Priorities Report: FY2017

Report on States Serving Prioritized Children with Child Care  Assistance under the CCDBG Act of 2014

BACKGROUND

The Child Care and Development Fund (CCDF) is the primary federal funding source dedicated to providing child care assistance to low-income families. As a block grant, CCDF gives funding to states, territories, and tribes to provide child care subsidies through vouchers or certificates to low-income families, and grants and contracts with providers in some states. CCDF provides access to child care services for low-income families so parents can work, attend school, or enroll in training. Additionally, CCDF promotes the healthy development of children by improving the quality of early learning and afterschool experiences. In November 2014, Congress acted on a bipartisan basis to pass the Child Care and Development Block Grant (CCDBG) Act of 2014 (Public Law (Pub.L.) 113-186) into law and reauthorized the CCDF program through fiscal year (FY) 2020. In September 2016, the Office of Child Care (OCC) within the Department of Health and Humans Services’ Administration for Children and Families (ACF) published a CCDF final rule (81 F.R. 67438) to provide clarity to states, territories, and tribes on how to implement the CCDBG Act.

For many families, affordable child care and school-age care are critical to maintaining a stable job. In 2016, 56 percent of married-parent households were employed and 67 percent of single mothers were employed among families with children under age six.^[1] Research has shown that low-income parents who receive child care subsidies are more likely to be employed and have fewer work disruptions, which leads to more stable jobs.^[2] In FY 2016, CCDF provided $5.7 billion in discretionary and mandatory matching funds to 56 states and territories and 260 tribal grantees encompassing over 500 federally recognized tribes. Each month, CCDF serves approximately 1.4 million children under the age of 13 from 850,000 low-income working families. However, CCDF and related programs only serve 15 percent of federally eligible children (birth through age 12). Since not all families are served, it is important to prioritize services particularly for the vulnerable populations. Children experiencing poverty, disability and homelessness may have adverse childhood experiences (ACEs) that have negative impacts through adulthood. ACEs studies have substantiated the tie between childhood adversity and negative outcomes, including poor academic achievement, incarceration, unemployment, poverty, disability, and early death.^[3] A significant goal of the CCDF program is to support children’s learning and development. Providing priority for an array of services to these populations may partially help mitigate adverse childhood experiences.

In section 658E(c)(3)(B)(ii)(I) of the CCDBG Act,^[4] Congress required an annual report “that contains a determination about whether each state uses amounts provided for the fiscal year involved under this subchapter in accordance with the priority for services.” The priority for service categories include: 1) children of families with very low family incomes (taking into consideration family size), and 2) children with special needs. In section 658E(c)(3)(B)(i) of the CCDBG Act,^[5] Congress also highlighted assistance for homeless children. The final rule added a priority of services for children experiencing homelessness at 45 CFR 98.46(a)(3). Lead agencies may fulfill priority requirements in a variety of ways, such as higher payment rates for providers caring for children with special needs, waiving co-payments for families with very low incomes (at or below the federal poverty level), or reserving slots for children experiencing homelessness.

DISCUSSION

The first annual priorities report was issued in 2016 and focused on information submitted by states and territories in their FY 2016 -2018 CCDF plans. In their plans, all states report meeting the priority requirements. States and territories provided information on their CCDF plans based on a reasonable interpretation of the CCDBG Act, because the final rule was not published until September 30, 2016. The next cycle of CCDF plans will require states and territories to be in compliance with the final rule requirements, and will not be effective until FY 2019. In the meantime, the current version of the priorities report for FY 2017 describes administrative data elements and other data sources that can be used to examine the extent that states are providing services for the required priority populations (i.e., children of families with very low family incomes, children with special needs, and children experiencing homelessness). Some of this data is not currently available, but will be in the future.

States and territories must submit monthly case-level data on the characteristics of children and families served through CCDF (Section 658K (a)(1) of the CCDBG Act, 45 CFR 98.70(a), and 98.71(a) of the regulation) to the Office of Child Care (OCC). This data report, the ACF-801, includes three data elements related to the priority of service categories: total monthly income, family homeless status, and child disability status. Two of these elements (homelessness and disability) were recently added and data is not yet available to include in this report. We are currently working with states to provide technical support as they implement the new reporting requirements. In the future, these data elements will be useful for determining the extent that states serve priority populations and for gauging trends overtime.

The rest of this report provides analysis of each of the three priority areas. For each priority group, this report describes relevant data sources and where available CCDF administrative data regarding how the group is served by the CCDF program.

1. Prioritizing services for children of families with very low incomes

State and territory CCDF lead agencies must demonstrate in their state CCDF plans how they are providing priority to children of families with a very low family income (considering family size) as required by section 658E(c)(3) of the CCDBG Act^[6] and 45 CFR 98.46(a)(1) of the final rule. As mentioned in FY 2016 priorities report, all states and territories prioritize or target child care services for families with very low incomes. States and territories have the flexibility to determine the definition of “very low income.” According to an analysis of FY 2016-2018 CCDF Plans, the definition of families with very low family incomes (considering family size) varies across states. For instance, some states define families with very low family incomes as families who are eligible or received assistance under the Temporary Assistance for Needy Families (TANF) program. Other states use the federal poverty level (FPL) thresholds to define families with very low incomes. There were 16 states that reported in their FY 2016-2018 CCDF plans that they are using 100 percent of the federal poverty level as a threshold to define families of very low income. Other states use thresholds related to their state median income (SMI) to define families with very low incomes.

CCDF administrative data provides information about the characteristics (including income) of families receiving a child care subsidy. FY 2015 ACF-801 CCDF administrative data (most recent year available) indicates that nearly 1.4 million children (ages 0 through 12) received child care assistance monthly and approximately 55 percent were below the FPL. 78 percent of children who received CCDF child care services in Puerto Rico were below poverty, the highest among the states and 30 percent of children who received CCDF assistance in North Dakota were the lowest among the states in 2015.^[7] As a point of comparison from analyzing 2015 American Community Survey 1-year estimates, we determined 23 percent of children (ages 0 through 12) were below poverty. The proportion of children below poverty is higher among children receiving CCDF services compared to the general population. This pattern holds in every state, suggesting that all states are prioritizing CCDF services for children of families with very low incomes.^[8]

1. Prioritizing children with special needs

Section 658E(c)(3)(B) of the CCDBG Act^[9] and 45 CFR 98.46(a)(2) require a state’s priority for services to include children with special needs. While lead agencies have flexibility to define ’’children with special needs’’ in their CCDF Plans, many include children with disabilities in their definitions. Section 658P(3) of the Act^[10], 45 CFR 98.2 of the final rule defines a child with a disability as (i) a child with a disability as defined in section 602 of the Individuals with Disabilities Education Act (IDEA) (20 U.S.C. 1401), (ii) a child who is eligible for early intervention services under part C of the IDEA (20 U.S.C.1431 et seq.), (iii) a child who is less than 13 years of age and who is eligible for services under section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), and (iv) a child with a disability, as defined by the state. Per the October 2016 report, states and territories are required to report if a child receiving CCDF services is a child with a disability as part of the ACF-801 administrative data reporting requirement. The reporting of the new data element for child disability will allow OCC to determine the extent the lead agencies are serving children with disabilities that receive CCDF assistance. Additionally, provide further evidence on how states are ensuring priority for services for children with special needs in accordance with the statute. OCC is working with states to address reporting issues. This data is not yet available, but we anticipate it will be included in future versions of the report.

In addition, we have identified a number of data sources that describe the prevalence of children with disabilities in the broader population, which can potentially be used in the future as a point of comparison to the CCDF caseload. Under section 618 of the IDEA,^[11] states must submit data about the infants and toddlers (birth through age 2), who receive early intervention services under Part C of IDEA and children with disabilities, and ages 3 through 21, who receive special education and related services under Part B of IDEA.^[12] The Department of Education (DOE) also requires school districts to submit data regarding enrollment and services provided to children with a disability and who receive related aids and services solely under section 504 of the Rehabilitation Act of 1973.^[13] Once CCDF administrative data on children with disabilities is available, we will explore comparisons with other data sources such as IDEA and section 504. Analysis of these data sources will enable us to examine the prevalence of children with disabilities and the extent to which states and territories are prioritizing CCDF services for children with disabilities in comparison to other programs that serve children with disabilities.

1. Prioritizing children experiencing homelessness

Section 658K (a)(1)(B)(xi) of the CCDBG Act^[14] requires states to report whether children receiving CCDF assistance are homeless. The CCDBG Act also includes several provisions designed to support services to children and families experiencing homelessness. The final rule added “children experiencing homelessness” to the priority for services categories at 45 CFR 98.46(a)(3). Lead agencies must use the definition of homeless applicable to Head Start and school programs from section 725 of Subtitle VII—B of the McKinney-Vento Act^[15] to align with other federal early childhood programs. Lead agencies must include a description in their state plans of how they provide priority for services to children who are experiencing homelessness. Lead agencies have flexibility as to how they offer priority. For instance, lead agencies have the option to prioritize enrollment, waive co-payments, and pay higher rates for access to higher-quality care, or use grants or contracts to reserve slots for children of families who are experiencing homelessness. Since October 2015, states and territories were required to report whether a family receiving CCDF assistance is homeless on the ACF-801 administrative data report. OCC is working with states to implement this new reporting and will include results in future annual priorities reports.

To examine the prevalence of children experience homelessness in each state, ACF intends to review relevant data sources that meet the homeless definition of section 725 of the McKinney-Vento Act, such as data sources from the McKinney-Vento program. The DOE oversees the collection of administrative data from state educational agencies regarding enrollment, services, and educational outcomes for students experiencing homelessness that receive services under the McKinney-Vento Education for Homeless Children and Youths Program.^[16] We anticipate the analysis of McKinney-Vento program administrative data sources and other similar data sources will enable OCC to determine the prevalence of children experiencing homelessness. OCC would be able to use these data sources as a comparison tool to examine how states and territories are providing priority CCDF services to children who are experiencing homelessness. A preliminary analysis of state-by-state data from the Early Childhood Homelessness in the United States: 50-State Profile shows a wide range of variation across states regarding the proportion of children under age 6 that experience homelessness relative to children under age 6 that live in each state. In 2015, the data ranged from 7 percent of children in California who experienced homelessness to 1 percent in Rhode Island.^[17]

CONCLUSION

OCC is required by law to provide a report on state and territory compliance with the priority of assistance to children in very low income families and children with special needs. This report also includes information established in the final rule, published September 30, 2016, which prioritized children experiencing homelessness.

This is the second of the newly required reports ensuring priority for services for specific populations. Based on the CCDF plans for FY 2016-2018, and other relevant data sources, OCC is pleased to report that all states and territories are prioritizing CCDF assistance to families with very low incomes, children with special needs based on state income eligibility limits, and state determinations of special needs. States are working to establish or expand outreach and access for children experiencing homelessness pursuant to the CCDF statute and the final rule. OCC will continue to track and update information in the next annual report (September 30, 2018) required by the CCDBG Act.

Attachment. Percent of Children Receiving CCDF and Children in the General Population (Ages 0 through 12) Below Poverty in Each State