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What to Know About the Childcare For Working Families Act

New bills and proposals on both sides of the aisle point to a willingness to solve a serious problem.

In 2017, Senators Patty Murray and Mazie Hirono, along with 33 other Senators introduced the Child Care for Working Families Act. It was a landmark piece of legislation that would significantly increase federal investment in child care programs across the country through direct subsidies and giving parents money to help cover the cost of child care, which in some places can cost up to a 36 percent of a family’s total income. That bill was just re-introduced into the Senate last week, just a few weeks after Senator Elizabeth Warren also released her own plan — the Universal Child Care Act — and proposed to pay for it in part through a wealth tax. Republicans, too, have looked for a solution, leaning on a collaboration between the public and private sector, tax benefits, and savings accounts.

What this all points to is that a solution to the high cost of child care may be closer than ever before. But is it?  To gain some insight into the, Fatherly talked to A. Everette James, a public policy expert at University of Pittsburgh, about the Child Care for Working Families Act, Elizabeth Warren’s plan, and which one might actually succeed. 

Let’s talk about The Child Care for Working Families Act, which was just re-introduced in the Senate after it stalled in 2017. What do you think about it?

The Act basically takes existing programs and modifies an existing policy, the Child Care Development block grant. It puts a lot more money into those block grant program, giving money to states, to help them help people pay for child care and establish a more extensive provider system in a more high-quality provider system.

It does that in a variety of different ways. The first thing it does is it provides direct subsidies for taxpayer funds for a significant increase in the childcare and development block grant. Currently, that block grant is around $6 billion.

We already have an existing program that provides money to states to that they can help families afford child care. Generally, that’s capped at about 200 percent of the federal poverty level under the existing program.

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So, the bill is more of a revamp and will increase federal investment in the existing programs that make up the patchwork of child care in the United States?

The new act starts out with about $20 billion [in funding] and the next year, $30, and the next, $40. States submit a plan, apply for funds, and get the funds as long as they are willing to set up a system to measure the quality of the providers, to set rates depending on the quality ratings of the providers that are established in the state. A sliding scale for copayments is applied.

The state submits their plan and then anybody that’s making less than 75 percent of the state median income would pay nothing. From 75 to 100 percent of the state median income, once you’ve used two percent of your income for child care expenditures, this program would pick up the rest. From 100 to 125 percent of the state median income, once you’ve spent four percent of the income, the state would pick up the rest. And then from 125 to 150 percent of the state median income, once you’ve spent between four and no more than seven percent of your income, this subsidy would be available to you to give you money to pay for child care. So that’s the direct financial support to families.

Has the act been given a Congressional Budget Office score yet?

No, it hasn’t been scored yet. It’s a pretty ambitious and expensive proposal. The proponents of the legislation were trying to say that it would cost $60 billion per year, but I think that’s probably a very conservative estimate based on the rest of the bill. This is very much like the Affordable Care Act, which is trying to fill gaps in the existing system to provide, basically, universal child care benefit or entitlement.

What other important parts of the bill do you think parents need to know about?

The bill stipulates that funds have to be used by the states to model or renovate existing child care centers and provide grants for new child care centers and family, friends, neighborhood centers, because formal child care centers are not going to be practical for all families.

The bill requires investments in referral systems to get people information and to connect them with child care resources. We’d invest a lot of money in a resource and referral system that would give people a one stop shop to figure out about existing child care providers.

The other thing the bill does is provide funds for the training and development of child care providers themselves. There are parts of it that provide for services for infants and toddlers. It’s a very comprehensive piece of legislation. It’s ambitious. But that’s just Title I of the bill.

What do the other titles stipulate and why are they important?

Title II of the bill would try to address the lack of consistency in preschool programs around the country. That puts about $8 billion into it. The idea there is that states would get formula grants. [That will be calculated] by the state’s number of children under six years old and a factor of how many people in that state are below 200 percent of the federal poverty level. States would get a specific amount of money based on those criteria.

The idea behind that is that we’d take the existing education system, specifically elementary schools, and try to help them expand preschool classrooms and programs and then help establish scholarships for people to attend those preschool programs. An interesting aspect of this proposal is that it requires a ten percent match from the state. That was a big hang up in the Medicaid expansion.

The Medicaid Expansion was funded by the federal government, but only to a certain point in time, which was 2019. And then after that, the states had to come up with 10 percent. One of the rationales for a lot of the states refusing to expand medicaid is that it would require state expenditures to receive the grant program.

Are there any more titles?

Title III, is about extending the duration of the Head Start program and making that more of a full school day, full school year program. That will have some expenses associated with it. That program currently requires a 20 percent state match. Title IV is a disabilities title.

Title V is kind of interesting. It increases investment in an existing program, the Maternal and Infant Child Home Visiting Program. That’s an evidence-based program that allows people to receive these services in their home. That program serves pregnant women, expecting fathers, caregivers of children from childbirth to kindergarten.

So basically the federal government is showing up for programs that are struggling to provide care to more people who need it. So, what are the shortcomings of the bill? Do you have any concerns about the way it would be funded or implemented?

The bill stands up a much more robust child-care provider system and training of individuals to provide child care and standardization of those individuals, and then, expands preschool, Head Start, and visiting programs to supplement around the edges of that policy.

I think, for serious policy proposals, at least Elizabeth Warren did realize she had to propose a way to fund her proposal, which as a lot of similarities to what’s laid out here. But that’s more of a new program, as opposed to building on the existing programs that are in place. The biggest problem that this bill had in 2017, and will continue to have now, is there isn’t a articulated way to pay for this bill. Even the conservative estimate, at $60 billion a year, would require a significant redistribution of other federal programs to pay for this legislation. I don’t think anybody disagrees that this problem is significant and acute, and that providing these child care services is good in the long run for the health of children. But it does lack the funding proposal.

I think I’m more [worried] about the effectiveness. Expanding on these systems to regulate standardized care is no small task. Doing that, state-by-state, across 50 states, is even more complicated. Some states will be able to do it relatively effectively and some states will struggle significantly in setting up a standardized system for licensing, credentialing, and measuring the quality of care.

Why do you think it will be so difficult?

This is a very complicated industry right now. We license child care centers, but the majority of child care is not being provided by centers. It’s provided by a hodgepodge of other supports from individual family members, all the way to community approaches and workplace approaches. Standardizing and measuring its quality is going to be a big lift. I think that when you do that fifty times over, that is going to be a big implementation hurdle.

[The bill also] has the potential to make child care a lot more expensive. We have a very tight labor market. Increasing pay and regulation could make the problem worse if we don’t find ways to make the services cheaper. I’d like to see some private sector innovation in this industry. The Affordable Care Act subsidized health insurance, but did virtually nothing to really address the underlying cost-drivers. We have to make sure that the same doesn’t happen in this bill.

That doesn’t mean that this bill shouldn’t exist though, right? The costs of child care are soaring.

I think the objectives of this legislation are headed in the right direction, but the cost impacts projected benefits of these kind of programs would be a significant leap of faith. These programs are going to increase workforce participation, expand the economy and the GDP. We’re going to increase tax revenues and partially pay for these programs by doing that. We will have a much healthier workforce. People [will] live more productive lives and be able to gain higher incomes and all of the things that go along with good child care.

We have a limited financial resource to address these problems [and all of these plans to deal with the issue] have some upsides and downsides and trade-offs, too. But I think it’s time for some new thinking. This Child Care for Working Families Act basically increases the direct subsidies by providing grants to states. The republican proposals are to use the tax system, which has proven to be effective but also regressive. The third proposal is using the child care savings accounts. I think it’s great that we’re having this debate. I expect that as various members of the political economy start to try to address needs of important voting blocs, we’ll start to see more important proposals like the one reintroduced by Senator Murray and 33 others, including every single declared candidate out of the senate for President.