welfare caseheads was the expansion of child care capacity and funding at unprecedented levels.

  • The Wisconsin child care program was designed to meet the demand of families facing welfare-to-work requirements, and this population makes up 98% of the enrollment in subsidized child care. Almost no "working poor" families from the non-welfare population are served.
  • The enrollment of families in subsidized day care more than tripled from 3,011 in January 1996 to 11,576 in June 2002 while monthly expenditures rose tenfold from $1.5 million to $15.4 million, due to more younger children in care, more full-time care, larger families served, and escalating costs.
  • For 71% of families subsidy costs exceeded one-half of family income and in 42% of cases the subsidy exceeded their total family income, due in large part to work program participants with little or no income.

Addressing Barriers to Employment: Increasing Child Care Rates and the Rate Setting Process Under the Wisconsin Shares Program (May 2002).
Besides the rise in enrollment, the child care subsidy expenditures in the county have increased for the several reasons:

  1. Shifts in the characteristics of the families in the subsidy program have occurred that increased costs, including more infants in care, more hours of care contracted per child, and larger families served with more children in care and lower co-payment requirements.
  2. Subsidy costs increased in part due to improvements in standards of care and changes in the license status of providers. The number of state-licensed family providers has grown dramatically and the number of accredited providers increased at both the group and family level, while the number of lower-cost county-certified providers has not grown.
  3. Reported market rates have escalated much faster than the rate of inflation since 1995. Increasingly, vendors without private-paying customers charge at the highest rates allowable, while many lower-cost vendors with market driven rates are subsidized at far lower rates. Basically, a new class of publicly-supported providers has been created that can take advantage of the maximum allowable community rates of the government subsidy program without experiencing the restraints of the private market. By 2000, 96 licensed group providers with 5,654 slots reported that they had not had three regular paying clients within the past six months.
  4. Costs increased because the subsidy program is reimbursing vendors who bill at the highest rates while paying few vendors who bill at the lowest rates. While only 25 percent of providers surveyed in Milwaukee County charge at or above the highest allowable rate, about half of subsidized children are billed at the highest rate.

Child Care for the Working Poor: The Milwaukee Experience (2002)

As of 2002, nearly all families receiving Wisconsin Shares child care subsidies were from the current or former welfare populations. In spite of promises to serve the non-welfare "working poor," less than 5% of subsidized families had no recent history of welfare receipt and only 200 two-parent families received subsidies.

If subsidized single families were to continue child care at the cost levels typically supported by the Wisconsin Shares subsidies in 2002, a four-person family would need to contribute $7.59 an hour of a 40-hour-a-week job to equal the current government subsidy (averaging $1,333 a month). A 5-person family, where government day care subsidies are averaging $1,602 a month, would need to contribute $9.24 an hour at a 40-hour-a-week job. Only in the case of single parents with one child might it be feasible for the parent to take over the typical government subsidy costs of $595 a month (or $3.43 an hour based on a 40-hour-a-week job). Even here, many parents would likely seek out lower cost child care options.

Barriers to Employment: Findings from the National Survey of America's Families for Milwaukee County Families with Preschool Children, 1997 and 1999 (May 2002).

The National Survey of America's Families, conducted in 1997 and in 1999, provided a unique opportunity to examine the child care arrangements and employment patterns of mothers with preschool children in Milwaukee County. The survey was designed to be representative for the nation as a whole and for 13 states, including Wisconsin. Milwaukee County was the only county in the U.S. to be separately surveyed. This technical assistance paper was prepared at the request of Milwaukee County to use the NSAF survey to help estimate the number of families needing Wisconsin child care subsidies for low-income families and to analyze the type of care selected by employed parents in Milwaukee County.

  • The majority of Milwaukee County mothers of preschool children do not work full-time. In 1999, just 28 percent of preschool children in lower-income families had a mother employed full- time (40 hours or more a week), as did 36 percent of children in families with mid-range income and 49 percent of children in families with upper-range incomes.
  • For low-income [i.e., below 150% of poverty] children in full-time care, most (69 percent) were in group care with 54 percent in subsidized care and 15 percent in unsubsidized group care. In 28 percent of the cases, relatives were caring for the child.
  • For mid-range income [i.e., 150-299% of poverty] families, relatives were the first day care choice for full-time care, with 43 percent of children cared for by relatives.
  • Children in upper-range income [i.e., 300% or more of the poverty level] families were the second most likely (after the poor) to have their preschool children in full-time group care (51 percent), with most in unsubsidized care (40 percent).

Barriers to Employment: NSAF Findings on Preschool Children, Mothers' Employment Status and Child Care Choices (May 2002).
National data from the 1997 and 1999 National Survey of America's Families on the employment patterns and child care choices of mothers with preschool children were analyzed for families by income levels.

  • Nationally, the majorities (57 percent) of low-income preschoolers with employed mothers were not in full-time child care, and those in full-time care were more often in low-cost relative care.
  • For unsubsidized low-income families, costs of full-time care of preschoolers with relatives averaged $129 a month in 1999 versus $302 a month for non-relative full-time care.
  • Women with preschoolers remain a difficult population to engage in full-time employment. Almost two-thirds of mothers of low-income preschoolers were not employed at all. This did not change during early TANF implementation, with 64 percent of children not having an employed mother in 1997 and 63 percent not having an employed mother in 1999. There was, however, a slight increase in mothers employed full time, rising from 16 percent in 1997 to 19 percent in 1999.

Impact of Welfare Reform on Child Care Subsidies in Milwaukee County, 1996-1999 (October 1999).

  • The number of Milwaukee County families receiving low-income day care support more than doubled over the last three years, from 3,011 in January 1996 to 6,876 in January 1999.
  • Monthly day care subsidy payments increased from $1.5 million in January 1996 to $5.2 million in January 1999. (These totals do not include payments for foster care and kinship care cases.)
  • Most of the increases occurred as the "W-2"/TANF program took effect and families with young children and more children required care. For these families the cost of child care often exceeded their "W-2" payments.
  • For over half (56 percent) of the "W-2"families the day care provider 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 not "W-2" payments in January 1999, and about a third (31 percent) of these families showed lower total wages than the day care payments made to their child care provider.

Removing Barriers to Employment: The Child Care-Jobs Equation (May 1998).

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. The majority of families financially eligible for subsidized child care did not receive it. Subsidized child care take-up rates for Milwaukee County families in 1997 were:

  • 1 of 15 of the 25,125 single parent families on AFDC in December 1995
  • 1 out of 9 of the 5,629 single parent families receiving food stamps or medical assistance (but not AFDC)
  • 1 out of 30 of the 22,000 Milwaukee County low-income "working poor" families not on public assistance.

Child Care Needs of Low-Income Employed Parents in Milwaukee County Under W-2 (July 1996)

After this report was issued, the state changed the co-payment schedule for part-time care so that parents pay only half of the co-payment amount calculated under the previous income rule.

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