Background:

Every North Carolina county receives state and federal funding from the Division of Child Development for subsidized child care services. Child care programs are reimbursed based on a rate established by the Division of Child Development. The rates vary according to age of child, Star License level of the child care program, and county of residence.

If a county does not receive enough funding to serve all eligible families who apply for subsidized child care, the county establishes a waiting list for services. For more information, go to http://ncchildcare.dhhs.state.nc.us/general/home.asp. In Buncombe County, Buncombe County Child Care Services administers the state subsidized child care program.

The Problem:

Child care subsidy funding is not equitably distributed in North Carolina and more funds are needed to serve eligible children.

• The formula used by the Division of Child Development to determine the reimbursement rate is not equitable and has not kept pace with inflation. Child care providers that accept child care vouchers must find other ways to cover the actual cost of providing care. This may mean charging higher co-payments, raising outside funds (if the center is a nonprofit), or raising costs for care for non-subsidized children. Some child care centers serving a high percentage of subsidized children cannot remain viable with the eroding value of the reimbursement.
• Without safe, affordable, and reliable child care it is hard for working parents to maintain employment without compromising their child’s safety. Demand for subsidized child care from eligible families consistently exceeds available funds – leaving many eligible families on a waiting list.

 What is Needed:

1. North Carolina should restructure the funding formula for the child care subsidy program to create a more equitable funding structure that takes into account the actual cost of care and cost of living in areas across the state.
2. North Carolina should increase the recurring funds for the child care subsidies.
3. North Carolina should continue to increase its investment in other early childhood education programs like More at Four, Smart Start, TEACH., and the Early Childhood Project.
4. The United State Congress should increase funds available to states for child care subsidy programs such as the Child Care and Development Fund, Social Services Block Grant, and Temporary Assistance for Needy Families.

Why Affordable Child Care is Important to You

Early Education and Development: Studies show that quality child care and early education programs decrease the likelihood of special education enrollment, juvenile delinquency, adult incarceration, and welfare participation. All these increase overall quality of life and reduce government spending. (National Economic Development and Law Center, 2004)

Family Economic Security: Accessible and affordable child care promotes employment stability for working parents. Single mothers receiving child care scholarships are 40% more likely to be employed after 2 years than those mothers that don’t get scholarships. If families loose jobs they must often rely on public assistance to make ends meet. Every $1 invested in early childhood programs for low-income children saves the community $7 later on. (NC Partnership for Children)

The Equity Gap for Buncombe County

The cost of living in the greater Asheville area and Buncombe County is similar to other urban counties in North Carolina. However, the child care market rate for Buncombe often lags significantly behind other urban counties – undermining the economic stability of both families and child care providers in our community. The market rate is the maximum amount reimbursed to a child care provider for a child eligible for the child care subsidy. The actual cost of care may be higher than the market rate and centers may require parents to pay the difference between the reimbursement (subsidy) and the cost.

The tables below show the market rate equity gap for high quality child care centers (4 & 5 Star Licensed) in Buncombe County when compared to other counties in North Carolina (2007). According to data from Buncombe County Child Care Services, 32 Five Star Centers and 23 Four Star Centers were operating in the county as of 2/4/08.

Source: Division of Child Development Subsidized Child Care Rates for Centers, October 2007