Child care cuts deal a blow to low-income working families and kids

The Oklahoma Department of Human Services this week approved changes to the state’s child care subsidy program that  will increase hardships for struggling low-income working families, threaten access to quality child care, and harm child care providers who serve low-income children. [UPDATE: In late July, the Commission decided to defer a vote on these changes until November]

DHS’ actions were precipitated by budget shortfalls for the upcoming year exceeding $30 million. The Legislature reduced state appropriations to DHS  for FY ’12 by a modest $6.0 million, or 1.1 percent, compared to FY ’11. However, the agency also faces the loss of one-time funding in this year’s budget, expected increases in program utilization, and higher employee benefit costs. To balance its budget, DHS proposed a series of  measures, which included voluntary buyouts of 231 positions, mostly within its field operations division for children and family services, and cuts in contracts for various social services.

However, the largest program cuts are concentrated on the child care subsidy program. Funded through a combination of federal and state dollars, the subsidy program provides assistance to qualifying families by paying all or part of their child care expenses while parents or caretakers are working, going to school or receiving training. Children may attend licensed child care centers or family child care homes, which are paid a daily amount  for subsidized children based on the child’s age and the facility’s quality of care. Families above a certain income level contribute a monthly co-payment. The program currently serves some 37,000 children in just under 24,000 families.

DHS has adopted two major changes aimed at reducing the cost of the child care subsidy program effective August 1, 2011:

  • Raising monthly co-payments by 20 to 35 percent depending on income and the number of children in care.  The increase is expected to affect some 13,000 families and reduce annual costs for DHS by $5.8 million.  Families with income below $850 per month will continue not to have a co-payment obligation;
  • Lowering the eligibility threshold for families newly applying for child care subsidies. The maximum monthly income for families not currently receiving subsidies will drop from $2,425 to $2,125 for a family with one child in care; from $2,425 to $2,125 for families with two children in care, and from $3,625 to $2,925 for families with three of more subsidized children. Families in the higher income brackets who are currently receiving benefits will remain eligible. DHS projects annual cost savings of $3.8 million from this measure.

These measures can be expected to have a significant financial impact on low-income working families. For example, the monthly co-payment for a single parent working full-time at $9.50 per hour will increase by $41  – from $162 to $203 –  if she has two children in subsidized care. The child care co-payment, equivalent to $1.21 per hour, will now absorb over 12 percent of her wages.  Meanwhile, as a result of the eligibility changes, a two-parent family with two children where both parents make the minimum wage of $7.25 per hour will no longer be eligible for subsidized care.

Coming at a time of rising costs for fuel, health insurance, and other household necessities, increased child care expenditures will squeeze already tight family budgets and place greater strain on public and private safety net providers. Faced with higher child care costs, some parents may choose to pull their children out of the system of licensed and subsidized child care in favor of informal and often unstable care arrangements with siblings, neighbors or friends. In other cases, the higher cost of child care may lead parents to stop working entirely – with a consequent loss of family income and, perhaps, a return to the welfare rolls.

The cuts will also affect the bottom line for child care providers, many of which are small locally-owned businesses that are already economically fragile. Many child care providers will lose clients, as higher co-pays and reduced eligibility lead some children to be withdrawn from the system of licensed care entirely. Others will be left to absorb part or all the higher co-payments themselves when families who are already receiving child care are unable to afford a 20 – 35 percent increase. For some providers, also dealing with rising operating costs and rates that have been frozen for several years, the lost revenue may push them out of business entirely.

Was DHS justified in making this decision? The agency clearly faces a shortfall and had its hands partly  tied by the Legislature, which passed a bill expressly prohibiting DHS from cutting senior nutrition services, home- and community-based waiver programs, and various other services. Still, as  noted by Commissioner Steven Dow, who was one of two commissioners to vote against the agency budget,  the agency still has $15 million in carryover TANF (Temporary Assistance to Needy Families) funds that it could have tapped to mitigate the extent of the child care cuts.  Linda Terrell, Executive Director of the Oklahoma Institute for Child Advocacy, stated:

State agencies are being asked to make tough decisions, but people working directly with children know the impact of their decisions. It is unfortunate that members of the commission see the value of a surplus over the value of ensuring working families have access to high-quality and safe childcare.

Given the available TANF surplus and a long history of actual expenditures coming in below projections, DHS could have adopted more modest co-payment increases and decided during the year whether additional budget-balancing measures were needed. As it is, this decision will be a serious blow for hard-pressed families trying to pay their bills and ensure quality care for their kids.

ABOUT THE AUTHOR

David Blatt helped found OK Policy in 2008 and became the organization's Executive Director in 2010. David previously served as Director of Public Policy for Community Action Project of Tulsa County and as a budget analyst for the Oklahoma State Senate. He has a Ph.D. in political science from Cornell University and a B.A. from the University of Alberta. David has been selected as Political Scientist of the Year by the Oklahoma Political Science Association, Local Social Justice Champion by the Dan Allen Center for Social Justice, and Public Citizen of the Year by the National Association of Social Workers. He lives in Tulsa with his wife, Patty Hipsher, a special education teacher in Broken Arrow, and their son, Noah.

29 thoughts on “Child care cuts deal a blow to low-income working families and kids

  1. I worked with TANF clients for 2 1/2 years as an alcohol/drug treatment counselor. These women used their TANF money to purchase spiral perms, and balloon bouquets for their “illegal” boyfriends, just to mention a few examples. I would try to discuss birth control and was usually met with angry stares. The “illegal” (who had just fathered his 12th child) became very belligerent when I delicately tried to discuss birth control with him. He would not hesitate to benefit from our state’s assistance, but we were not to interfere in his business. This experience, plus my 26 years as a Probation/Parole Officer tainted my view of the “needy” Oklahomans our tax dollars are supporting. I would propose that DHS has researched all their options and felt this was the most feasible.

  2. Cynthia, I have to disagree. These cuts will do nothing for the families that you speak of becasue most likely they do not work anyway and are abusing the system. Who it will hurt are the many families struggling to get by on minimum wage and under 10 an hour. Why don’t they cut administration and teh ones taht sit around writing insanely stupid policies taht do not do anything to protect children, but rather create more red tape jobs.

  3. I take offense to a couple of the phrases in the last paragraph: “Given the available TANF surplus” sounds like OKDHS is sitting on a pile of money and withholding it from struggling families. The “surplus” is actually a contingency fund. No reputable business operates without a contingency fund to cover emergencies and unexpected events. Calling this a “surplus” is patently unfair. Secondly, “a long history of actual expenditures coming in below projections” is also a cheap shot. OKDHS has to budget conservatively. Coming in over projections is not exactly an option, so of course we come in below projections. It means we’ve done our jobs of managing tax dollars effectively.

  4. I am a mother of two in a two parent household. We have been living off of my husband’s teaching salary for the last two years so that I can complete my college education to become a teacher and because putting two children under the age of 4 in a quality daycare would cost us 1600 a month. I am now down to my last semester of school when I must do a full internship and I am forced to put the chidlren in daycare. We were just $75.00 over the original guideline and now we will be further from it with the new guidelines. We are working very hard to get me through college so that my children can be off of soonercare and I can get them into public schools. I am devastated to think that there will be more like me now that do not qualify for subsidized assistance and are forced to place their children in not such great conditions. It is sad that some parents abuse th system and are getting a free ride and not choosing to work towards better living when there are people like me that are working hard and now must make a decision to either not finish my schooling and work at nihts or place my child with someone I do not know or trust. Cuts like this actually affect people that are on the borderline and working hard or going to school. I am at the end of my rope with the system. Should my husband stop working so that we could qualify?

  5. Cynthia, you say you were a drug and alcohol treatment counselor. Did it never occur to you that the problem with your clients might not be that they were low-income but that they were ADDICTS? You do realize that addicts in general are not good at taking care of themselves or others, which is what makes addiction such a problem in the first place, right? And do children of addicts deserve less or worse treatment by society than children of non-addicts do? Wouldn’t it actually be BETTER that they be in subsidized daycare so that they are away from the harmful influence of their parents for at least part of the day? The same is true of criminals – who are, in this state, disproportionately ADDICTS as well. You were not serving “the ‘needy’ in this state”, you were serving a portion of the needy people in this state who have already proven that they can’t take care of themselves properly, so kindly quit using that experience to act as though all low-income people in Oklahoma are the same and are all worthless.

  6. There are many who misued the system and that is hurting the ones that really need the help. Children will be the one to suffer in the long run.

  7. By this cut or whatever you wanna call it is going to force families for one of the parents to quit working so they don’t have enough money to pay the bills and to pay the people they just to provide care for the child but yet they will provide all kinds of service for these legal immigrants who are here in the United States illegally and don’t question them but for the US citizens to get assistance for care so they can make money to pay their debts is next to impossible they need to spend more time and energy I’m getting the illegals out of the country that are here taking our assistance to live

  8. There are people getting assistance from DHS childcare who don’t report their income and sources.They should have to show their spousal support even if they don’t file jointly.

  9. Thanks to the DHS cutbacks the daycare that is in the bld we own is having to close. My husband and I are retired, barely making ends meet, we depend on this income. The people who have the daycare, have worked so hard for many years w/an excellent reputation. Many of the kids have grown up there. Anyone that has had a daycare knows that you won’t get rich in this line of work. What are the daycare owners, employees, parents and children suppose to do? Because of so many unnecessary regulations etc., it’s almost impossible to make a go of an independently owned daycare under the best of circumstances. Do you relize how many lives are affected by what you do? What had happened to our state?!

  10. I am a hardworking single mother who has been impacted by these “budget cuts”

    I was laid off by by last job, and was collecting unemployment until I found something else. When I accepted and got hired through another company, I went to get daycare for my child just to find out there wasn’t any daycare anymore. At making only $10hr there would be no way I could afford day as for my child with all of my other bills. Rent, electric, phone, ect. For a mother who doesn’t even receive child support it is very hard to make it even when dhs did help with child care. So because of these cuts I had to decline the job offered to me because I just can’t afford child care (almost $500 a month !) so now I have no job &I’m living strictly off of any other assistance offered. Your forcing people like myself to live off assistance because now we can’t work without childcare. I have no family to help me watch my child. I know there are many trying to work and raise their families and trying to get off this assistance and now it seems impossible to do so. So thank you Oklahoma.

  11. I receive a subsidy payment from Oklahoma for Aid to the Aged, Blind and disabled. My money has been held for 3 months already, I called on Friday July 1st to find out where my payment was and they guaranteed me it would be there by 5pm that day. I am typing this on Tuesday July 5th, STILL NO MONEY! I called them again today and got another excuse……”due to the HOLIDAY it will be another couple of days”. Electricity will be turned off sometime this afternoon because I did not make the payment like I told them I would! I called OG&E ON FRIDAY JULY 1ST AND MADE ARRANGEMENTS THAT I CANNOT MEET BECAUSE OF DHS!

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