Child Care Prices: A Profile of Six Communities

Sandra J. Clark and Sharon K Long

The Urban Institute

April 1995

This report was prepared for the U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, under contract number HHS-100-92-0005. In addition to the authors, the following people conducted site visits for this study: Lorelei R. Brush, Amy-Ellen Duke, Carolee Fucigna, Freya Sonenstein, and Louise Stoney. Sarah Nordmann assisted in selecting the sites and provided helpful comments on the price survey and report. Nancy Marshall also reviewed site visit materials and this report. We thank the CCR&R staff in each of the sites, especially Bruce Atchison, Margie Curry, Linnea Klee, Evelyn Efinger Lacroix, Sandra Lamm, and Cass Wolfe, who coordinated the efforts of their staff on short notice and within a short time frame. We are especially grateful to the CCR&R staff who completed the price survey. The study could not have been completed within the short time frame without their hard work and cooperation. Brenda Brown and Sharon Hilliard provided other helpful assistance throughout this study.

EXECUTIVE SUMMARY

The key objective of this study was to provide current information about the price and availability of child care for low-income families. To meet that objective, we collected child care price data from local child care resource and referral agencies (CCR&Rs) in six communities: Bath, NY, Birmingham, AL, Boulder, CO, Chicago, IL, Dallas,IX, and San Francisco, CA. We also gathered information on the availability and accessibility of child care services for low-income families in those sites.

In the study communities, many different funding streams were used to subsidize child care for low-income families, including Title IV-A Child Care, the Child Care and Development Block Grant, the Social Services Block Grant (Title XX), and the Community Development Block Grant. The funding streams were combined in different ways across the communities resulting in a "seamless" child care system in some sites, and complex and highly-fragmented systems in other sites. Multiple administrative agencies and varied program rules were cited by the CCR&Rs in some sites as factors in the fragmentation of some service-delivery systems.

Child Care Prices.

It is clear from the child care price data that there is wide variation in child care prices within and across the six communities. For example, the reported price for full-time infant care in a center ranged from $87 to $650 per month within one site, while, across the sites, the average price for such care ranged from $273 to $673 per month. To put these figures in perspective: a full-time minimum wage worker paying the average cost for care for an infant in a center would pay at least 50 percent of family earnings for child care in five of the six sites. If the worker could obtain care with the lowest-priced provider in their community (something which is not always possible and may not be desirable in terms of quality of care), the share of family earnings spent on child care still would be more than 35 percent of earnings in four of the six sites.

The maximum rates of reimbursement for child care services under the Title IV-A and Child Care and Development Block Grant (CCDBG) programs also varies across the communities. For full-time infant care in a center, for example, the Title IV-A maximum reimbursement varies from $290 to $750 per month across the sites. The relationship between the maximum reimbursement rate and child care prices was cited by CCR&R staff as an important factor in low-income families access to care, particularly in the site where the maximum reimbursement has been set well below the 75th percentile of market rates.

Accessibility to Child Care Subsidies.

In five of the six study sites, many eligible families go unserved because of child care funding shortages. In only one community are subsidies available to all eligible low-income families seeking assistance. Because of the scarcity of child care funds, waiting lists for child care subsidies are quite common across the study sites.

Several of the CCR&Rs also highlighted difficulties with the continuity of child care funding (and, consequently, child care arrangements) as family circumstances change. In some communities, even families transitioning out of the welfare system may not receive continued child care assistance. As a result, low-income families must either devote a larger share of their budgets to child care expenses, make informal arrangements for care, or negotiate with child care providers for reduced rates. In some cases, the situation results in children being left in inappropriate or unsafe situations, or the family reentering the welfare system. When asked about ways to improve the child care system in their areas, staff in all six sites listed increased funding and reduced program complexity as key factors.

Accessibility of Child Care.

All of the communities reported that there were some shortages of child care; these shortages often affected all families not just low-income families. In particular, the CCR&Rs report an inadequate supply of care for infants and school-age children, part-time care, and nontraditional hours of care. Lack of accessible care and transportation problems were also cited as barriers, particularly for low-income families. CCR&R staff across the sites reported a need for expanded child care capacity in their communities.

Quality of Care.

Overall, CCR&R staff characterized the quality of child care in their communities as "not high" for all children, regardless of whether they were receiving child care subsidies. In one site, CCR&R staff reported that quality for subsidized care was "not as high" as that for children who can pay the full rate, primarily because of that state's low maximum reimbursement rates. The assessment by the CCR&Rs that the quality of child care in their communities tends to be low is supported by recent research that finds significant shares of child care of such poor quality as to interfere with children's emotional and intellectual development (Helburn et al., 1995, Galinsky et al., 1994; and Whitebook et al., 1989). Reasons cited by the CCR&Rs for low quality care within their communities include: low maximum reimbursement rates, low wages for child care workers, low licensing standards for providers, and few, if any, regulations covering license-exempt care.

Understanding the Process of Finding Child Care.

As part of the site visits for this project, we asked staff in each CCR&R to take us through the process of helping three hypothetical families find child care. Among the difficulties identified by the CCR&Rs as arising for the typical families were: limited numbers of providers willing to take children on a part-time basis, a need to look for care outside of the family's immediate neighborhood, few providers with openings for an infant, and waiting lists for child care subsidies. For example, in helping a low-income working mother (earning 150 percent of poverty) find care for her three children, the CCR&R in San Francisco estimated that it would take 6 months to obtain funds to place an 8-year old in after school care, 2 years to place a 3-year-old in care, and 1 year to place an infant in care. CCR&R staff reported that, in the meantime, they would advise the mother to "make do" as best she could.