Order Code RL30021
CRS Report for Congress
Received through the CRS Web
Child Care Issues in the 106th Congress
Updated January 4, 2001
(name redacted)
Analyst in Social Legislation
Domestic Social Policy Division
(name redacted)
Specialist in Social Legislation
Domestic Social Policy Division
Congressional Research Service ˜ The Library of Congress
Child Care Issues in the 106th Congress
Summary
In President Clinton’s 2000 State of the Union Address, he outlined several child
care-related initiatives, in the form of tax credit proposals; increased child care
subsidies; and increased funding for Head Start and the 21st Century Community
Learning Centers programs. Details of those proposals were included in the Clinton
Administration’s FY2001 budget proposal. This was the third year in a row that the
Clinton Administration proposed a major child care initiative. As was the case in the
105th Congress, the 106th Congress introduced considerable child care-related
legislation, however, little action was taken on the dozens of bills introduced.
Child care policy debates typically focus on three elements: availability,
affordability, and quality of child care. All three of these elements would be addressed
by the Administration’s and other proposals. In addition, a fourth element was raised
during the 105th Congress and was addressed again in some bills introduced in the
106th Congress: the extent to which child care policy treats families with and without
a stay-at-home parent equitably.
A primary reason for the current focus on child care is welfare reform legislation
enacted in 1996, which has called attention to the child care needs of welfare
recipients and low-income families who are attempting to become and remain
economically self-sufficient. In addition, for families with tax liability, a tax credit is
available to offset part of the costs of child care, but the terms of this credit have not
been updated since 1981. Regarding the quality of child care, recent research on early
brain development has heightened interest in the experiences of children in child care
settings, while the death of a Massachusetts infant in 1997 and subsequent murder
conviction of his caregiver focused national concern on the basic question of child
care safety. Finally, after-school child care also has become a focus in the current
debate.
The federal government operates several programs related to child care, of which
the largest is the Child Care and Development Block Grant, a grant program that
helps subsidize the child care expenses of low-income and welfare families. The
Clinton Administration advocated for new spending for this block grant and the
Dependent Care Tax Credit (DCTC). In 2000, the Administration proposed to not
only expand the DCTC, but to make the credit refundable as well.
Numerous child care bills were introduced in the 106th Congress but few received
full floor action. Like the Administration’s initiative, some were omnibus packages
of tax and grant provisions. Proposals would have increased the supply of child care
through tax incentives or grants for employers, and through expanded federal grants
to states. Some bills would have made child care more affordable through the tax
code, and some (including the Administration’s latest initiative) had provisions for
families with an at-home parent. Legislation proposed to upgrade the quality of child
care primarily through voluntary incentives. Several would have provided incentives
for use of nationally accredited child care providers or credentialed caregivers.
Contents
Most Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Federal Programs and Recent Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Clinton Administration Proposals in 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Legislation in the 106th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Action on Child Care Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
FY2001 Budget Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
FY2001 Appropriations Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
FY2000 Budget Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
FY2000 Appropriations Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Child Care Provisions in the Taxpayer Refund Act of 1999 (vetoed) . . . . 18
Action in the 105th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Legislative Approaches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Availability of Child Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Affordability of Child Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Quality of Child Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Additional Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
CRS Reports and Issue Briefs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Other Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
List of Tables
Table 1. Appropriations for Federal Child Care and Related Programs,
FY1998-FY2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Table 2. Overview of Additional Funding Proposed and Enacted in
Administration’s 2000 Child Care Initiative . . . . . . . . . . . . . . . . . . . . . . . . 9
Table 3. House and Senate Proposals for CCDBG Appropriations
Compared to Enacted Law (P.L. 106-554) . . . . . . . . . . . . . . . . . . . . . . . . 16
Child Care Issues in the 106th Congress
Most Recent Developments
On December 21, 2000, the Consolidated Appropriations Act, 2001 was signed
into law (P.L.106-554), providing appropriations for Department of Health and
Human Services programs including the Child Care and Development Block Grant
(CCDBG), the Social Services Block Grant (SSBG), and Head Start. The law
provides an additional $817 million in funding for the CCDBG, which when added
to the $1.183 billion provided as an advance appropriation in the FY2000 law,
amounts to $2 billion in FY2001 funding for the CCDBG. In other child care-
related funding, the FY2001 appropriations law provides $6.2 billion in FY2001
funding for Head Start, a $933 million increase over the FY2000 level. An advance
appropriation of $1.4 billion for Head Start in FY2002 is also included in the new
law. Funding for the SSBG was decreased by $50 million from its FY2000 level,
being set at $1.725 billion for FY2001. The law does include a provision
maintaining states’ ability to transfer up to 10% of their annual Temporary
Assistance for Needy Families (TANF) allotments to the SSBG.
Additional child care provisions, relating specifically to federal child care,
drawn from the vetoed appropriations legislation covering the legislative branch
(H.R. 4985) were also included in the Consolidated Appropriations Act, 2001. These
provisions include continuing to permit executive branch agencies (not including the
General Accounting Office) to use agency funds (otherwise available for agency
salaries and expenses) to provide child care services, in a federal or leased facility,
or through contract, for civilian employees of the agency. These funds are to be
used to improve the affordability of child care for lower income federal employees
using or seeking to use the child care services offered by the agency facility or
contractor. Also included in P.L. 106-554 is a new provision (Section 643) which
requires that all current and newly hired workers in all child care centers located in
federally owned or leased facilities undergo criminal background checks in
compliance with the Crime Control Act of 1990. (See FY2001 Appropriations
Legislation section for additional information.)
On December 6, 2000, HHS released state-reported data on Child Care and
Development Fund (CCDF) subsidy receipt, indicating that in FY1999, on an
average monthly basis, 1.8 million children in low-income families received federal
child care subsidies. This is an increase of 300,000 families from the 1.5 million
served in FY1998. HHS estimates that only 12 percent of federally eligible children
were served in FY1999.
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Introduction
For the third straight year, the Clinton Administration proposed a major child
care initiative for 2000. The 2000 initiative, outlined in President Clinton’s State of
the Union address, and detailed in his budget request for FY2001, included child care
proposals that would increase spending and tax incentives by $3.3 billion over 2000.
President Clinton put forth proposals to both expand
and make refundable the
dependent care tax credit (DCTC); to create a tax credit for businesses that provide
child care services for their employees; to increase subsidies provided through the
Child Care and Development Block Grant (CCDBG); to provide an additional $1
billion for the Head Start program; to increase funding for child care services for low-
income higher education students; and to increase funding for after school programs
through 21st Century Community Learning Centers. This marked the third year in a
row that the President’s child care initiative has combined tax initiatives with
increased program funding.
In 1999, the Clinton Administration’s proposed child care package totaled
approximately $20 billion over 5 years, intended primarily to help parents pay for
child care and also to expand the supply of quality care for preschoolers and activities
for school-aged children. However, little final action occurred in the 106th Congress
on any major child care proposal, despite the introduction in Congress of well over
50 bills. Similarly, most of the many child care-related bills proposed during the 105th
Congress also lacked legislative movement. This report provides background
information on child care programs, funding, and proposals, and tracks the progress
of child care legislation and appropriations during the 106th Congress.
Child care policy debates typically focus on three elements: availability,
affordability, and quality of child care. All three of these elements would be addressed
by the Administration’s and other proposals. In addition, a fourth element emerged
in the 105th Congress; i.e., the extent to which child care policy treats all families with
children equitably, including families in which a parent stays home to care for the
children. In both his 1999 and 2000 initiatives, the President Clinton included a
proposal intended to address this concern for families with infants. Several bills
introduced in the 106th Congress also addressed this issue.
A primary reason for the current focus on child care is welfare reform legislation
enacted in 1996, which has called attention to the child care needs of welfare
recipients and very low-income families who are attempting to become and remain
economically self-sufficient. The 1996 welfare law consolidated several previously
existing child care programs into one, with substantially increased federal funding.
Lawmakers are closely watching the implementation of welfare reform at the state
level, to assess its impact on child care demand and to determine whether the supply
of affordable care is adequate for the need, especially among low-income families that
are not receiving welfare.
For families with tax liability, a tax credit is available to offset part of the costs
of child care. This is known as the dependent care tax credit (DCTC). However, the
terms of this credit (i.e., the credit rate, the amount of expenses against which the
credit can be claimed, etc.) have not been updated since 1981. In the meantime,
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changes in the tax code and new provisions benefitting families with children have
raised questions about the continuing value of this tax credit, motivating the
Administration and others to propose changes in the existing provision. In his 2000
State of the Union address, President Clinton not only proposed to expand the DCTC
(as he also proposed to do in 1999), but also proposed to make the credit refundable.
Regarding the quality of child care, recent and highly publicized research on early
brain development has heightened interest in the experiences of children in child care
settings, particularly babies and very young children. Quality issues include the
training, qualifications and compensation of caregivers, group size and caregiver/child
ratios, and curriculum. At the same time, the death of a Massachusetts infant in 1997
and subsequent murder conviction of his caregiver focused national concern on the
basic question of safety in child care. Finally, after-school child care and activities for
school-aged children also have become a focus in the current debate, and are
promoted as a preventive measure to keep children away from risky behavior and to
protect them from victimization.
Federal Programs and Recent Funding
Several federal programs support child care, primarily for low-income working
families. The primary federal grant program is the
Child Care and Development
Block Grant (CCDBG), which was created in 1990 and reauthorized and
substantially expanded in 1996, as part of welfare reform. The CCDBG is
administered by the Department of Health and Human Services (HHS), and provides
block grants to states, according to a formula, which are used to subsidize the child
care expenses of families with children under age 13, if the parents are working or in
school and family income is less than 85% of the state median. (In practice, many
states establish income eligibility levels that are lower than this federal threshold.)
Child care services are provided on a sliding fee scale basis, and parents may choose
to receive assistance through vouchers or certificates, which can be used with a
provider of the parents’ choice, including sectarian providers and relatives.
States receiving CCDBG funds must establish child care licensing standards,
although federal law does not dictate what these standards should be or what types
of providers must be covered. In addition, states must have health and safety
requirements applicable to all providers receiving CCDBG subsidies, that address
prevention and control of infectious diseases, building and physical premises safety,
and health and safety training for caregivers. However, federal law does not dictate
the specific contents of these requirements.
The CCDBG is funded through both discretionary and capped entitlement grants,
and state maintenance-of-effort and matching requirements apply to part of the
entitlement funds. States must use at least 4% of their total funds to improve the
quality and availability of child care, and must target 70% of entitlement funds on
welfare recipients working toward self-sufficiency or families at risk of welfare
dependency. Remaining entitlement and discretionary funds may be used for low-
income, non-welfare, working families. No more than 5% of state allotments may be
used for state administrative costs.
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In FY2001, a total of $4.57 billion was appropriated for the CCDBG (see
Table
1). Entitlement funds of $2.57 billion were appropriated in advance by the welfare
reform law, and $2 billion in discretionary funds were appropriated by the FY2001
Consolidated Appropriations Act , P.L. 106-554 for FY2001. Unlike prior years,
there is no advance discretionary funding for CCDBG in FY2002.
Under welfare reform, total CCDBG funding is scheduled to increase to $3.7
billion by FY2002. Overall, the welfare law authorized a total of $20 billion for child
care for 6 years (FY1997-FY2002), which is $4 billion more than the Congressional
Budget Office (CBO) had estimated would have been available under prior law.
The
Child and Adult Care Food Program (CACFP) provides federal funds
(in some cases commodities) for meals and snacks served in licensed child care
centers, family and group day care homes, and Head Start centers. Child care
providers that are exempt from state licensing requirements must comply with
alternative state or federal standards. Children under 12, migrant children under 15,
and children with disabilities of any age may participate, although most are
preschoolers. Eligible providers are usually public and private nonprofit
organizations. The CACFP is an open-ended entitlement, administered by the
Department of Agriculture. In FY2001, estimated obligations are $1.8 billion.
The
Dependent Care Tax Credit (DCTC) is a non-refundable tax credit for
employment-related expenses incurred for the care of a dependent child under 13 or
a disabled dependent or spouse, under Section 21 of the tax code. The maximum
credit is 30% of expenses up to $2,400 for one child (for a credit of $720), and up to
$4,800 for two or more children (for a credit of $1,440). The credit rate is gradually
reduced as income goes up for taxpayers with incomes above $10,000, until the credit
rate reaches 20% for taxpayers with incomes above $28,000. The current, estimated
revenue loss for FY2000 is $2.2 billion, as determined by the Joint Committee on
Taxation.
Under Section 129 of the tax code, payments made by a taxpayer’s employer for
dependent care assistance may be excluded from the employee’s income and,
therefore, not be subject to federal income tax or employment taxes. The maximum
exclusion is $5,000. Section 125 of the tax code allows employers to include
dependent care assistance, along with other fringe benefits, in nontaxable flexible
benefit or “cafeteria” plans. The estimated revenue loss associated with this income
exclusion is currently $400 million in FY2000, as determined by the Joint Committee
on Taxation.
Title XX of the Social Security Act authorizes
Social Services Block Grants
(SSBG), which may be used for social services at the states’ discretion. There are no
federal income eligibility requirements, targeting provisions, service mandates, or
matching requirements. Child care funded by SSBG must meet state or local
standards. An HHS analysis of state expenditures in FY1998 indicates that almost
10% of SSBG funds were used for child care in that year. Title XX is a capped
entitlement, administered by HHS, and state allocations are based on relative
population size. Legislation enacted by the 105th Congress (P.L. 105-178) reduced
the entitlement ceiling for the SSBG from $2.38 billion to $1.7 billion in FY2001.
However, Congress has appropriated $1.725 billion for FY2001, despite the ceiling.
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On May 17, 2000, two bills (H.R. 4481 and S. 2585) were introduced, which would
have restored the authorized ceiling to the earlier $2.38 billion level, but neither was
acted upon in the 106th Congress.
Although not generally characterized as a child care program,
Head Start
provides comprehensive early childhood education and development services to low-
income preschool children, typically (but not always) on a part-time basis. Head Start
funds are provided directly by HHS to local grantees, which must comply with
detailed federal performance standards. In FY2001, $6.2 billion was appropriated for
Head Start, of which $4.8 billion is available in FY2001 and $1.4 billion is available
in FY2002. The advance funding component of the appropriation was new for the
Head Start program, starting in FY2000.
Several Education Department (ED) programs also provide support for early
childhood or after-school activities.
Even Start provides grants for family literacy
projects that include early childhood education for children through age 7 (FY2001
appropriations were $250 million). The Individuals with Disabilities Education Act
(IDEA) authorizes an
early intervention program for infants and toddlers with
disabilities (funded in FY2001 at $384 million), and
preschool grants for children
with disabilities (funded in FY2001 at $390 million). In addition, the Elementary
and Secondary Education Act authorizes grants to rural and inner-city public
elementary or secondary schools for
21st Century Community Learning Centers,
which provide after-school activities (funded at $846 million in FY2001).
FY1998 - FY2001 funding for the programs identified above is summarized in
the following table. (For more details on the FY2001 Appropriations process see
FY2001 Appropriations Legislation section.)
Table 1. Appropriations for Federal Child Care and Related Programs,
FY1998-FY2001
($ in millions)
Program
FY1998
FY1999
FY2000
FY2001
CCDBG (discretionary portion)a
$1,002
$1,000
$1,183
$2,000
CCDBG (entitlement portion)
2,067
2,167
2,367
2,567
Child and Adult Care Food
1,562b
1,599b
1,690b
1,807
c
Dependent Care Tax Credit
2,455c
2,200c
N/A
c
Dependent Care Assistance
400c
400c
N/A
Social Services Block Grantsd
2,299
1,909
1,775
1,725
Head Start
4,347
4,658
5,267e
6,200f
Even Start
124
135
150
250
IDEA Infants and Toddlers
350
370
375
384
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Program
FY1998
FY1999
FY2000
FY2001
IDEA Preschool Grants
374
374
390
390
21st Century Community Learning
40
200
454
846
Centers
a The CCDBG discretionary amounts shown in each column reflect the appropriated funding to be
made available for that given year, taking the advance funding into account.
b Estimated obligations, Department of Agriculture.
c Estimated revenue loss, Joint Committee on Taxation. Comparable estimate for FY1998 not
available.
d Total SSBG amount shown. In FY1998, states spent an estimated 9.5% on child care.
e Of the $5.267 billion, $3.867 billion was available for FY2000, and $1.4 billion is available for
FY2001.
f Of the $6.2 billion, $4.8 billion is available for FY2001, and $1.4 billion will be available for
FY2002.
Clinton Administration Proposals in 2000
President Clinton described his Administration’s child care initiative for 2000 in
his State of the Union address. Details of the proposals were included in the FY2001
budget request. The President’s proposals for FY2001 funding would have increased
child care spending and tax incentives by $3.3 billion over 2000 levels. The major
elements of the proposal included increased funding for the CCDBG, Head Start, and
the 21st Century Community Learning Centers, and both expansion and modification
of the DCTC. Most components of the 2000 child care initiative are similar to that
of 1999, with one significant new addition: a proposal to make the DCTC
refundable, thus providing a benefit to families with no tax liability.
The following is a summary of the 2000 child care initiative, noting the funding
requested by President Clinton for FY2001, and, where applicable, the appropriated
amounts ultimately enacted into law:
CCDBG Expansion. The Administration proposed to increase FY2001 funding
for the CCDBG by $817 million over the FY2000 level, which would bring it up to
$2 billion. According to Administration documents, the additional funding would
enable the program to provide nearly 150,000 additional low-income children with
child care subsidies in FY2001. When combined with the $2.6 billion in child care
entitlement funding provided under the welfare reform law (P.L. 104-193), the Child
Care and Development Fund would reach a total of $4.6 billion for FY2001.
Congress met this appropriation request, and $817 million in additional CCDBG
funding for FY2001 was provided in P.L. 106-554.
Dependent Care Tax Credit Expansion. The Clinton Administration proposed
to expand the DCTC by increasing the credit amount for middle-income families, and,
for the first time ever, to make the DCTC
refundable, thus assisting lower income
families. Specifically, the maximum credit rate would be increased from 30% to 50%
and the credit would apply to families earning up to $60,000 rather than $28,000, as
under current law. Also, by making the DCTC refundable (beginning in 2003), low
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income families with no tax liability would be eligible for the DCTC benefit (up to
$2,400). In addition, as in 1999, President Clinton proposed again in 2000 to allow
parents who stay at home with a child under age one to claim annual child care
expenses up to $500. The Administration estimated that these DCTC expansion
proposals would provide tax credits worth an additional $7.5 billion over 5 years.
Several bills that included these legislative proposals were introduced during the 106th
Congress, but none were enacted into law.
Tax Credits for Private Employers. The Clinton Administration proposed a
tax credit to encourage businesses to provide child care for employees. Eligible for
the credit would be private employers that expand or operate child care facilities, train
child care workers, contract with a child care facility to provide child care services to
employees, or provide child care resource and referral services to employees. Like
the 1999 proposal, it would create a tax credit covering 25% of costs up to $150,000
per year, per business. The Administration estimated that the proposal would provide
tax credits worth over $500 million over 5 years. No legislation in this area received
full floor action in the 106th Congress.
After-School Child Care. The Clinton Administration has been successful in
funding after-school care through the 21st Century Community Learning Centers
program which was created in 1997. The President proposed for FY2001 to fund the
program at a level of $1 billion – more than double the FY2000 funding of $454
million, estimating that this additional funding would enable the program to reach
over 10,000 schools and 2.5 million students. The Administration also contended that
this requested amount would provide sufficient funds for the program to make after-
and/or summer-school programs universally available to all Title I schools identified
as low-performing, while also offering high quality after-school opportunities to
others. Congress did not fully meet President Clinton’s requested level in the FY2001
appropriations legislation, however P.L. 106-554 did increase funding for FY2001 to
$846 million.
Early Learning Fund. The Clinton Administration again in 2000 proposed to
create the Early Learning Fund– new entitlement funding to help improve early
childhood education for children under 5 years old. As proposed, the Fund would
require $600 million in FY2001 and $3 billion over 5 years. Funds would be used to
provide grants to communities to improve school readiness by fostering the cognitive,
physical, social and emotional development of children under 5 years old. Grants to
the states would be contingent on reporting progress regarding child care quality
goals and children’s educational goals. A federal evaluation would assess
improvements in outcomes. Like the CCDBG, the Early Learning Fund would be
administered by HHS. The FY2001 Consolidated Appropriations Act (P.L. 106-554)
provides $20 million for this new initiative.
Head Start Expansion. The Clinton Administration followed up on FY1999's
expanded Head Start funding with another proposed increase. The FY2001 budget
request included an additional $1 billion for Head Start – the largest proposed single-
year increase in the program’s history – which would bring FY2001 Head Start
funding to $6.3 billion. With the FY2000 proposal, the Clinton Administration aimed
to add approximately 60,000 Head Start pre-school slots and 10,000 Early Head Start
slots, bringing the total number of children in Head Start, according to DHHS, to
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approximately 950,000. The request was consistent with President Clinton’s goal of
enrolling a million children in Head Start by 2002, including doubling the number of
infants and toddlers in Early Head Start. Clinton Administration budget documents
also highlighted the Administration’s intent to increase participation in Head Start by
under-represented groups in specifically targeted areas with recent influxes of
immigrants and children with limited proficiency in English. Congress met President
Clinton’s request for a significant increase for Head Start, providing (in P.L. 106-554)
an FY2001 appropriation of $6.2 billion, of which $1.4 billion will become available
in FY2002.
College Campus-Based Child Care. The Clinton Administration’s budget
request included $15 million for the Child Care Access Means Parents in School
program. This program, funded at $5 million in FY2000, would establish and support
child care services on college campuses. Administration documents note that states
may also use a share of the CCDF fund for this purpose. The Consolidated
Appropriations Act, 2001 (P.L. 106-554) provides more than President Clinton’s
requested amount, funding the Child Care Access Means Parents in School program
at $25 million for FY2001.
CCDBG Quality Activities. In the advance appropriation for the CCDBG for
FY2001 (provided in the FY2000 Consolidated Appropriations Act), Congress
included an additional $173 million for activities related to quality improvement in
child care, such as resource and referral services for parents, scholarships and training
for child care providers, monitoring and inspection of providers, networks for family
day care providers, and linkages with Head Start. (These amounts are in addition to
the 4% set-aside that states must use for quality activities.) The Administration has
requested that Congress continue to provide these additional funds. The
Administration’s budget also requests $10 million in continued child development and
child care research funding. (These funds are not shown in
Table 2, because the
request would maintain, but not increase amounts above the level provided in the
FY2000 Consolidated Appropriations Act.)
The Consolidated Appropriations Act 2001 (P.L. 106-554) provides that of the
$817 million appropriated for the CCDBG, $19.1 million shall be available for
resource and referral, of which $1 million shall be specifically for the Child Care
Aware toll free hotline. Also, $273 million shall be reserved for quality activities
($100 million for quality infant and toddler care specifically). Finally, of the FY2001
funds, $10 million shall be used for child care research, demonstration and evaluation
activities.
Services for Families of Children with Disabilities. The Clinton
Administration proposed in its FY2001 budget to continue a $4 million program
(funded at that level in FY2000 by Congress) that provides grants to states for
support systems to help families who have children with disabilities deal with such
problems as inadequate child care. The FY2001 request proposed to fund this
program from the $10.2 million provided for funding Developmental Disabilities
Projects of National Significance (DDPNS). The Consolidated Appropriations Act,
2001 (P.L. 106-554), increased this total amount for DDPNS to $10.9 million.
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The following table shows new funding, above amounts provided in FY2000,
requested and ultimately received by the Administration for FY2001, for components
of the proposed child care initiative.
Table 2. Overview of Additional Funding Proposed and Enacted in
Administration’s 2000 Child Care Initiative
($ in billions)
Additional
FY2001
funding
proposed
enacted for
additional
FY2001
Proposal
funding
(P.L. 106-554)
CCDBG Expansion
$0.817a
$0.817
DCTC Expansionb
0.121
not enacted
Tax Credits for Private Employers
0.042
not enacted
After-School Child Care (21st Century Learning Centers)
0.547
0.392
Early Learning Fund
0.600
0.020
Head Start Expansion
1.000
0.933
College Campus-Based Child Care
0.010
0.020
Total
$3.137
$2.182
a In addition to this amount, the current welfare reform law (P.L. 104-193) provides for an increase
in CCDBG entitlement funding of $200 million from FY2000 to FY2001.
b Includes an expansion of the credit for families with earnings below $60,000, and assistance for
stay-at-home parents of infants. (Refundability is phased in beginning in 2003). Includes tax
expenditures and effect on outlays.
Legislation in the 106th Congress
Numerous child care bills were introduced in the 106th Congress, of which many
were similar to proposals offered in 1998. Legislation included several omnibus
packages that, like the Clinton Administration’s 2000 initiative, were a combination
of child care grant and tax provisions. (Similar versions were introduced in the 105th
Congress.) These were:
! H.R. 143, the CIDCARE (Creating Improved Delivery of Child
Care: Affordable, Reliable, and Educational) Act, introduced by
Representative Gilman, January 6, 1999. This bill would expand
benefits under both the existing DCTC and DCAP; establish a new
tax credit for employers that support child care for their employees;
authorize incentive grants for quality improvement activities to states
that maintain child care licensing and other standards at certain
levels; authorize grants to accreditation and credentialing
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organizations and other groups to establish a national child care
training infrastructure; require that child care supported by certain
federal agencies be delivered through accredited or credentialed
providers, to the maximum extent feasible; and authorize cancellation
of certain student loans for individuals who work as child care
providers.
! S. 17, the Child Care ACCESS (Affordable Child Care for Early
Success and Security) Act, introduced by Senator Dodd, January 19,
1999. This bill would increase entitlement funding available for the
CCDBG; appropriate additional funds for activities to improve the
quality of child care; authorize grants to be made to local
collaboratives for child care and early education activities for children
age 0 through 5; authorize cancellation of certain student loans for
individuals who work as child care providers; appropriate additional
funds for the CCDBG to be used for school-aged child care; expand
eligibility under the CCDBG to children under age 16; increase
authorizations for the 21st Century Community Learning Centers
program; expand the DCTC, make it refundable and payable in
advance, and allow DCTC benefits to families with an at-home
spouse and a child under age 1; establish a new tax credit for
employers that support child care for their employees; authorize
grants to local communities that generate additional resources for
child care from the private sector; and require that child care centers
operated for federal employees meet certain standards, including
accreditation or credentialing.
! H.R. 1139, the Affordable Child Care, Education, Safety and
Security Act (ACCESS), introduced by Representative Tauscher,
March 16, 1999. This bill would increase funding available for the
CCDBG; increase the dependent care tax credit; provide a tax credit
for stay-at-home parents providing child care for children under age
1; establish a tax credit for employers that assist with child care;
provide grants to business consortia to initiate quality, affordable
child care; appropriate funds for early learning programs; and
establish a child care provider scholarship program. (The portions of
Representative Tauscher’s bill related to tax provisions were also
introduced separately by Representative Cardin in H.R. 1119.)
! S. 599, the Caring for Children Act, introduced by Senator Chafee,
March 11, 1999. This bill would double the funding for the CCDBG;
increase the maximum DCTC from 30% to 50% of child care
expenses, resulting in a maximum tax credit of $1,200 for working
parents with one child, or $2,400 for those with two or more
children; make available a maximum DCTC of $900 to parents who
stay home for a year to care for a child age 3 or under; provide tax
credits to businesses for child care-related start-up costs of up to
$500,000; provide grants to small employers for child care;
commission a study by the U.S. General Accounting Office to
determine if liability concerns are hindering the availability of child
care; establish a bonus/penalty system to help enforce existing state
health and safety inspection standards; and require federal child care
facilities to comply with state health and safety standards.
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! S. 616, the Child Development Act, introduced by Senator
Wellstone, March 15, 1999. This bill would increase funding for the
CCDBG; provide loan forgiveness to those who earn a degree and
work in early childhood education; and expand the dependent care
tax credit, including a minimum credit for stay-at-home parents with
a child under age 1.
! S. 749, the Early Learning Trust Fund Act, introduced by Senator
Kennedy, March 25, 1999. This bill would provide $10 billion over
5 years in funding for an HHS grant program for states to create full-
day, full-year pre-kindergarten services, with a 20% cash or in-kind
match.
! S. 810/H.R. 1430, the Caring for America’s Children Act, introduced
by Senator Jeffords and Representative Gilman, April 15, 1999. This
bill would increase the dependent care tax credit (DCTC); increase
the child tax credit; permit parents to choose among the DCTC, child
tax credit and dependent care assistance program for each dependent
child; create a child care tax credit for employers; establish a state
grant program to fund activities designed to improve the quality of
child care; amend the CCDBG to encourage states to improve the
enforcement of existing state laws and regulations regarding the
inspection of child care facilities; establish youth development-
focused programs that provide care for school-aged children during
the non-school hours; require federal child care centers to meet
standards established by a child care accreditation entity; increase the
CCDBG authorization from $1 billion to $2 billion; and permit use
of Community Development Block Grant funds to renovate or
construct child care facilities. (This comprehensive bill was also
introduced by Senator Jeffords in the form of four smaller, more
narrowly focused bills: S. 811, S. 812, S. 813, and S. 814.)
In addition, a number of single-purpose child care bills were introduced. These
included proposals to create a new tax credit for employers who support child care
for their employees (S. 63 - Kohl and H.R. 389 - C. Maloney; H.R. 963 - Pryce; S.
1147 - Graham); proposals to expand funding under the CCDBG and/or the 21st
Century Community Learning Centers program for after-school child care (S. 316 -
Kennedy ,H.R. 489 - Slaughter, S. 716 - Kohl, S. 817 - Boxer); a proposal to amend
the CCDBG to provide incentive grants to improve the quality of child care (S. 1475 -
Reed); a proposal to amend the CCDBG to provide for improved care for young
children (H.R. 2693 - Woolsey); a proposal to provide grants to improve the quality
and availability of after-school programs (H.R. 1307 - Castle); a proposal to establish
a child care provider scholarship program (H.R. 846 - Weygand); a proposal to
increase availability of child care for children whose parents work nontraditional hours
(H.R. 2694 - Woolsey); a proposal to amend the CCDBG Act to provide incentive
grants to improve the quality of, and access to child care, by increasing child care
payment rates (H.R. 2943 - Bishop); proposals to provide for the acquisition,
construction, and improvement of child care facilities or equipment (S. 1539 - Dodd;
H.R. 3610 - Jackson; H.R. 3889 - McCarthy); proposals to improve child care offered
to federal employees (H.R. 28 - Gilman and H.R. 206 - Morella; these are not the
same bill, and both were approved by the House Government Reform Committee; S.
1176 - Robb, a bill which would allow federal agencies to use appropriated funds to
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pay tuition for employees’ children); a proposal to increase the child tax credit to
$1,000 for children under the age of 5 (H.R. 756 - Wolf); separate proposals to make
the DCTC refundable (S. 130 - Snowe; H.R. 2164 - Peterson); a proposal to expand
the DCTC for lower income working families (H.R. 285 - Sweeney); and separate
proposals to increase and expand the DCTC, and create a minimum credit for parents
who stay at home with an infant (S. 1160 - Grassley; H.R. 2259 - N. Johnson; H.R.
2020 - N. Johnson; H.R. 2085 - Hooley; H.R. 4336 - Stabenow). Representative
DeLauro introduced a bill which would allow a refundable credit to grandparents who
provide primary child care services without compensation for grandchildren who are
not their dependents (H.R. 5602). Legislation also was introduced in the 106th
Congress that would make it a federal crime for certain child care providers to
intentionally misrepresent themselves to parents or police (H.R. 469 - Lazio).
Another bill would authorize bonus grants to states under the TANF program for
certain activities, including their performance in providing safe and accessible child
care to eligible families (H.R. 699 - Woolsey).
Senator Kerry introduced S. 1068, the Early Childhood Development Act of
1999, which in addition to providing funding for family-based services for households
with children under age 6, would allow states to use this funding to increase child care
quality and supply. Senator Stevens introduced S. 2866, the Early Learning
Opportunities Act, which would, among other things, provide funds for increasing
availability of early childhood programs and increasing compensation for child care
providers. Representative Nadler introduced H.R. 2552, a bill requiring the posting
of Consumer Product Safety Commission child care center safety standards in child
care centers. Representative Lowey introduced H.R. 3318, which would establish
a program to provide child care through public-private partnerships. Senator
Voinovich introduced S. 1154, the Prenatal, Infant and Child Development Act of
1999, which includes a proposal to allow states to transfer an additional 15% of their
TANF block grant to the CCDBG for expenditures under a state early childhood
collaboration program. Under current law, states may transfer up to 30% of their
TANF allotments to the CCDBG. Representative Stark introduced H.R. 2175, a
proposal to, among other things, amend the Social Security Act to appropriate funds
for a child care quality improvement grant. Senator Frist and Representative Bryant
introduced S. 2236 and H.R. 4750 respectively, legislation which would establish
programs to improve the health and safety of children receiving child care outside the
home. Representative DeLauro introduced H.R. 4206, a bill which would establish
a grant program to improve the quality and expand the availability of child care
services and family support services for families with children under 3 years of age.
Action on Child Care Legislation
The Children’s Health Act of 2000 was signed into law (P.L. 106-310) on
October 17, 2000. This law includes authorization for the appropriation of funds for
making grants to states intending to establish programs to improve the health and
safety of children receiving child care outside the home. No funds were appropriated
for this purpose in FY2001 appropriations legislation. The authorization level for
future years is at such sums as may be necessary.
H.R. 3122, introduced by Representative Thomas (10/21/99) was signed into law
(P.L. 106-100) on November 12, 1999. The law permits the enrollment in the House
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of Representatives Child Care Center of children of federal employees who are not
employees of the legislative branch.
Two other bills pertaining to child care for federal employees received full
committee action but never full floor action. The Quality Child Care for Federal
Employees Act (H.R. 28) introduced by Representative Gilman was approved by the
House Government Reform Committee on May 19, 1999. H.R. 28 would require that
child care centers for federal employees meet state and local codes as well as require
that at least 50% of children receiving care in those centers be children of federal
employees or contractors. On September 15, 1999, H.R. 28 was reported by the
Committee on Government Reform (H.Rept. 106-323), and placed on the Union
Calendar. The bill was discharged by the Judiciary Committee on the same day.
On June 7, 1999, H.R. 206, introduced by Representative Morella, was reported
by the House Government Reform Committee (H.Rept. 106-169). This bill would
provide greater access to child care services for federal employees, allowing any
executive agency to use appropriated funds, otherwise available for salaries, for
provision of child care for its employees. This provision was included in the FY2000
Treasury, Postal Service and General Government Appropriation bill, signed into law
on September 29,1999 (P.L. 106-58 –see Appropriations Legislation section below).
Similar language was also included in the Consolidated Appropriations Act 2001 (P.L.
106-554).
Committee Hearings. On March 16, 1999, the House Ways and Means
Subcommittee on Human Resources held a hearing on the federal resources available
for child care. On July 27, 1999, the Senate Committee on Health, Education, Labor
and Pensions (HELP) held a hearing to discuss innovations that are being made to
help improve the quality and supply of child care. On October 8, 1999, the House
Subcommittee on Housing and Community Opportunity held a field hearing on H.R.
1112 (Maloney), “The Children’s Development Commission Act (KIDDIE MAC).”
On April 11, 2000, the Senate HELP Committee’s Subcommittee on Children and
Families held a hearing on the availability of early childhood programs for low-income
families, and their impact on those families.
FY2001 Budget Resolution
The conference report (H.Rept. 106-577) on the FY2001 budget resolution was
agreed to by the House (roll call #125, 220-208) and by the Senate (roll call #85,
50-48) on April 13, 2000. This final resolution did not include child care measures
that had been approved in the earlier Senate version, S.Con.Res. 101 (S.Rept. 106-
251). The Senate’s resolution included a “Sense of the Senate” measure, which
assumed that tax relief should be directed to parents who are struggling to afford
quality child care, including those who wish to stay home to care for a child; and
assumed a total of $4.567 billion in funding for the CCDBG (an increase of $1 billion)
in FY2001. The text of the Senate’s version was incorporated into the House version
(H.Con.Res. 290), and was passed by the Senate on April 7, 2000. The House passed
its version, H.Con.Res. 290 (H.Rept. 106-530) on March 24, 2000.
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FY2001 Appropriations Legislation
Consolidated Appropriations Act, 2001 (H.R. 4577, P.L. 106-554, signed
December 21, 2000). As was the case for FY2000, the FY2001 appropriations for
programs administered by the Departments of HHS, Labor, and Education were
included in a consolidated bill for FY2001. Included in P.L. 106-554 are FY2001
appropriations for the Child Care and Development Block Grant (CCDBG), the
Social Services Block Grant (SSBG), Head Start, and two new initiatives: the Early
Learning Fund and a program of loan forgiveness for child care workers. The law
provides an additional $817 million in funding for the CCDBG, which when added to
the $1.183 billion provided as an advance appropriation in the FY2000 law, amounts
to $2 billion in FY2001 funding for the CCDBG.
In other child care-related funding, the FY2001 appropriations law provides $6.2
billion in FY2001 funding for Head Start, a $933 million increase over the FY2000
level. An advance appropriation of $1.4 billion for Head Start in FY2002 is also
included in the new law. Funding for the SSBG was decreased by $50 million from
its FY2000 level, being set at $1.725 billion for FY2001. The law does include a
provision maintaining states’ ability to transfer up to 10% of their annual Temporary
Assistance for Needy Families (TANF) allotments to the SSBG in FY2001. Under
earlier legislation (P.L. 105-178, the Transportation Equity Act) the allowable transfer
amount was scheduled to be reduced from 10% to 4.25% in FY2001, however the
newly enacted appropriations legislation supercedes that earlier law, for FY2001.
The law provides $20 million for a new Early Learning Fund, and $1 million for
the loan forgiveness for child care providers program. The House had not proposed
funding for either of these initiatives, and the Senate had proposed $10 million for
loan forgiveness, but no funding for the Early Learning Fund.
Additional child care provisions, relating specifically to federal child care, drawn
from the vetoed appropriations legislation covering the legislative branch (H.R. 4985)
were also included in the Consolidated Appropriations Act, 2001. These provisions
include continuing to permit executive branch agencies (not including the General
Accounting Office) to use agency funds (otherwise available for agency salaries and
expenses) to provide child care services, in a federal or leased facility, or through
contract, for civilian employees of the agency. These funds are to be used to improve
the affordability of child care for lower income federal employees using or seeking to
use the child care services offered by the agency facility or contractor. Also included
in P.L. 106-554 is a new provision (Section 643) which requires that all current and
newly hired workers in all child care centers located in federally owned or leased
facilities undergo criminal background checks in compliance with the Crime Control
Act of 1990.
Leading up to the consolidated bill and conference report (H.Rept. 106-1033),
both the House and Senate passed versions of FY2001 appropriations bills for the
Departments of Labor, Health and Human Services, and Education. Differences
between the House and Senate bills (H.R. 4577 and S. 2553), with regard to child
care and related funding are explained below. Provisions regarding federal child care
were originally included in appropriations legislation for the Department of Treasury,
the Postal Service, and General Government, and subsequently the Legislative Branch
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appropriations, before ultimately being included in the Consolidated Appropriations
Act, 2001.
House Labor/HHS/Education Appropriations Bill. On June 14, 2000, the
House passed its Labor-HHS-Education FY2001 Appropriations bill (H.R. 4577).
The bill proposed to increase CCDBG funding by $400 million in FY2001 and to
provide an additional $817 million in advance funding for the CCDBG in FY2002.
However, under Section 518, Title V of the House bill, a portion of the $817 million
increase for FY2002 would be subject to recission,
if advance appropriated programs
in
all of the FY2001 appropriations bills exceeded $23.5 billion. If that cap was
surpassed, H.R. 4577 states that funding for CCDBG in FY2002 could not drop
below the level of CCDBG appropriations provided for FY2001 in the FY2000
Appropriations Act (P.L. 106-113): $1.183 billion (shown in
Table 3). In the event
that this would occur, the resulting appropriation for FY2002
could have been lower
than the FY2001 total, by as much as $400 million (the additional amount which
would be appropriated for FY2001). However, in S. 2553, the bill reported by the
Senate Appropriations Committee (and the text of which was then adopted and
passed by the full Senate under the number H.R. 4577), the CCDBG would receive
$817 million in additional funds for FY2001, without the contingent rescission. The
final law (P.L. 106-554) does not include any of the House language pertaining to this
potential recission.
The House bill proposed to increase Head Start funding by $400 million, which
would have brought the total to $5.7 billion. The House bill proposed to fund the
Social Services Block Grant (SSBG) at its authorized level of $1.7 billion.
Senate Labor/HHS/Education Appropriations Bill. On June 30, 2000, the
full Senate passed its version of a Labor/HHS/Education appropriations bill. On May
12, 2000, the Senate Appropriations Committee approved and reported S.
2553/S.Rept. 106-293, which would provide FY2001 funding for the Departments
of Labor, HHS, and Education. The Senate substituted the text from the committee-
approved bill (S.2553) and amended and passed H.R. 4577. This Senate version of
H.R. 4577 would provide an additional $817 million for the Child Care and
Development Block Grant (CCDBG) for FY2001, raising the level of discretionary
child care funding to $2 billion for FY2001. The bill did not include an advance
appropriation for FY2002 – S.Rept. 106-293 states that total funding for FY2002
would be included as part of the FY2002 bill. Also included in the bill were proposals
to increase Head Start funding by $1 billion (bringing the total funding level to $6.3
billion), and to increase funding for the 21st Century Learning Center programs by
$146.5 million. The Senate’s recommended increases in the CCDBG and Head Start
program were the same as those proposed by President Clinton in his FY2001 budget
request. The Senate bill did include a $1.1 billion cut to the Social Services Block
Grant– a block grant which can be used to provide child care services. S. 2553 would
fund the SSBG at $600 million in FY2001, a $1.1 billion difference from the $1.7
billion proposed by the House.
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Table 3. House and Senate Proposals for CCDBG Appropriations
Compared to Enacted Law (P.L. 106-554)
FY2001
FY2002
Advance
Appropriation
Appropriation
included in
Advance Appropriations
from
FY2001
for FY2002,
FY2000 bill
appropriations
as included in FY2001 bill
(P.L. 106-113)
bills
House (H.R. 4577)
$400 million
$2 billiona
$1.183 billion
Senate (S. 2553)
$817 million
none
Consolidated
Appropriations
$1.183 billion
$817 million
none
Act, 2001
(P.L. 106-554)
Source: Table prepared by the Congressional Research Service (CRS).
a A portion of the proposed $2 billion in advance appropriations for CCDBG in FY2002 would be
subject to recission if advance appropriated programs in all of the FY2001 appropriations bills
exceed $23.5 billion. (See text of House Appropriations bill section for details.)
Treasury, Postal Service, and General Government Appropriations. As was
the case for FY2000, provisions regarding federal child care were initially included in
FY2001 Treasury, Postal Service and General Government appropriations legislation.
Ultimately, however, these provisions were rolled into the Consolidated
Appropriations Act, 2001, as described above. The following describes the House
and Senate activity leading up to that point.
On July 20, 2000, the House passed H.R. 4871, which included a provision
(Section 634) that would continue to permit executive branch agencies (not including
the General Accounting Office) to use agency funds (otherwise available for agency
salaries and expenses) to provide child care services, in a federal or leased facility, or
through contract, for civilian employees of the agency. These funds would be used
to improve the affordability of child care for lower income federal employees using
or seeking to use the child care services offered by the agency facility or contractor.
The bill stipulated that amounts paid to licensed or regulated child care providers may
be paid in advance of child care services rendered, covering agreed upon periods as
appropriate. The House also agreed to an amendment (H.Amdt. 1019) which would
require that all current and newly hired workers in all child care centers located in
federally owned or leased facilities undergo criminal background checks in compliance
with the Crime Control Act of 1990.
The Senate’s bill (S. 2900), reported out of the appropriations committee on July
20, 2000 included language identical to H.R. 4871 with respect to the use of funds for
improving affordability of child care for lower income federal employees (Section
634), but did not include the H.R. 4871 provision regarding the timing of payments
to child care providers, nor the House amendment language requiring that current and
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newly hired child care workers in federal child care centers undergo criminal
background checks. On July 26, the Senate voted to invoke cloture to proceed with
debate on H.R. 4871.
On July 26, a third bill, H.R. 4985, was introduced as a new bill and reported
from the Legislative Branch appropriations conference committee as Division B of
that conference. This bill included all of the same federal child care provisions
(Sections 633 and 643) as those in H.R. 4871, except for the provision that would
allow for advance payment of salaries to child care providers. This was the language
included in the final law (P.L. 106-554).
FY2000 Budget Resolution
The conference report (H.Rept. 106-91) on the FY2000 budget resolution
(H.Con.Res. 68) was approved in the House and Senate on April 14 and 15, 1999,
respectively. The conference agreement assumed $3 billion in new mandatory
CCDBG spending over 10 years and $3 billion in additional tax relief in the form of
child care credits for families with children.
The conference report’s assumption regarding new CCDBG entitlement
spending over 10 years marked a decrease from the proposed $5 billion included in
Senator Dodd’s amendment (S.Amdt. 160, modified) to the Senate’s budget
resolution proposal (S.Con.Res. 20). The House version of the budget resolution
(H.Con.Res. 68) did not specify any assumptions regarding child care. Prior to the
conferees’ finalization of the conference report, Senators Dodd and Jeffords offered
a non-binding motion instructing Senate negotiators to insist on the inclusion of the
Dodd amendment in the conference report. Although the motion passed by a vote of
66-33, indicating bipartisan support for new funding in child care, the final conference
report included only a portion of the amount originally proposed by Senator Dodd.
FY2000 Appropriations Legislation
FY2000 Consolidated Appropriations Act. On November 29, 1999, the
President signed into law the FY2000 Consolidated Appropriations Act (H.R.
3194/P.L. 106-113), which provides $1.183 billion in advance funding for the
CCDBG in FY2001, $1.775 billion for the Social Services Block Grant (SSBG), and
$5.267 billion for Head Start. (see
Table 1.) The signing of the consolidated
appropriations bill (H.R. 3194), which contained funding for Departments of Labor,
Health and Human Services, and Education programs among others, followed seven
continuing resolutions and the veto of H.R. 3064. In the case of the CCDBG, the
final funding level matched the level requested by the President. The Senate bill (S.
1650) had proposed $2 billion in advance funding for CCDBG in FY2001, but the
lesser $1.183 billion was agreed to in conference. Head Start’s final funding also
matched the President’s requested amount, however P.L. 106-113 splits the
availability of funding over FY2000 and FY2001. The SSBG appropriation marks a
decrease from not only its FY1999 appropriation level, but also from what was
requested by the President, House (H.R. 3037– $1.909 billion) and Senate (S. 1650
– $2.38 billion, of which $1.3 billion would have been advance funded for FY2001).
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FY2000 Treasury, Postal Service and General Government Appropriations
(P.L. 106-58). On September 29, 1999, the President signed P.L. 106-58, which
permits the use of executive branch agency funds (otherwise available for salaries) to
provide child care services for low-income federal employees. The Senate, on July
1, 1999, and the House, on July 15, 1999, had passed versions of a FY2000 Treasury,
Postal Service and General Government Appropriation bill (S. 1282 and H.R. 2490,
respectively), both containing provisions regarding federal child care. Both House
and Senate bills included a provision allowing executive branch federal agencies to use
agency funds to provide child care services for employees of the agency, in a facility
owned or leased by the agency, provided these funds are used to improve the
affordability of child care for low-income federal employees. In addition, the Senate
bill would have required regulations establishing health and safety standards for
federal agency child care programs and required that facilities meet state or local
licensing standards and comply with standards set by a state or nationally recognized
accreditation entity.1
Child Care Provisions in the Taxpayer Refund Act of 1999 (vetoed)
On September 23, 1999, President Clinton vetoed the Taxpayer Refund Act of
1999. The conference report, (H.Rept. 106-289) on the bill (H.R. 2488) had passed
both the House and Senate on August 5, 1999. The conference agreement did not
include all of the child care provisions from the House bill and Senate amendment.
The agreement did not adopt the Senate provision to create a tax credit for employer-
supported child care, and also dropped the Senate’s amendment proposing a $10
billion increase in CCDBG funding over 10 years. The conference agreement did
include provisions regarding the dependent care tax credit (DCTC), but modified the
Senate amendment’s proposal. The conference agreement would have set the DCTC
maximum credit percentage at 35% for taxable years beginning in 2001 through 2005,
and 40% thereafter. (The Senate amendment would have set the maximum credit rate
at 40% beginning in taxable year 2001. The House bill had no DCTC provisions.)
The conference agreement also included the Senate amendment’s provision which
would have extended up to $960 of additional credit ($1,920 for two or more
qualifying dependents) to taxpayers with qualifying dependents under age one. The
conference agreement, however, would have made this provision effective for taxable
years beginning after 2005 rather than the Senate amendment’s effective date of
taxable year 2001.
Action in the 105th Congress
Although none of the major authorizing committees acted on a comprehensive
proposal in the 105th Congress, some action on child care did occur. For example, the
Head Start program was reauthorized for 5 years (P.L. 105-285). The Higher
Education Act also was reauthorized (P.L. 105-244), with two child care-related
provisions: grants for campus-based child care (authorized at $45 million in FY1999
1 For more information on federal child care provisions included in these appropriation bills,
see CRS Report RL30202,
Appropriations for FY2000: Treasury, Postal Service, Executive
Office of the President, and General Government.
CRS-19
and such sums as necessary in subsequent years); and a loan forgiveness
demonstration program for low-income individuals who complete a degree in early
childhood education and work full-time in a child care facility (authorized at $10
million in FY1999 and such sums as necessary in later years). Appropriations
legislation subsequently provided $5 million for the campus-based child care grants
in FY1999, but no funding for the loan forgiveness demonstration (P.L. 105-277).
Also during the 105th Congress, both the House and Senate passed resolutions
recognizing parents who stay home with their children. In the Senate, this provision
was included in the FY1999 budget resolution, which also assumed increased
spending for the CCDBG and the DCTC. These assumptions required additional
legislative action, however, which did not occur.
The 105th Congress acted on several child care-related bills that did not become
law. For example, the House Government Reform and Oversight Committee
approved legislation that would have mandated standards for child care provided to
federal employees. Similar legislation was approved by the Senate, as part of the
FY1999 Treasury, Postal Service appropriations bill. The House eventually passed
a bill allowing federal agencies to use funds for child care, but not mandating
standards for such care. No further action occurred on these proposals.
Several bills would have earmarked tobacco revenues for child care. The Senate
debated legislation that would have provided grants to states from a National Tobacco
Trust Fund, and approved an amendment that would have required states to use part
of these trust fund grants for child care, after defeating an effort to table this
amendment by a vote of 33 to 66. However, the Senate ultimately stopped
consideration of this bill and returned it to the Commerce Committee, where no
further action took place.
Legislative Approaches
More than 50 child care bills were introduced in the 105th Congress, and several
dozen, many with similar provisions, were introduced again in the 106th Congress.
Like the Administration’s 1999 initiative, several were omnibus packages of tax and
grant provisions. In general, these bills addressed one or more of the traditional
elements in child care policy debates: availability, affordability, and quality of care.
The following sections briefly describe the legislative approaches that have been
proposed in each of these areas.
Availability of Child Care
Proposals in the 105th Congress would have increased the supply of child care
in several ways, including through tax incentives or grants for employers to provide
child care for their employees, and through expanded federal grants to increase the
supply of child care for low-income families. Other proposals would have increased
the availability of specific types of child care, such as after-school care.
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Private Sector Incentives. Like the Administration’s initiative, numerous
proposals would have established a new tax credit for businesses that support child
care programs for their employees. The bills differed somewhat regarding the size of
the tax credit and the types of expenditures that could be covered. For example, the
size of the credit varied from 20% of qualified expenditures to 50%. Some proposals
would have placed a dollar limit on the credit of $100,000 or $150,000 in a single
year, while others would have established no upper limit. One proposal would have
limited the credit to $100,000 for start-up costs, $25,000 for facility operating costs,
and $50,000 to reimburse employees for their child care expenses.
Under some proposals, the credit would have been available only for start-up
costs, such as buying, building, rehabilitating or expanding properties, while others
would have also allowed the credit to apply to operating costs, including the costs of
training and scholarships for caregivers, allowing higher pay for caregivers with higher
levels of training, and resource and referral services. Some bills would have allowed
the credit to be used for the costs of accreditation or credentialing.
As an alternative to tax credits, some proposals would have encouraged private
employers, especially small businesses, to provide child care for their employees
through federal grants. Proposals varied in size from $25 million annually to $75
million. In some cases, grants would go directly to businesses or consortia of
employers; in others, grants would go through states and then to private employers.
In general, HHS would administer these grants, which would help employers set up
and operate child care programs. Several bills would have limited participating
employers to those with fewer than 50 or 100 employees.
Expansion of CCDBG. Numerous bills were introduced in the 105th Congress
to increase funding for the CCDBG, either by increasing its discretionary
authorization level or by directly appropriating additional funds for its entitlement
component. Some of these proposals would have increased funding by as much as
$1.5 billion per year. In some cases, these additional funds would have been
specifically earmarked for services to non-welfare, low-income working families.
Some bills also would have earmarked a certain amount of funding for families with
very young children.
New Grant Programs. Several bills would have created new, free-standing
grant programs, independent of the CCDBG, to provide quality child care and related
services, especially focusing on very young children (in some cases, children under
age 6; in others, children under age 3). Authorization levels varied widely, going as
high as $4 billion annually in the out-years. Some proposals would have authorized
formula grants to states, while others would have awarded funds directly to local
grantees. Under some proposals, HHS would have been the federal administering
agency; others would have established the program within the Department of
Education and provided grants to local education agencies. One proposal would have
authorized grants to states for school-based child care programs for children under
age 7.
After-School Child Care. As proposed by the Administration, numerous bills
sought to increase annual funding for the 21st Century Community Learning Centers
from $40 million to $200 million. As described earlier, this proposal was successful
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for FY1999. For FY2000, funding for the 21st Century Community Learning Centers
was increased further to $454 million. In addition, several bills would have authorized
or directly appropriated funding for after-school programs, either through grants to
states or to local education agencies, administered either by HHS or the Department
of Education. Primarily as a delinquency prevention measure, after-school programs
also were proposed to be administered by the Department of Justice.
Campus-Based Child Care. To enable low-income parents to pursue higher
education, several bills proposed to authorize funds for the Education Department to
make grants for campus-based child care. This proposal was included in the
reauthorization of the Higher Education Act, and $5 million was appropriated for
FY1999, and again in FY2000. In addition, bills were introduced that would have
increased the dependent care allowance that is considered in determining Pell Grant
awards.
Welfare-to-Work Exemption. Under the new Temporary Assistance for Needy
Families (TANF) welfare program, states may not withhold benefits to single
custodial parents with children under age 6 for failure to work, if they cannot find
appropriate and affordable child care. One proposal would have extended this
exemption to parents with children under age 11.
Legal Liability Concerns. One proposal would have required the General
Accounting Office to study whether legal liability concerns are a barrier to the
establishment and operation of child care programs by businesses, schools, community
centers, or individuals in their own homes.
Facilities Construction. To make it easier for child care programs to obtain
financing to buy, build or substantially rehabilitate facilities, several bills would have
authorized the Department of Housing and Urban Development to insure mortgages
and would have established a Children’s Development Commission to certify facilities
for such insurance. Another proposal would have authorized grants to states for
construction or renovation of school-based child care programs, and another would
have authorized $100 million over 5 years under the CCDBG for a capital financing
program for child care.
Affordability of Child Care
Numerous bills proposed to make child care more affordable for parents through
the tax code, and some of these proposals included provisions for families with an at-
home parent. In addition, most proposals to increase federal funds for child care were
specifically intended to help provide affordable care for low-income families.
DCTC Revisions. The maximum credit available under the existing Dependent
Care Tax Credit is 30% of expenses, up to $2,400 for one child (for a maximum
credit of $720) and $4,800 for two or more children (for a maximum credit of
$1,440). The credit rate is gradually phased down for taxpayers with incomes above
$10,000 as their incomes go up, until it reaches 20% for taxpayers with incomes
above $28,000. Moreover, the existing tax credit is non-refundable, which means that
it can be used only by families with tax liabilities.
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Several bills proposed to make the DCTC refundable (as did the President in his
2000 State of the Union Address), so that families without tax liability could actually
receive a payment equal to the credit. Many bills would have done a combination of
the following: increase the percentage of expenses that may be claimed for the credit
(i.e., the credit rate); increase the amount of expenses that may be considered in
calculating the credit; and increase the income levels at which the credit rate phases
down. Some bills would have denied the credit altogether for higher income
taxpayers. One proposal would have connected the credit rate to the status of the
provider, with a higher credit rate available for taxpayers who use accredited or
credentialed child care.
Several proposals would allow the DCTC to be used by families where a parent
is not employed and stays home to care for the children. In general, these proposals
would have “deemed” such families to have child care expenses of a certain amount,
and would have enabled the family to claim a credit based on these deemed expenses.
Most of these proposals would have limited such benefits to families with very young
children. One proposal would have eliminated the DCTC altogether for families with
children under age 5, and instead would have increased the per-child tax credit (which
is a separate, recently enacted tax provision available to all families regardless of
employment status) from $500 to $1,500 for children in this age group.
Other measures would have amended the Dependent Care Assistance Program
(DCAP) to enable its use by families with an at-home spouse, and a related proposal
would have increased the number of years to 5 of little or no earnings that are
disregarded in calculating Social Security benefits, for individuals who did not work
in those years to care for a dependent child under age 12.
Business Tax Credits. Some of the employer tax credit proposals, described
in the previous section on availability of child care, also would have required that any
tax credit claimed by an employer must be passed on to employees in the form of
reduced child care costs.
Expansion of CCDBG. As described earlier, numerous bills would have
increased CCDBG funding, which is designed to increase the supply of affordable
child care for low-income families. Moreover, one proposal would have required
states, as a condition of receiving CCDBG funds, to base their child care payment
rates on market rate surveys that are no more than 2 years old. (This is currently a
requirement under the CCDBG regulations, which took effect August 24, 1998.)
New Grant Programs. Also as described in the previous section, several new,
free-standing grant programs were proposed in the 105th Congress, largely focused
on providing quality services for young children. Improving the affordability of care
also was a goal of many of these proposals.
Quality of Child Care
Numerous bills would have attempted to upgrade child care quality, primarily
through voluntary incentives. None would have mandated federal standards for child
care, which has led to contentious debates when proposed in the past. However,
CRS-23
several would have provided incentives for use of nationally accredited child care
providers or credentialed child caregivers.
Competitive Incentive Grants. Several bills proposed to award competitive
or challenge grants to states that comply with certain conditions related to quality.
Some of these proposals would have awarded as much as $1 billion per year, and
conditions for receiving such grants varied. For example, one proposal would have
awarded incentive funds to states that had not reduced their child care standards or
requirements since 1995, and had furnished sufficient matching funds to draw down
80% of their CCDBG matching funds the previous year. Another proposal would
have rewarded or penalized states under the CCDBG program, by increasing or
reducing their block grant allotment by 10%, depending on the state’s performance
in maintaining health and safety standards.
Other proposals would have awarded grants to states that require criminal
background checks for child care workers, conduct frequent health and safety
inspections, require first aid training for workers, maintain certain child-staff ratios,
and require a minimum level of training for caregivers. States that adopted quality
components of the military child care system or other successful models would have
received incentive funds, under another measure.
In general, these incentive grant proposals would have targeted the funds toward
quality related activities, such as subsidies for credentialed providers, parent
education, scholarships for education or training needed to obtain accreditation or
credentialing for providers, training and technical assistance, development of criteria
for accreditation and credentialing, higher payments for accredited or credentialed
providers or for special needs child care, or equipment for special needs children.
Some proposals would have allowed states to use funds to upgrade their licensing
standards and enforcement of standards, and for higher caregiver salaries and other
incentives for caregivers to pursue more advanced training.
New Grant Programs. As already stated, several bills would have created free-
standing grant programs for services to young children, and most of these bills
emphasized improvement of quality as a primary goal.
CCDBG Quality Improvement Funds. One proposal would have amended
the existing 4% reserve for quality improvement activities under the CCDBG to make
the use of funds more explicit. Under this proposal, funds would be used for one or
more of the following: resource and referral programs; assistance in meeting state and
local standards; monitoring and enforcement of licensing and regulatory requirements;
training; and compensation for child care staff. (These activities were specifically
authorized under the CCDBG before it was amended in 1996.) Another proposal
would have appropriated an additional $600 million per year for quality activities
under the CCDBG. To receive these funds, states would be required to set quality
benchmarks and provide grants to local cooperatives for quality improvement
activities.
Child Care Workforce. Although training and education for child care
providers was included in many proposals, several bills focused specifically on this
issue. Proposals included development by HHS of a model training program for
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caregivers, based on the military program; grants for technology-based training
programs; a national child care provider scholarship program, as proposed by the
Administration; and cancellation of student loans for child care workers who have a
degree in early childhood education or development, as ultimately included in the
higher education reauthorization. Other proposals would have established various
incentives for caregivers to pursue accreditation or credentialing, and one bill would
have authorized grants to local counties to provide early childhood training for
welfare recipients.
Tax Credit Incentives. As mentioned earlier, numerous bills would have made
child care more affordable through expansion of the Dependent Care Tax Credit, and
one proposal would have allowed a larger credit for accredited or credentialed care.
Some proposals also would have increased the amount of tax-free dependent care
assistance allowable, if taxpayers used accredited or credentialed child care, and
another measure would have required child care facilities supported by a proposed
business tax credit to become accredited after 3 years. Legislation also was proposed
that would have allowed a tax deduction to providers for the costs of pursuing
accreditation or credentialing.
Federal Child Care. Several bills were offered in the 105th Congress that
addressed the quality of child care operated by federal agencies for their employees,
and would have required programs to comply with state and local licensing
requirements and/or accreditation standards. Legislative activity in the 106th
Congress, as mentioned earlier, included passage of the FY2000 Treasury, Postal
Service, and General Government Appropriations bill (P.L. 106-58) containing a
provision to assist in providing child care services for low-income federal employees.
Telephone Hotline. Finally, one proposal would have authorized funding for
HHS to operate a national, toll-free telephone hotline to provide information and
assistance to families seeking quality early childhood education services. Other
proposals would have required HHS to disseminate information on the importance of
quality child care.
Additional Reading
CRS Reports and Issue Briefs
CRS Report RL30785,
The Child Care and Development Block Grant: Background
and Funding, by Alice Butler and (name redacted).
CRS Report RL30081,
Child Care Subsidies: Federal Grants and Tax Benefits for
Working Families, by (name redacted), (name redacted), and (name redacted).
CRS Report 96-780,
Child Care for Low-Income Families: Federal Programs and
Welfare Reform, by (name redacted).
CRS Report 98-875,
Child Care: State Programs Under the Child Care and
Development Fund, by Evelyne Parizek, (name redacted), and (name redacted).
CRS-25
CRS Report 98-541,
Child Care: The Role of the Federal Government, by Molly
Forman and (name redacted).
CRS Report 98-113,
Child Day Care Centers: A List of Resources for Starting and
Operating a Child Day Care Center, by Marjorie Washington.
CRS Report RS20537,
Head Start: Background and Funding, by Alice Butler and
(name redacted)
CRS Report 94-953,
Social Services Block Grants (Title XX of the Social Security
Act), by (name redacted).
Other Resources
U.S. Department of Commerce. Census Bureau.
State Estimates of Organized Child
Care Facilities, by Lynne M. Casper and Martin O’Connell. Population
Division Working Paper #21, March 1998.
——-
Who’s Minding Our Preschoolers? Fall 1994, by Lynne M. Casper. Current
Population Reports, P70-62, November 1997.
——-
Who’s Minding the Kids? Child Care Arrangements. Fall 1995, by Kristin
Smith. Current Population Reports, P70-70, October 2000.
——-
My Daddy Takes Care of Me! Fathers as Care Providers, by Lynne M.
Casper. Current Population Reports, P70-59, September 1997.
——-
What Does It Cost to Mind Our Preschoolers? by Lynne M. Casper. Current
Population Reports, P70-53, September 1995.
U.S. Department of Health and Human Services. National Child Care Information
Center Home Page, [http://nccic.org].
——–
Access to Child Care for Low-Income Working Families. Administration for
Children and Families, October 19, 1999.
U.S. General Accounting Office.
Child Care: Use of Standards to Ensure High
Quality Care. GAO/HEHS-98-223R, July 1998.
——-
Child Care: How Do Military and Civilian Center Costs Compare?
GAO/HEHS-00-7, October 1999.
——-
Child Care: State Efforts to Enforce Safety and Health Requirements.
GAO/HEHS-00-28, January 2000.
——-
Education and Care: Early Childhood Programs and Services for Low-
Income Families. GAO/HEHS-00-11, November 1999.
——-
Welfare Reform: States’ Efforts to Expand Child Care Programs.
GAO/HEHS-98-27, January 1998.
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U.S. House of Representatives. Committee on Ways and Means.
2000 Green Book,
Section 9, October 6, 2000.
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