Report: Reinvestment in State Child Care and Preschool Programs Remains a Critical Need

New CBP Report Points to Over 100,000 Lost Slots and Outdated Payment Rates, Highlights Need for Increased Support to Boost Access to Quality Programs

FOR IMMEDIATE RELEASE

SACRAMENTO – A new report from the California Budget Project (CBP) highlights the need for state policymakers to begin reinvesting in California’s child care and preschool programs as they work to finalize a 2014-15 budget agreement in the coming days. The report – Five Things You Need to Know About California’s Child Care and Development System – shows that despite the many benefits of quality child care and preschool, especially for low- and moderate-income children and families, budget cuts and other program changes in recent years have significantly reduced access to such programs.

“As Governor Brown and state lawmakers work out a budget agreement this month, a key priority should be reinvesting in child care and preschool programs,” said Kristin Schumacher, CBP policy analyst and author of the report. “Increased support for child care and preschool would give more kids access to safe environments where they can learn and explore, while enabling parents to find and keep jobs.”

“There are a number of ways that state policymakers could expand access to child care and preschool. And these could be made part of this year’s budget agreement, as both the State Senate and Assembly have proposed,” said Schumacher. “Reversing a portion of the cuts made to child care and preschool in recent years would restore some of the 110,000 slots lost since the start of the Great Recession. Also, boosting provider payment rates, which have not been updated in years, would help more low-income families to afford high-quality care for their children.”

The report shows that:

  • Recent years’ state budget cuts have severely reduced access to subsidized child care and preschool – and the Governor’s proposed budget would largely leave these cuts in place. State policymakers in recent years made deep cuts to child care and preschool programs, and the Governor’s revised 2014-15 budget proposal generally maintains these reductions. Under the Governor’s proposal, annual funding for child care and preschool would be about 40 percent below that in 2007-08, after adjusting for inflation. This translates into a loss of nearly 110,000 “slots” in subsidized child care and preschool, a decline of nearly one-quarter.
  • Payment rates for providers are outdated, which in turn limits families’ access to subsidized child care and preschool. Providers of subsidized care receive payments based on one of two standards: the statewide Standard Reimbursement Rate (SRR) or county-level rate ceilings. The state’s SRR has not been updated since 2007, and this rate is currently more than one-fifth lower – after adjusting for inflation – than when the SRR was introduced in 1980-81. Meanwhile, the county-level rate ceilings are right now based on rate data that are nearly a decade old. Outdated payment rates mean that families have access to fewer high-quality providers for child care or preschool.
  • Child care costs take a huge bite out of household budgets in California, especially for low- and moderate-income families. Child care assistance is critical to helping many families afford quality care and still have resources left over for housing, food, and other necessities. For a single-parent California family living at the federal poverty line (annual income of $19,790), child care accounts for nearly 80 percent of total income. For a single mother with income at the statewide median (annual income of $25,524 for single mothers), child care takes up more than 60 percent of income. (Child care cost estimates are for an infant and a school-age child in a licensed center.)

“It’s essential that California rebuild the state programs that help bring high-quality child care and preschool within reach of low- and moderate-income families,” said Chris Hoene, CBP executive director. “Especially in light of high levels of both poverty and long-term unemployment, policymakers need to prioritize investments in child care and preschool in the current budget cycle and make this part of a long-term effort to boost support and opportunity for low- and moderate-income families.”

Five Things You Need to Know About California’s Child Care and Development System is available online at the CBP’s website, www.cbp.org.

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The California Budget Project (CBP) engages in independent fiscal and policy analysis and public education with the goal of improving public policies affecting the economic and social well-being of low- and middle-income Californians. Support for the CBP comes from foundation grants, subscriptions, and individual contributions. Please visit the CBP’s website at www.cbp.org.