Potential Need for Child Care Subsidies Outstrips Supply in Mid-Hudson Valley

Potential Need for Child Care Subsidies Outstrips Supply in Mid-Hudson Valley

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Friday, March 27, 2015

Child care can be an expense that is simply out of reach for low-income families. A family needing full-time care for an infant can pay as much as $13,100 per year. Compare that to the before-tax earnings of a minimum wage worker - $18,200. If this worker has a second child, work becomes a near impossibility.

The child care subsidy program supported by federal and state funds and administered by county governments in New York is meant to ease this burden by helping poor children access quality child care and ensuring that parents can work. Counties set an income threshold and reimburse child care providers selected by families. Families with income above the federal poverty level pay a share of it toward their child care costs in the form of a co-payment.

Yet throughout New York State, the potential demand for subsidies far outstrips the supply. Statewide in 2013, there were about 668,000 children under 13 in families with working parents earning at or below 200% of the federal poverty level (which is different for different sized families). Of this group potentially eligible for subsidies, just 20% were receiving subsidies. It should be noted that not all families who qualify for subsidies seek them out. They may use unpaid child care options such as family members, or juggle work schedules to be home with their children as needed.

The figures in the Mid-Hudson Valley were lower in 2013: 12% of eligible children were served in Dutchess County, 11% in Ulster and Sullivan[1], and 10% in Orange. In recent years, Dutchess and Orange both have had to create waiting lists, as the number of families seeking subsidies outpaced the number the counties could afford to serve. Both counties also reduced the eligibility threshold to 125% of the federal poverty level. In the fall of 2013, about 80 Orange County families lost their subsidies with 10 days’ notice.

From 2007 to 2013, the number of subsidies provided in Dutchess, Orange, Ulster and Sullivan counties increased 5% to 2,600. There was a 12% increase in Dutchess, a 3% increase in Orange, and a 2% decline in Ulster (-2%).

Over the same time period, funding for subsidies increased 22% in Dutchess, while falling 11% in Orange and 9% in Ulster, after adjusting for inflation.

The federal government provided additional funding for subsidies in 2010 as part of the stimulus package aimed at lifting the economy out of recession. In that year, the number of subsidies increased in the three counties to almost 2,900. But when that funding expired, counties had to find ways to cut back, often by lowering the income eligibility level.

As you would expect, this has had the effect of concentrating subsidies among poorer families. From 2011 to 2013 (the only years with available data), the number of subsidies going to families with income below the poverty level increased 34% in Dutchess, 18% in Orange, and 2% in Ulster, while there were declines in subsidies to families with income above the poverty level.

Child care is expensive – not only for families but also for government. Spending in Dutchess, Orange and Ulster totaled $17.4 million in 2014-15, but estimates by CGR suggest it would cost $100 million just to serve all eligible families with incomes below poverty.

But there are ways to target additional subsidies to those most in need. For example, targeting families with income at or below poverty, or those with children 0-3 are two potential strategies.

As research and attention continues to focus on the importance of the early years of childhood in setting a good foundation for learning, and the benefits of reliable child care to workers and employers, New York policymakers will likely face increased pressure to support quality care and education – including the child care subsidy program.

To learn more, see the full report (updated in April), which also includes information about Columbia, Greene, and Putnam counties, Child Care Subsidies in the Mid-Hudson Valley: An Analysis of Need, Availability and Trends.

[1] These calculations rely on Public Use Microdata Sample data from the US Census Bureau, which are available for some individual counties and some groups of counties. While data were available for Dutchess alone and Orange alone, Ulster was grouped with Sullivan County.

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