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Excerpted from the 2000 House Ways and Means Green Book, "Child Care"

Child Care

Child care is an issue of significant public interest for several reasons. The dramatic increase in the labor force participation of mothers is the most important factor affecting the demand for child care in the last quarter century. Currently, in a majority of American families with children--even those with very young children--the mother is in the paid labor force. Similarly, an increasingly significant trend affecting the demand for child care is the proportion of mothers who are the sole or primary financial supporters of their children, either because of divorce or because they never married. In addition, child care has been a significant issue in recent debates over how to move welfare recipients toward employment and self-sufficiency; mothers on welfare may have difficulty entering the labor force because of child care problems. Finally, the impact of child care on the children themselves is an issue of considerable interest, with ongoing discussion of whether low-income children benefit from participation in programs with an early childhood development focus.

Concerns that child care may be in short supply, not of good enough quality, or too expensive for many families escalated during the late 1980s into a national debate over the nature and extent of the Nation's child care problems and what, if any, Federal interventions would be appropriate. The debate culminated in the enactment of legislation in 1990 that expanded Federal support for child care by establishing two new State child care grant programs. The programs--the Child Care and Development Block Grant (CCDBG) and the At-Risk Child Care Program--were enacted as part of the Omnibus Budget Reconciliation Act of 1990 (Public Law 101-508). These programs were preceded by enactment of a major welfare reform initiative, the Family Support Act of 1988 (Public Law 100-485), which authorized expanded child care assistance for welfare families and families leaving welfare. In 1996, as part of welfare reform legislation (the Personal Responsibility and Work Opportunity Reconciliation Act, Public Law 104-193), these programs were consolidated into an expanded Child Care and Development Block Grant (sometimes referred to as the Child Care and Development Fund), which provides increased Federal funding and serves both low-income working families and families attempting to transition off welfare through work.

This chapter provides background information on the major indicators of the demand for and supply of child care, the role of standards and quality in child care, a summary description of the major Federal programs that fund child care services, and reported data from the largest of those sources of funding, the Child Care and Development Fund (CCDF).


The dramatic increase in the labor force participation of mothers is commonly regarded as the most significant factor fueling the increased demand for child care services. A person is defined as participating in the labor force if she is working or seeking work. In 1947, just following World War II, slightly over one-fourth of all mothers with children between the ages of 6 and 17 were in the labor force. By contrast, in 1999 over three-quarters of such mothers were labor force participants. The increased labor force participation of mothers with younger children has also been dramatic. In 1947, it was unusual to find mothers with a preschool-age child in the labor force--only about 12 percent of mothers with children under the age of 6 were in the labor force. But in 1999, over 64 percent of mothers with preschool-age children were in the labor force, a rate more than 5 times higher than in 1947. Women with infant children have become increasingly engaged in the labor market as well. Today, 60 percent of all mothers whose youngest child is under age 2 are in the labor market, while in 1975 less than one-third of all such mothers were labor force participants.  

The rise in the number of female-headed families has also contributed to increased demand for child care services. Single mothers maintain a greater share of all families with children today than in the past. Census data show that in 1970, 11 percent of families with children were headed by a single mother, compared with 26 percent of families with children in 1998. While the number of two-parent families with children did not fluctuate much between 1970 and 1998 (25.8 and 25.7 million respectively), the number of female-headed families with children almost tripled, increasing from 3.4 million families in 1970 to 9.8 million in 1998. These families headed by mothers were a major source of growth in the demand for child care.

Mothers' attachment to the labor force differs depending on the age of their youngest child and marital status. Among those with children under 18, divorced women have the highest labor force participation rate (84.0 percent), followed by separated women (77.3 percent). The labor force participation rate for never-married mothers with children under 18 grew to over 73 percent in 1999, a 21 percent increase over the 1996 rate. In 1996, never-married mothers trailed all other marital status groups (with children under 18) in labor force participation, but by 1999, the participation rate for never-married mothers surpassed married women (70 percent) and widowed mothers (63 percent).

Labor force participation rates tend to increase regardless of the marital status of the mother as the age of the youngest child increases. Among all women with children under 18, 61 percent of those with a child under 3 participate, 70 percent of those whose youngest child is between 3 and 5 participate, and 79 percent of those whose youngest child is between 14 and 17 participate.

While there has been a substantial increase in the proportion of mothers in the labor force, the data can be misleading without examining employment status. Although 72 percent of mothers participated in the labor force in 1999, 50 percent worked full time and 18 percent worked part time (less than 35 hours per week). Therefore, in 1999, about 30 percent of mothers were actively looking for work, but not employed. Forty-one percent of mothers with children under age 6 worked full time, and 19 percent worked part time.

The 1996 welfare reform law's new emphasis on work is likely to have affected the employment status of the never-married mother subgroup most significantly. Overall, the percent of all mothers (with children under 18) employed full time grew from slightly over 47 percent in 1996 to just over 50 percent in 1999. Within the subgroup of never-married mothers, the 3 year period was accompanied by a larger increase in full-time employment. In 1996, about 35 percent of never-married mothers with children under 18 were employed full time. By 1999, the figure had increased to over 48 percent. The percent of never-married mothers working full time with children under age 6 had grown comparably, increasing from almost 29 percent in 1996 to over 41 percent in 1999. Within the divorced mothers subgroup, there were increases between the years, but the differences are not nearly as large as within the never-married subgroup. In 1999, the percent of all divorced mothers employed full time with children under 18 had reached almost 69 percent, a 2 percentage point increase since 1996. For those with children under 6, over 60 percent worked full time in 1999. The employment status of married mothers is shown to have changed little or not at all since 1996, depending on full- or part-time status, and age of children.


Data are collected periodically by the U.S. Census Bureau on the types of child care arrangements used by families with working mothers. The most recent U.S. Census Bureau statistics available on child care arrangements are based on data collected by the Survey of Income and Program Participation (SIPP) for the fall of 1995 (although the Census Bureau has not published a report with these data, the data are available on their Website at Because the interview questions obtain information about both paid and unpaid substitute care used while the mother works, it provides information on categories of care that generally are not considered child care, such as care provided by the father, or care by a sibling.

The 1995 data indicate that the types of child care arrangements used by families while the mother works vary depending on the age of the child, as well as the mother's work schedule (full- or part-time), marital status, and family income. In the 1995 SIPP survey, parents were asked to estimate the number of hours a child spends in any of several care arrangements during a week, rather than to identify the child's ``primary'' care arrangement while the mother worked. The primary child care arrangement is based on the arrangement in which a child spends the most hours in a typical week. In the case of a child who spends equal time between arrangements, the child would have more than one primary arrangement.

Over 36 percent of families of preschoolers with working mothers in 1995 primarily relied on care in another home by a relative, family day care provider, or other nonrelative, compared to almost 26 percent of families whose primary arrangement was an organized child care facility. These data mark a change from the fall 1994 survey results, which revealed that over 30 percent of families used organized child care as their primary arrangement. However, some of the decline in the use of organized child care facilities and increase in care out of another's home may reflect a change in the 1995 survey, which more clearly defined care types, by asking specifically about family day care providers (providers caring for more than one child outside the child's home), as distinct from organized group day care. Relative care, either in the child's home or the relative's home, was used by 21 percent of families of preschool children with employed mothers. Over one-fifth of families with young children did not rely on others for help with child care arrangements while the mother worked, but instead used parental care (22 percent), especially care by fathers (almost 17 percent). Only 5 percent of families relied on care provided in the child's home by a nonrelative.

Preschool children of part-time employed mothers were much more likely to be cared for by a parent (31 percent), than by an organized child care facility (21 percent), and also more likely to be cared for by a relative, family provider, or nonrelative in another home (29 percent). Mothers employed full time were more likely to use family day care providers (19 percent) and organized day care centers (20 percent) than any other form of care. Care by grandparents, either in or out of the child's home, was the next most utilized category for full-time (14 percent), and part-time employed mothers (18 percent).

The types of afterschool arrangements used in 1995 for school-age children by working mothers, as well as cases in which there were no arrangements used at all. The 1995 survey asked more questions about arrangements than in earlier years (for instance, it specifically asked about care by a sibling), and this may account for some of the increase in the ``care in child's home'' category. In 1993, 11 percent of children age 5-14 were being cared for afterschool in the child's home, whereas in 1995 this figure had increased to almost 20 percent. Of those children age 5-14 with employed mothers in 1995, over 10 percent were cared for by a sibling (over 3 percent by a sibling under age 15). Afterschool care by fathers also increased substantially from 1993 to 1995. In 1993, just over 11 percent of children were primarily cared for by fathers during afterschool time, compared to 21 percent in 1995. A total of 2.5 million school-age children (11.6 percent of children age 5-14) were reported to be in self-care or to be unsupervised by an adult for some time while their mothers were working. It is not known if the children in the ``no care mentioned'' category were unsupervised, or if other factors may account for their not being reported in a child care arrangement, such as travel time from school. Regardless, the 1995 survey instrument appears to have been more effective in identifying types of child care arrangements, since only 1.6 percent of children reportedly fall in the ``no care mentioned'' category, a sharp decline from 46 percent in the 1993 survey.

The 9.2 percent of poor children being cared for in the child's home by a relative or nonrelative in 1995 represents a marked decrease from over 18 percent reported in 1994. The percent of nonpoor children in this category remained unchanged at 14 percent. Nonpoor children in 1995 were more likely than poor children to be cared for in another home by either a relative, family day care provider, or other nonrelative. Poor families were more likely than nonpoor families to not mention any regular arrangement (10 percent versus 1 percent).

The U.S. Census Bureau data discussed above reflect child care arrangements in the fall of 1995. More recently, data from the 1997 National Survey of America's Families (NSAF), collected by the Urban Institute, can be used to examine primary child care arrangements used by children under 5 with employed mothers nationally, and across 12 individual States. Nationwide, 41 percent of preschool children with employed mothers are in care for 35 or more hours per week (Capizzano ; Adams, 2000a). One-quarter are in care for 15-34 hours per week, 16 percent for 1-14 hours per week, and 18 percent spend no hours in nonparental child care. For preschool children with mothers employed full time, the number of children in full-time care (35 or more hours) increases to 52 percent. Children that are 3 and 4 years old are slightly more likely to be in full-time care than younger preschoolers (44 percent versus 39 percent). Children in high-income families are almost equally as likely to spend 35 or more hours a week in child care as low-income children (42 percent versus 40 percent), although high-income children are more likely than low-income children to be in part-time care (42 percent versus 37 percent). Twenty-three percent of low-income children are reported to spend no hours in nonparental care, compared to 16 percent of high-income children.

According to the 1997 NSAF, 32 percent of preschool children use center-based child care as their primary arrangement, while about half that number (16 percent) are in family child care (Capizzano, Adams, ; Sonenstein, 2000). About 6 percent are primarily cared for in the child's home by a babysitter or nanny. Twenty-three percent of children under 5 are cared for primarily by a relative, either inside or outside the child's home, while almost a quarter (24 percent) of children are in the care of a parent. The analysis of individual States revealed that there is considerable State variation in the use of specific primary child care arrangements.

The Urban Institute's analysis also examined how child care arrangements vary according to both age of child and family income. The survey data indicate that nationally, infants and toddlers are more likely to be cared for by relatives (27 percent) and parents (27 percent) than to be in center-based care (22 percent) or family child care (17 percent). As preschoolers grow older (age 3 and 4), use of relative and parent care decreases (17 and 18 percent respectively), and center-based care becomes the most commonly used primary arrangement (45 percent). Use of family child care remains relatively steady at 14 percent for 3- and 4-year-olds.

At the national level, children under age 5 in families below 200 percent of poverty are less likely than high-income children to use center-based care as a primary arrangement (26 percent versus 35 percent). Relative care and parent care are used equally by low-income families (28 percent each), and more often than by high-income families, of which 20 percent use relative care and 21 percent parent care. Low- and high-income children are almost equally likely to use family child care as their primary arrangement (14 and 17 percent respectively).

In addition to looking at the primary child care arrangements for children under 5, Urban Institute researchers used the 1997 NSAF to examine the number of arrangements used to care for a child, and the hours that are spent in each type of arrangement. Nationally, 38 percent of children under 5 combine more than one child care arrangement each week (Capizzano ; Adams, 2000b). Of those, 8 percent combine three or more arrangements. The remaining 62 percent have only one child care arrangement. Children under age 3 are less likely to have multiple child care arrangements than 3- and 4-year-olds (34 percent versus 44 percent). Children aged 3 and 4 are three times as likely to be in three or more care arrangements. Of the children in multiple arrangements, most use a combination of formal and informal care, regardless of age or income. Children from low- and high-income families are almost equally likely to be in multiple child care arrangements (37 and 40 percent respectively). As seen with primary arrangements, there is considerable State variation in the use of multiple arrangements.


Research studies have found that the majority of families with working mothers and preschool children purchase child care services. The tendency to purchase care and the amount spent on care, both in absolute terms and as a percent of family income, generally varies by the type of child care used, family type (married or single mothers), and the family's economic status.

The most recent data on child care expenditures by families are from the Survey of Income and Program Participation for the fall of 1995. These data show that 64 percent of families with employed mothers paid for child care for their preschool-aged children. Nonpaid child care was most typically provided by relatives. Families with mothers employed full time were more likely to purchase care for their young children than those with mothers working part time. Among families with full-time working mothers, 73 percent paid for child care, compared to 50 percent of families with mothers employed part time. Likewise, families with higher incomes were more likely to purchase care than families with lower incomes, with the exception of families with monthly incomes between $1,200 and $3,000. For example, 71 percent of families with monthly incomes of $4,500 or more purchased child care in the fall of 1995, while only 60 percent of families with monthly incomes of less than $1,200 purchased care.

Average weekly costs per family for all preschool-aged children were $83 in 1995 for those families that purchased care. Married-couple families devoted a smaller percentage of their income to child care (9 percent) than single-parent families (22 percent), but their child care expenditures were nonetheless greater ($87 per week) than those of single-parent families (about $70 per week).

While poor families spend fewer dollars for child care than higher income families, they spend a much greater percentage of their family income for child care. Thus, poor families spent only $60 per week, but this amount represented 36 percent of their income. By contrast, nonpoor families spent $85 per week on care, but this amount was only 10 percent of their income. A December 1997 survey of the cost of child care for a 4-year-old in urban child care centers across the country, conducted by the Children's Defense Fund (Adams ; Schulman, 1998) found that in every State, the average child care tuition exceeds $3,000 per child, and is over $5,000 per child in 17 States.


Supply of Providers

The variety of child care arrangements used by families has been discussed above, however, the studies of arrangements do not include estimates of the number of available providers. A comprehensive study of licensed centers, early education programs, center-based programs exempt from State or local licensing (such as programs sponsored by religious organizations or schools), and licensed family day care providers has not been conducted since the U.S. Department of Education's Profile of Child Care Settings Study was released in 1991. That study reported that approximately 80,000 center-based early education and care programs were providing services in the United States at the beginning of 1990 (Kisker, Hofferth, Phillips, ; Farquhar, 1991).

A less extensive, but more recent study, focusing only on regulated child care centers, was released by the Children's Foundation in January 2000. The study reported that the number of regulated child care centers in the 50 States, the District of Columbia, Puerto Rico, and the Virgin Islands totals 106,246 (Children's Foundation, 2000). This is a 3.5 percent increase from the Foundation's 1999 study's total, and nearly a 19 percent increase from the total published by the Children's Foundation's first study of centers in 1991. The 2000 study notes that the definition of regulated child care center varies by State or territory. In 28 States, the number of regulated child care centers includes nursery schools, preschools, prekindergartens and religiously affiliated centers. In the remaining States and territories, the definition is less inclusive. For example, some States exclude nursery schools or religiously affiliated centers in their count.

The Children's Foundation also conducts studies on family child care providers (as opposed to centers). Their 1999 report indicates that there are 290,667 regulated family child care homes, of which 249,622 are family day care homes (caring for up to 6 children) and 41,045 large group child care homes (in which providers generally care for 7-12 children). It is assumed by child care researchers that the number of unregulated family day care providers far exceeds the number of regulated family providers, though it is difficult to determine by how much. At the time of the aforementioned Profile of Child Care Settings Study of 1991, the number of regulated family day care homes represented an estimated 10-18 percent of the total number of family day care providers.

The U.S. Census Bureau also collects data on the number of child care businesses in the United States. For a historical look at child care businesses in the early 1990s, a 1998 report used Census of Service Industries (CSI) data to provide information on the number and characteristics of child care businesses in 1992 (Casper ; O'Connell, 1998). ``Child care businesses'' are defined as organized establishments engaged primarily in the care of infants or children, or providing prekindergarten education, where medical care or delinquency correction is not a major component. Not included in this definition are babysitting services or Head Start Programs that are coordinated with elementary schools. Based on the Census of Service Industries data, the number of incorporated child care centers doubled from 25,000 in 1977 to 51,000 in 1992.

Wages of Child Care Center Staff

No single data source provides comprehensive information on wages of child care workers. However, occupational data collected by the Department of Labor, when complemented by survey information gathered by organizations interested in child care issues, begin to paint a picture of the status of child care wages in the United States.

The Bureau of Labor Statistics (BLS) collects wage data for 764 occupations, as surveyed by the Occupational Employment Statistics (OES) Program. However, readers should be aware that the occupational categories create a misleading division in the child care work force. Center-based child care staff are described by the OES survey as either ``preschoolteacher'' or ``child care worker,'' distinguishing the former as an individual who instructs children up to age 5 in developmental activities within a day care center, child development facility, or preschool, and the latter as a person who performs tasks such as dressing, feeding, bathing, and overseeing play of children. This division of tasks does not necessarily occur in actual child care settings, and therefore the survey's occupational group assignments, and wage distinctions made between those groups, should be interpreted with some caution. Nevertheless, the OES survey provides a general sense of wages within the child care field. Based on BLS data and OES survey results from 1997, the median hourly wage of a center-based ``child care worker'' was $7.03, and a ``preschoolteacher,'' $9.09. Both these wages are considerably higher than the median hourly wage for family child providers, who, based on 1997 Current Population Survey data, earn an estimated median wage of $4.69 per hour [based on a 55-hour week, which the Center for Child Care Workforce (1999) reports is the typical work week for U.S. family child care providers].

The National Child Care Staffing Study (NCCSS), originally launched in 1988, and most recently updated in 1997, provides additional information on child care center staff (Whitebook, Howes, ; Phillips, 1998). Information on wages and characteristics of center staff was collected from 158 full-day, full-year, State licensed child care centers in five metropolitan areas around the country. In the study's findings on trends in hourly wages for center-based child care staff, over the 10 year period of the study, wages of child care center workers have remained relatively stagnant.

Staff Turnover

Like many low-wage industries, turnover among the child care work force has been historically high. The NCCSS has tracked worker turnover and stability beginning with its initial study in 1988. In 1988, center directors in the sample reported a 41 percent average rate of annual turnover of teaching staff. In 1992, they reported average annual turnover of 26 percent for the year prior to the survey interview. By 1997, the rate had risen to 31 percent for all teaching staff, and one-fifth of centers reported losing half or more of their teaching staff in the previous year. The 10 percentage point decrease in turnover rates between 1988 and 1997 should be analyzed with caution, however, as the sample size of the NCCSS study dropped from 227 to 158. According to the study directors, a disproportionate number of the centers reporting the highest turnover in 1988 had closed by the time of the 1997 survey, leaving a sample of centers with potentially lower than average turnover rates for their areas. The issue of stability among centers themselves is not specifically addressed in the NCCSS study, however its authors do mention increasing reports of centers closing due to an insufficient supply of trained teachers. Better job opportunities and higher wages in other fields, due to a strong economy, have been identified as recent major causes of turnover. Ninety-three percent of directors reported taking more than 2 weeks to find replacements for departing teaching staff and over one-third (37 percent) reported taking over a month to do so. The effect of staff turnover on children is one of several topics that continues to receive attention during ever-growing discussions of how to measure child care quality.

Employing Welfare Recipients as Child Care Workers

Passage of welfare reform legislation in 1996, and its emphasis on moving recipients into work, created expectations of an increase in demand for child care, and recipients themselves were identified by some as a potential new source of child care workers. The 1997 NCCSS therefore gathered information from child care directors regarding the employment of welfare recipients (recipients of Temporary Assistance for Needy Families) as center staff. The study found that approximately one-third (35 percent) of the child care centers in the sample employ Temporary Assistance for Needy Families (TANF) recipients, that those centers employing TANF recipients are more likely to pay lower wages across all positions, and that those centers experience higher teaching staff turnover. While the median wage reported for TANF workers is $5.50 per hour (in 1997) compared to the $6 per hour for all entry-level teaching assistants, 60 percent of centers pay TANF workers the same as their lowest-paid assistants, 23 percent pay them more, and 18 percent pay them less. Almost half (48 percent) of the centers employing TANF recipients report providing on-site training for TANF employees, 18 percent use community-based training programs, and 16 percent of the programs offer college credit-bearing training.


Regulation and Licensing

Regulation and licensing of child care providers is conducted primarily at the State and local levels, although the extent to which the Federal Government should play a role in this area has been a topic of debate for many years (see below). Licensing and regulation serves as a means of defining and enforcing minimum requirements for the legal operation of child care environments in which children will be safe from harm. There is no uniform way in which States and/or territories regulate child care centers, preschools, nursery schools, prekindergartens, and/or religiously affiliated child care centers. All States and territories do, however, require these center-based types of care (as opposed to family child care providers) to be regulated through licensing or registration. In the case of family day care providers, most States exempt certain providers--typically those serving smaller numbers of children from licensing or regulation. As mentioned in the earlier discussion of child care supply, the Children's Foundation survey found that there were 290,667 regulated family child care providers in the States and territories in 1999. If estimates from the 1990 child care settings study are applied, this number may represent only 10-18 percent of family child care, with the remaining facilities being unregulated. The count of centers that are regulated (meaning licensed or certified) totals 106,246 according to the Children's Foundation 2000 study.

Research on Child Care Quality

As women's labor force participation has grown over the past several decades, concerns about child care quality have increased. Highly publicized research on early brain development in infants and young children (under age 3) has drawn attention to what role child care may play in children's cognitive and social development. The relationship between quality of child care and outcomes for children is of increasing interest to parents, researchers, and policymakers. A growing body of research examines questions such as how to define the elements that correspond to quality child care, how to measure those elements, and ultimately, their effects on children both in the short- and long-term.

One comprehensive study of connections between child care and early childhood development is part of an ongoing project conducted by a team of researchers supported by the National Institute of Child Health and Human Development (NICHD, 1999), of the National Institutes of Health. The broad goal of the NICHD study, started in 1991, is to collect data on an ongoing basis from a sample of children and their families (located in 10 areas across the United States) to answer a range of questions about the relationship between child care characteristics and experiences, and children's developmental outcomes. The children and families in the study's sample vary in socioeconomic background, race, family structure, and type of child care used. The study design takes into account characteristics of the family and its environment to gain a more complete picture of the contribution that child care characteristics and experiences themselves make to children's development, above and beyond the contribution of the family environment. Even so, not all characteristics are observed, and the ability to completely disentangle all of the characteristics (both of the parents and the child) is difficult, if not impossible, in such a study. Children in the study are not randomly assigned to child care settings of varying degrees of quality, but are instead placed in settings of their parents' selection. The selection of care in and of itself may reflect contributing variables--characteristics of the parents, children, and environment--that are not fully observed in the study. Likewise, a child's developmental outcomes in a particular setting may reflect the child's characteristics as much as the setting's quality. Although the NICHD study attempts to distinguish among some of these factors, the ability to interpret the results is somewhat constrained by selection bias.

The findings showed that in general, family characteristics and the quality of the mother's relationship with her child were stronger predictors of the child's development than were the characteristics of child care. The family characteristics such as income and mother's education were strong predictors of children's outcomes, for both children cared for solely by their mothers and children in extensive nonparental child care. The study did find a modest but consistent association between quality of nonparental child care over the first 3 years of life and children's cognitive and language development, regardless of family background. In this case, quality child care was defined as positive care giving and language stimulation; i.e., how often providers spoke to children, asked questions, and responded to children's questions.

The NICHD researchers also analyzed the more structural elements of child care in centers--elements that are generally regulated by the States, but to varying degrees, such as child-staff ratio, group size, and teacher training and education. The researchers used recommended guidelines developed jointly by the American Public Health Association and the American Academy of Pediatrics to evaluate the degree to which standards were being met by centers used by families in the study. Twelve percent of the study's children were enrolled in child care centers at 6 months, and 38 percent at age 3. Findings indicate that the children in the centers that met some or all of the guidelines had better language comprehension and school readiness than the children who were in centers that did not meet the guidelines. There were also fewer behavioral problems for children age 2 and 3 in the centers that met the guidelines.

The researchers have continued to follow the children in the sample, and will release findings from the assessment of the children at 54 months of age, and again in first grade. Like other studies that examine the relationship between child care and developmental outcomes, the NICHD research aims to determine not just whether there are concurrent and short-term effects of child care on children's development, but long-term effects as well.

The study did not attempt to measure the quality of care offered by family child care providers or relatives according to the same set of guidelines used for center-based care. The most recent indepth observational study of family child care and relative care was published in 1994 by the Families and Work Institute. The study examined the care offered by 226 providers in 3 different communities in California, Texas, and North Carolina (Galinsky et al., 1994). Nonregulated family care providers may be nonregulated because they care for few enough children to be exempt from State regulation requirements, or, as the 1994 study found in their sample, 81 percent of the 54 nonregulated providers were illegally nonregulated, due to the fact that they were actually providing care for a number of children over their State's limit. The quality of all types of family and relative care was determined according to measurements such as the setting's safety and the sensitivity and responsiveness of providers to the children. The study found that only 9 percent of the homes in the study sample were rated as good quality, while 56 percent were rated as adequate, and 35 percent inadequate. The researchers found that quality appeared to be higher when providers were trained and when they were caring for three to six children rather than one or two. As important, if not more so, in determining quality was whether the provider was committed to taking care of children, and had a sense that their work was important; participated in family child care training; thought ahead about the children's activities; was regulated; and followed standard business and safety practices. In the case of relative care, an important factor in the quality of the child's experience was whether the relative caring for the children did so out of desire, necessity, or both.

The Cost, Quality, and Child Outcomes (1995, 1999) in Child Care Centers study conducted by researchers from four universities beginning in 1993, analyzes the influence of ``typical'' center-based child care on children's development during their preschool years and into elementary school. The ``typical'' centers were represented by a random sample of 401 full-day child care centers, half of them for-profit, half nonprofit, in regions of 4 States: California, Colorado, Connecticut, and North Carolina. Data on the quality and cost of services were collected, as well as data on the developmental progress of a sample of children in the selected centers.

Findings from the first phase of the study were released in 1995, and indicated that the quality of child care offered in over three-quarters of these ``typical'' centers in the United States did not meet ``high standards'' according to the Early Childhood Environment Rating Scale, which ranges from 1 (``low quality'') to 7 (``high quality''). Eleven percent of centers in the sample scored below 3 (``minimally acceptable''). The researchers found that the quality of child care is primarily related to higher staff-to-child ratios, staff education, and administrators' previous experience. Teacher wages and education were also generally higher in higher quality centers. Like the NICHD study, the 1995 Cost, Quality, and Child Outcomes Study also found that centers meeting higher licensing standards provided higher quality care.

In addition to examining the status of quality in the centers, the researchers wanted to determine what effects, if any, the quality of care had on children's development. The study's initial findings in 1995 indicated that children's cognitive and social development are positively related to the quality of their child care experience. This proved to be the case even after taking into account factors related to family background and associated with children's development (such as maternal education); the children in the low-quality care still scored lower on measures of cognitive and social development.

 The findings from the second phase of the study, released in 1999, indicate that there are long-term effects of child care quality on children's development. Similar to the NICHD results, this study indicated that the impact of child care quality on children's development was modest, but consistent, and applied even after taking into account child and family characteristics.

The extent to which the effects of quality child care and other early childhood program experiences ``fade out'' over time has long been an area of interest for researchers studying the connection between child care programs and children's development. One of the longest-running research studies in this area is known as the Abecedarian Project, which began in the early 1970s. The project design consisted of a controlled study in which 57 infants, all from low-income families in North Carolina, were randomly assigned to an experimental group that would receive year-round, all-day educational child care/preschool emphasizing cognitive, language, and adaptive behavior skills (Burchinal et al., 1997; Campbell ; Ramey, 1995). The control group of 54 infants received nutritional supplements and supportive social services (as did the experimental group), but did not receive the educational intervention emphasizing language, cognitive, and social development. The Abecedarian Project began in early infancy, and the children received the educational ``treatment'' for 5 years, a longer period than other programs. This study also differs from those discussed earlier in that it focuses solely on disadvantaged, low-income children.

Early findings of the project showed that from the age of 18 months through age 5 (the end of the program), children in the treatment group had higher scores on mental tests than children in the control group. In the primary grades through middle adolescence, children from the treatment group scored significantly higher on reading and math tests. Through age 15, the treatment group continued to score higher on mental tests, although the gap between the two groups had narrowed.

Most recently, the project's researchers completed a followup study of the project's participants (104 of the original 111) at age 21 (Campbell, 1999). Results showed that the 21-year-olds who had been in the treatment group had significantly higher mental test scores than those from the control group. Likewise, reading and math scores were higher for the treatment group, as had been the case since toddlerhood. Due to the longevity of the project, researchers were also able to look for differences in areas such as college enrollment and employment rates. The followup interviews revealed that about 35 percent of the young adults in the treatment group had either graduated from or were attending a 4 year college or university at the time of the assessment, compared to 14 percent of the control group.

A team of researchers from RAND evaluated the results of nine early childhood intervention programs, including the Abecedarian Project (Karoly et al., 1998). The RAND team determined that the nine early intervention programs evaluated in their study provided benefits for the participating disadvantaged children and their families. However, the Rand team pointed out that expanding model, resource-intensive programs like the Abecedarian Project to a larger scale may not necessarily result in the same developmental benefits.


Background and Overview

The Federal Government entered the child care business during the New Deal of the 1930s when federally funded nursery schools were established for poor children. The motivation for creating these nursery schools was not specifically to provide child care for working families. Rather, the schools were designed primarily to create jobs for unemployed teachers, nurses, and others, and also to provide a wholesome environment for children in poverty. However, when mothers began to enter the work force in large numbers during World War II, many of these nursery schools were continued and expanded. Federal funding for child care, and other community facilities, was available during the war years under the Lanham Act, which financed child care for an estimated 550,000-600,000 children before it was terminated in 1946.

The end of the war brought the expectation that mothers would return home to care for their children. However, many women chose to remain at work and the labor force participation of women has increased steadily ever since. The appropriate Federal role in supporting child care, including the extent to which the Federal Government should establish standards for federally funded child care, has been an ongoing topic of debate. In 1988 and 1990, four Federal child care programs were enacted providing child care for families receiving Aid to Families with Dependent Children (AFDC), families that formerly received AFDC, low-income working families at risk of becoming dependent on AFDC, and low-income working families generally.

The establishment of these programs was the culmination of a lengthy, and often contentious debate, about what role the Federal Government should play in child care. Lasting nearly 4 years, the debate centered on questions about the type of Federal subsidies that should be made available and for whom, whether the Federal Government should set national child care standards, conditions under which religious child care providers could receive Federal funds, and how best to assure optimal choice for parents in selecting child care arrangements for their children, including options that would allow a mother to stay home. Differences stemming from philosophical and partisan views, as well as jurisdictional concerns, were reflected throughout the debate.

Though the programs created in 1988 and 1990 represented a significant expansion of Federal support for child care, they joined a large number of existing Federal programs providing early childhood services, administered by numerous Federal agencies and overseen by several congressional committees. The U.S. General Accounting Office (GAO; 1994) estimated that in fiscal year 1992 and fiscal year 1993, more than 90 early childhood programs were funded by the Federal Government, administered through 11 Federal agencies and 20 offices. Of these programs, GAO identified 34 as having education or child care as key to their mission. The Congressional Research Service (CRS), in a memo to the House Committee on Ways and Means (Forman, 1994), identified 46 Federal programs related to child care operating in fiscal year 1994, administered by 10 different Federal agencies. However, CRS noted that some of these programs were not primarily child care programs; rather, they were designed for some other major purpose but included some type of child care or related assistance. Moreover, a majority of the programs were small, with 32 of the 46 providing less than $50 million in annual funding. A more recent GAO (1998a) report identified 22 key child care programs, of which 5 accounted for more than 80 percent of total child care spending in fiscal year 1997.

In 1996, the 104th Congress passed a major restructuring of Federal welfare programs, including a consolidation of major Federal child care programs into an expanded Child Care and Development Block Grant (CCDBG) (Public Law 104-103). The child care provisions in the new law were developed to achieve several purposes. As a component of welfare reform, the child care provisions are intended to support the overall goal of promoting self-sufficiency through work. However, separate from the context of welfare reform, the legislation attempts to address concerns about the effectiveness and efficiency of child care programs. The four separate child care programs that were enacted in 1988 and 1990 had different rules regarding eligibility, time limits on the receipt of assistance, and work requirements. Consistent with other block grant proposals considered in the 104th Congress, the child care provisions in Public Law 104-193 are intended to streamline the Federal role, reduce the number of Federal programs and conflicting rules, and increase the flexibility provided to States.

Under the new amendments, the CCDBG is now the primary child care subsidy program operated by the Federal Government, and replaces previous child care programs for welfare and working families (i.e., child care for recipients of Aid to Families with Dependent Children, Transitional Child Care Assistance, and the At-Risk Child Care Program). The new law makes available to States almost $20 billion over a 6-year period (1997-2002) in a combination of entitlement and discretionary funding for child care, which is approximately $4 billion above the level that would have been available under the previous programs.

 Despite this increase in Federal resources, concerns persist about the adequacy and quality of child care in the era of welfare reform. Although welfare caseloads have declined, freeing up potential funds from the Temporary Assistance for Needy Families Block Grant for use for child care, the Administration for Children and Families (ACF) estimates that in an average month in 1998 only 15 percent of children eligible for Child Care and Development Fund (CCDF) subsidies received them, raising questions of whether total child care funding is adequate (CCDF or otherwise). It should be noted, however, that eligibility figures do not necessarily reflect consumer demand for child care, leaving the issue of whether adequate child care funding exists open to debate. Nonetheless, child care spending has unarguably been increasing every year. In 1998, States drew down all available Federal mandatory CCDF funding and transferred $652 million in Federal TANF dollars in that year to CCDF Programs. If, as many suspect, demand for child care increases alongside dropping welfare rolls and heightened work requirements for welfare recipients, proposals for additional child care funding are likely to be made in the years ahead.

Increased demand and Federal resources for child care could cause growth in the supply of child care providers. In May 1997, the U.S. General Accounting Office reported that gaps existed between the demand for child care and the ``known'' supply (i.e., providers that are regulated by or otherwise known to the States), based on research at four sites. These gaps were larger in poor areas and for certain types of care, such as infant and school-aged care. However, since many parents rely on informal care givers, such as relatives and neighbors, who may not be known to State agencies, linking supply and demand for child care can be difficult. A later GAO study reviewed efforts in seven States to expand child care programs (U.S. General Accounting Office, 1998b). The seven States did not know whether their efforts to expand the supply of providers would be sufficient to meet the increased demand expected to result from welfare reform. States' efforts included new provider recruitment; fiscal incentives for providers and businesses to establish or expand child care facilities; and initiatives to increase the use of early childhood development and education programs, such as Head Start and prekindergarten programs.

Major Day Care Programs

One of the largest Federal sources of child care assistance is provided indirectly through the Tax Code, in the form of a nonrefundable tax credit for taxpayers who work or are seeking work. Other major sources of Federal child care assistance include the CCDBG, the Social Services Block Grant under title XX of the Social Security Act, the Temporary Assistance for Needy Families Block Grant, and the Child Care Food Program, which subsidizes meals for children in child care. Head Start, the early childhood development program targeted to poor preschool children, can also be characterized as a child care program. Although Head Start primarily operates on a part-day, part-year basis, programs increasingly are being linked to other all-day child care providers to better meet the needs of full-time working parents. Assuming that about $1.9 billion will be spent from TANF either directly or by transfer to the CCDBG Block Grant, assuming that 13 percent of the title XX block grant is spent on child care, and counting the tax loss from the dependent care credit as spending, we can estimate that the Federal Government will spend over $15 billion on child care and Head Start in 2000.

Child Care and Development Block Grant

The Child Care and Development Block Grant (CCDBG) was originally authorized as an amendment to the Omnibus Budget Reconciliation Act of 1990, and in 1996 was reauthorized (through 2002) and amended by the Personal Responsibility and Work Opportunity Reconciliation Act (Public Law 104-193). The program provides funding for child care services for low-income families, as well as for activities intended to improve the overall quality and supply of child care for families in general. Financing

Under the original CCDBG Act, discretionary funds were authorized, subject to the annual appropriations process. As amended by the 1996 welfare reform law, the program is funded by a combination of discretionary and entitlement amounts. The combined total of funds is sometimes referred to as the Child Care and Development Fund. The discretionary funds are authorized at $1 billion annually. However, appropriations surpassed the authorized level in both fiscal years 1999 and 2000, at $1.183 billion. These funds are allocated among States according to the same formula contained in the original CCDBG Act, which is based on each State's share of children under age 5, the State's share of children receiving free or reduced-price lunches, and State per capita income. Half of 1 percent of appropriated funds is reserved for the territories, and between 1 and 2 percent is reserved for payments to Indian tribes and tribal organizations. States are not required to match these discretionary funds. Funds must be obligated in the year they are received or in the subsequent fiscal year, and the law authorizes the Secretary to reallocate unused funds.

The welfare reform law also provided entitlement funding to States for child care under the CCDBG. The annual amounts of entitlement funding were $1.967 billion in fiscal year 1997; $2.067 billion in fiscal year 1998; $2.167 billion in fiscal year 1999; $2.367 billion in fiscal year 2000; $2.567 billion in fiscal year 2001; and $2.717 billion in fiscal year 2002.

The Secretary must reserve between 1 and 2 percent of entitlement funds for payments to Indian tribes and tribal organizations. After this amount is reserved, remaining entitlement funds are allocated to States in two components. First, each State receives a fixed amount each year, equal to the funding received by the State under the three child care programs previously authorized under AFDC in fiscal year 1994 or fiscal year 1995, or the average of fiscal years 1992-94, whichever is greater. This amount, totals approximately $1.2 billion each year, is sometimes referred to as ``mandatory'' funds. No State match is required for these funds, which may remain available for expenditure by States with no fiscal year limitation. Although no State match is required, to receive their full TANF allotment, States must maintain at least 80 percent of their previous welfare expenditures (referred to as their ``maintenance-of-effort'' requirements), including previous expenditures for welfare-related child care, in fiscal year 1994.

After the guaranteed amount is distributed, remaining entitlement funds are distributed to States according to each State's share of children under age 13. States must meet maintenance-of-effort and matching requirements to receive these funds. Specifically, States must spend all of their ``guaranteed'' Federal entitlement funds for child care, plus 100 percent of the amount they spent of their own funds in fiscal year 1994 or fiscal year 1995, whichever is higher, under the previous AFDC-related child care programs. Further, States must provide matching funds at the fiscal year 1995 Medicaid matching rate to receive these additional entitlement funds for child care. If the Secretary determines that a State will not spend its entire allotment for a given fiscal year, then the unused amounts may be redistributed among other States according to those States' share of children under age 13.

In addition to amounts provided to States for child care, States may transfer up to 30 percent of their TANF Block Grant into their CCDBG or Social Services Block Grant Programs. Funds transferred into child care must be spent according to the CCDBG rules. However, States also may use TANF funds for child care without formally transferring them to the CCDBG. Eligibility and target population groups

Children eligible for services under the revised CCDBG are those whose family income does not exceed 85 percent of the State median. States may adopt income eligibility limits below those in Federal law. Because child care funding is not an entitlement for individuals, States are not required to aid families even if their incomes fall below the State-determined eligibility threshold. Federal law does require States to give priority to families defined in their plans as ``very low income.'' To be eligible for CCDBG funds, children must be less than 13 years old and be living with parents who are working or enrolled in school or training, or be in need of protective services. States must use at least 70 percent of their total entitlement funds for child care services for families that are trying to become independent of TANF through work activities and families that are at risk of becoming dependent on public assistance. In their State plans, States must explain how they will meet the specific child care needs of these families. Of remaining child care funds (including discretionary amounts), States must ensure that a substantial portion is used for child care services to eligible families other than welfare recipients or families at risk of welfare dependency. Use of funds

CCDBG funds may be used for child care services provided on a sliding fee scale basis; however, Federal regulations allow States to waive child care fees for families with incomes at or below the poverty line. Funds also may be used for activities to improve the quality or availability of child care. States are required to spend no less than 4 percent of their child care allotments (discretionary and entitlement) for activities to provide comprehensive consumer education to parents and the public, activities that increase parental choice, and activities designed to improve the quality and availability of child care (such as resource and referral services).

Child care providers receiving Federal assistance must meet all licensing or regulatory requirements applicable under State or local law. States must have in effect licensing requirements applicable to child care; however, Federal law does not dictate what these licensing requirements should be or what types of providers they should cover. States must establish minimum health and safety standards that cover prevention and control of infectious diseases (including immunizations); building and physical premises safety; and health and safety training; and that apply to child care providers receiving block grant assistance (except relative providers).

Parents of children eligible to receive subsidized child care must be given maximum choice in selecting a child care provider. Parents must be offered the option to enroll their child with a provider that has a grant or contract with the State to provide such services, or parents may receive a certificate (also sometimes referred to as a voucher) that can be used to purchase child care from a provider of the parents' choice. Child care certificates can be used only to pay for child care services from eligible providers, which can include sectarian child care providers. Eligible providers also can include individuals, age 18 or older, who provide child care for their grandchildren, great grandchildren, nieces or nephews, or siblings (if the provider lives in a separate residence). In fiscal year 1998 certificates were overwhelmingly the form of payment most used, serving over 83 percent of CCDF children nationally. States must establish payment rates for child care services that are sufficient to ensure equal access for eligible children to comparable services provided to children whose parents are not eligible for subsidies.

The CCDBG contains specific requirements with regard to the use of funds for religious activities. Under the program, a provider that receives operating assistance through a direct grant or contract with a government agency may not use these funds for any sectarian purpose or activity, including religious worship and instruction. However, a sectarian provider that receives a child care certificate from an eligible parent is not so restricted in the use of funds. Administration and data collection

At the Federal level, the CCDBG is administered by the Administration for Children and Families of the U.S. Department of Health and Human Services (DHHS). The Secretary is required to coordinate all child care activities within the agency and with similar activities in other Federal agencies. States are required to designate a lead agency to administer the CCDBG, and may use no more than 5 percent of their Federal child care allotment for administrative costs. States must submit disaggregated data on children and families receiving subsidized child care to DHHS every quarter, and aggregate data twice a year. The Secretary is required to submit a report to Congress once every 2 years. The most recent available data from DHHS as submitted by the States is from fiscal year 1998.


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This document is not necessarily endorsed by the Almanac of Policy Issues. It is being preserved  in the Policy Archive for historic reasons.

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