Reauthorized Child Care Block Grant: Another Brick in the Wall for Big Government

Access to high-quality child care is an important consideration for many American families and parents—especially those struggling to make ends meet.

Last month the Senate passed the Child Care and Development Block Grant Act of 2014 (CCDBG), approved by the House back in September. President Obama signed the bill on November 19. The bill passed with strong bi-partisan support, and it is being hailed across the political spectrum. (For some good historical background, see Education Week.)

But it’s worth considering why we’re funneling funding for state child care programs through the federal government in the first place—especially since it has no express constitutional authority whatsoever in child care (a fact Sen. Tom Coburn of Oklahoma and family physician points out).

Until last month, there hadn’t been any reauthorization of the CCDBG since 1996, and it was kept afloat with discretionary funding. The House Education and the Workforce Committee explained that:

Approximately 1.5 million children under the age of 13 are served in some type of child care arrangement supported through the federal Child Care and Development Block Grant (CCDBG) program. The program funds state efforts to help low-income families – parents who are working, pursuing an education, or enrolled in job training – access crucial child care services.

The program has supported countless working families for many years; however, weaknesses in the program have raised the need for reform. Due to a patchwork of licensing, monitoring, and related safety requirements across the country, children are not always as protected as they should be. Further, a wide variety of programs and lack of coordination make it difficult for families to understand the full array of options and determine the best care setting for their children.

The Department of Health and Human Services (HHS) Office of Child Care (OCC) provides key program statistics and explains that:

The new law makes significant advancements by defining health and safety requirements for child care providers, outlining family-friendly eligibility policies, and ensuring parents and the general public have transparent information about the child care choices available to them.

While the latest CCDBG stands out for its express desire for greater parental choice (Sections 2 and 11), inclusion of faith-based providers (Sections 5, 6, and 11), and the prohibition against federal control over early learning and developmental guidelines (Section 5), it’s worth curbing our enthusiasm about more government involvement in any level of child care or education.

As with any federal program, there are always strings attached and even the best of intentions get muddled in mandates. For example, according to the HHS’ OCC, most states and territories already require providers provide parents with certification materials (45), well over 50 states and territories currently require providers to give parents quality of care, health and safety, child care regulation and complaint materials, and more than 50 states and territories make provider lists publicly available (54). This and other information reaches more than 8.8 million families—that’s over 10 times the number of families currently participating in the Child Care Development Fund (CCDF)-sponsored CCDBG.

And, as of August 2014, nearly every state already had, or was planning on implementing, a Quality Rating and Improvement System (QRIS).

HHS’ OCC also reports that fully 99 percent of all children served attend providers that are licensed (84 percent) or legally operate without a license (15 percent) because the providers are family members or non-relatives operating a home-based center (more details here and here, p. 3).

So it seems that all these new regulations and mandates really amount to vehicles for expanding government into people’s homes and private-providers’ businesses—including faith-based providers—under the guise of helping “the children.”

With any expansion of government, not only are there significant upfront costs, but there are also significant additional compliance costs—in this case costs of extending numerous mandates to family and non-relative private providers that currently operate legally without having to be licensed by the state.

And most mainstream media doesn’t even come close to reporting the full annual costs of the reauthorized CCDBG, which extends from 2015 through 2019. For example, the New York Times says the program costs $5.2 billion. As if.

The program actually costs far more, once some $6.2 billion in states’ required matching funds and maintenance of effort (MOE) funding is added to the reported $5.3 federal funding tally (which includes territories and tribes as well as states) for fiscal year 2014. Thus for the current year alone, the program is set to cost more than $11.5 billion. With more than 1.45 million children participating, that amount works out to more than $7,900 per child.

Now let’s tally the annual regulatory compliance costs, which inflate the sticker price by a staggering 23 percent. The combined annual costs of the additional CCDBG mandates relating to income verification, licensing enforcement, health and safety training, quality improvement spending, consumer information, and criminal background checks total an estimated $266 million, based on estimates from the Congressional Budget Office. Over the five-year CCDBG reauthorization period, the compliance costs will exceed $1.2 billion through 2019.

If elected officials really wanted to help families in need, all the funding currently associated with the CCDBG would simply remain in the states and not go to Washington in the first place. Just based on the upfront initial annual state and federal CCDBG program spending of more than $11.5 billion, that works out to over $7,900 per child. The hundreds of millions of dollars in annual regulatory compliance costs would add almost $200 more to that amount.

A better approach is for states to simply disperse funds to eligible families in the form of child care savings accounts, similar to the way states such as Arizona operate education savings account (ESA) programs for K-12 students. Those accounts are not only audited annually by the state treasurer’s office, but by law quarterly random audits are also performed and parents must submit quarterly expense reports (with receipts, p. 10) before subsequent quarterly disbursements are made (here and here, pp. 20 and 36ff). Using ESAs fraudulently would result in the account being frozen, and those suspected of committing fraud would be referred to the state attorney general’s office for investigation.

There’s a strong argument to be made for this type of approach since historically HHS has not kept track of states’ program management, in spite of examples of expensive fraud and waste. Along with Head Start, the CCDBG is part of one of the largest federal early child care programs (p. 4), so this is a real problem.

In fact, earlier this year the Government Accountability Office (GAO) again reported that there are some 45 programs scattered throughout the federal government that relate to early child care, although just 12 of those programs explicitly target early learning and child care. In spite of program duplication and overlap, the GAO concludes that program evaluations are scarce and that significant numbers of children likely aren’t receiving necessary services in spite of all the money we’re spending.

While the reauthorized CCDBG does require annual reports that include recommendations for reducing duplicative early education programs throughout the federal government (Section 13), the better approach would be just keeping the feds out of child care, keeping more tax dollars with citizens in the states, and letting them decide the best ways to help parents in need access the child care of their choice.