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Home Visiting Can Improve Outcomes for Children, But Few Receive Services

July 2019 | By Esi Hutchful

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The early childhood years are the foundation for lifelong well-being. Yet, despite the state’s strong economic growth, about 1 in 10 of California’s children are born without important resources strongly associated with child health and well-being, such as access to health care or economic resources. [1] Children with fewer “assets” are at higher risk for adverse experiences — such as abuse — that expose them to harmful stress. [2] Chronic exposure to stress, especially in the early years, undermines children’s healthy development, with long-term health, behavioral, and academic consequences.[3]

Research indicates that early intervention tools like evidence-based home visiting can reduce or prevent the effects of adverse experiences for children. [4] Home visitors, who are often social workers or nurses, provide parenting education and other assistance to at-risk parents.[5] These services can boost children’s and parents’ well-being by enhancing child and maternal health, helping prevent child abuse, and improving child development.[6] However, the number of children in California who would most benefit from home visiting outweighs the current service levels. In the 2017-18 state fiscal year, 31,800 children benefitted from federally- and locally-funded evidence-based or evidence-informed home visiting, compared to the estimated 151,500 children ages 0 to 2 who would most likely benefit from home visiting services. [7]

Home visiting in California is largely funded and coordinated by local First 5 commissions, the California Home Visiting Program in the California Department of Public Health (CDPH), and — beginning January 2019 — the CalWORKs Home Visiting Program.[8] The 2019-20 budget also expanded support for home visiting by providing funding for services through CDPH, which represents the state’s first financial investment in home visiting for non-CalWORKs families.

Without adequate resources, children are at higher risk to experience traumatic life events. This can jeopardize children’s potential success, imposing significant costs on children, their families, and society. Recognizing this, California is investing in early interventions like home visiting in order to improve outcomes for children and their families. Yet, with home visiting programs out of reach for so many children who could benefit from them, policymakers should consider ways to continue to close the gap. Increasing state funding to expand home visiting is a step in the right direction. Additionally, state policymakers should also strengthen the infrastructure for home visiting by improving local service coordination and data collection, and building workforce capacity.

Support for this Fact Sheet was provided by First 5 California.

[1] Email correspondence with Emily Putnam-Hornstein (USC Suzanne Dworak-Peck School of Social Work Children’s Data Network) on April 30, 2019. Analysis is based on data from the California Strong Start Index. The index counts how many resources are present at birth and assigns a birth asset score from 0 to 12.

[2] Regan Foust, et al., California Strong Start Index Documentation (USC Suzanne Dworak-Peck School of Social Work Children’s Data Network, no date), p. 34.

[3]  Ross Thompson, “Stress and Child Development,” The Future of Children 24:1 (2014), pp. 41-59.

[4] Lynn A. Karoly, Rebecca Kilburn, and Jill S. Cannon, Proven Benefits of Early Childhood Interventions (RAND Corporation: 2005).

[5] For example, parents who are at risk of problems such as substance abuse, unemployment, or family violence. See Charles Michalopoulos, et al., The Mother and Infant Home Visiting Program Evaluation: Early Findings on the Maternal, Infant, and Early Childhood Home Visiting Program — A Report to Congress (US Department of Health and Human Services: January 2015).

[6] US Department of Health and Human Services, The Maternal, Infant, and Early Childhood Home Visiting Program: Partnering With Parents to Help Children Succeed (no date), accessed from https://mchb.hrsa.gov/sites/default/files/mchb/MaternalChildHealthInitiatives/HomeVisiting/pdf/programbrief.pdf on April 2, 2018.

[7] The estimated number of children who would most likely benefit from home visiting is based on statewide birth data from the California Department of Public Health (CDPH) and from data provided by Emily Putnam-Hornstein and Regan Foust (USC Suzanne Dworak-Peck School of Social Work Children’s Data Network) on April 30, 2019 and May 9, 2019. This analysis defines children born with 6 or fewer California Strong Start assets as children most likely to benefit from home visiting services. Compared to other children in the state, this population experiences significantly higher rates of childhood adversities, such as a fatality or reports of abuse or neglect by age 5. Putnam-Hornstein provided the share of children who were born with 0 to 6 assets in 2016. This analysis assumes that share is constant in both 2015 and 2017. Data on the number of children receiving home visiting comes from the CDPH and from First 5 California and applies to the 2017-18 state fiscal year. It is not possible to ascertain the asset scores of children receiving home visiting services. For example, some children receiving services may have an asset score that is greater than 6. This analysis does not include the CalWORKs Home Visiting Program, which was implemented in January 2019.

[8] The California Home Visiting Program receives funding from federal grants and, as of the 2019-20 budget agreement, the state. First 5 supports both national evidence-based home visiting models and local models. The CalWORKs Home Visiting Program, which provides up to 24 months of home visiting for CalWORKs parents who are pregnant or parenting children under age 2, was introduced in the 2018-19 state budget and made permanent in the 2019-20 budget. It is currently supported by federal Temporary Assistance for Needy Families funds and the state General Fund. See Esi Hutchful, Home Visiting is a Valuable Investment in California Families (California Budget & Policy Center: May 2018), California Budget & Policy Center, First Look: 2018-19 State Budget Invests in Reserves and an Array of Vital Services, Sets Course for Future Advances (June 2018), and California Budget & Policy Center, First Look: 2019-20 Budget Includes Balanced Investments, Leaves Opportunities to Improve the Economic Well-Being of More Californians (July 2019).

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The neighborhood a child grows up in can shape their long-term success, affecting their economic mobility as adults.[1] While Governor Newsom has pledged to create a “California for All,” currently opportunities for children are not evenly distributed across the state. Policymakers who aim to boost opportunity and improve children’s life-long prospects can strategically invest in subsidized child care and development programs that serve families with low and moderate incomes by targeting areas that have been left behind.

According to a Budget Center analysis of federal survey data, an estimated 2 million children from birth through age 12 were eligible for subsidized child care and development programs in California in 2017 — roughly 1 in 3 children across the state (32.2%).[2] The share of children eligible by county varied dramatically, with the highest shares of eligible children living in counties in the Central Valley — a region with some of the state’s highest poverty rates.[3] Kings County had the highest share, with more than half of all children in the county eligible for subsidized care (50.9%). (See Map below.) More than half of the children in the county group of Colusa, Glenn, Shasta, Tehama, and Trinity were also eligible (50.2%).[4] Conversely, the counties with the lowest share of eligible children were in and around the San Francisco Bay Area and Lake Tahoe, where the cost of living is significantly higher.[5] San Mateo County had the lowest share of eligible children, with 14.9% of children in the county eligible for subsidized care. [6] Because the cost of living is considerably higher in these counties, many families with incomes too high to qualify for subsidized care may still struggle to afford early care and education for their children.

The five counties with the largest number of eligible children were all located in Southern California: Los Angeles (539,900), San Bernardino (154,000), San Diego (149,600), Riverside (147,900), and Orange (136,900). (See Table below.) Collectively, these five counties accounted for more than half of all children birth through age 12 eligible for subsidized child care and development programs in the state. Los Angeles County alone accounted for more than 1 in 4 eligible children in California (26.6%).

Of the 2 million children eligible for subsidized care in California in 2017, just 1 in 9 children were enrolled in a program that could accommodate families for more than a couple hours per day and throughout the entire year (228,100).[7] The share of eligible children enrolled in a state program also varied across the state. (See Table below.) For example, in Orange County just 1 in 16 eligible children were enrolled in a subsidized program (6.1%). Riverside County also had a large number of eligible children but a very low share enrolled in a state program (7.3%). In contrast, due in part to a long history of prioritizing early care and education at the local level, nearly half of all eligible children were enrolled in a subsidized program in San Francisco (49.5%).[8]

Governor Newsom has signaled the intent to increase families’ access to the state’s subsidized child care and development system by proposing to boost funding for this system in the next fiscal year, including dollars for child care facilities, workforce development, and additional spaces for children. With a Governor focused on children and families, policymakers have an opportunity to invest new funding in the 2019-20 budget in an intentional fashion, targeting counties and even neighborhoods were the need is particularly acute. A child’s opportunity to escape poverty is often influenced by where they grow up. By strategically investing in areas throughout the state where children and families do not have as many opportunities, the Administration can ensure that “California for All” reaches those with the greatest need.

This analysis is the fourth part of a multiphase effort to analyze subsidized child care and development programs in California. Other phases of this work have examined the total unmet need for subsidized child care and unmet need across different age groups and by race and ethnicity. Support for this Fact Sheet was provided by First 5 California.

[1] Raj Chetty, et al., The Opportunity Atlas: Mapping the Childhood Roots of Social Mobility (Opportunity Insights and US Census Bureau: October 2018).

[2] Income eligibility is based on initial certification levels, which is 70% of state median income. Families are eligible for subsidized child care if the child who would receive care is under the age of 13; the family establishes an appropriate eligibility status, such as by having an income below the limit set by the state; and the family demonstrates a need for care, such as parental employment. Families generally must meet the same income guidelines applicable to child care to qualify for the California State Preschool Program (CSPP), which is funded solely with state dollars. State law, however, allows up to 10 percent of families in the state preschool program to have incomes up to 15 percent above the income eligibility limit, but only after all other eligible children have been enrolled. The CSPP is a part-day program offered for roughly nine months of the year. Some children receive “wraparound” services that provide subsidized child care for remainder of the day and throughout the entire year. To be eligible for the full-day CSPP, families generally must meet the same guidelines regarding eligibility status that are applicable to subsidized child care. See Kristin Schumacher, Millions of Children Are Eligible for Subsidized Child Care, but Only a Fraction Received Services in 2017 (California Budget & Policy Center: January 2019).

[3] “Central Valley” refers to both the San Joaquin Valley and the Sacramento Valley. For poverty rates by county, see Esi Hutchful and Sara Kimberlin, Incomes Grew and the Official Poverty Rate Dropped in California in 2017, But Millions Still Struggle With Extremely Low Incomes (California Budget & Policy Center: September 2018).

[4] Estimates for certain counties were deemed unreliable due to data limitations. The following counties have been grouped to improve the reliability of the data: 1) Alpine, Amador, Calaveras, Inyo, Madera, Mariposa, Mono, and Tuolumne; 2) Colusa, Glenn, Shasta,  Tehama, and Trinity; 3) Del Norte, Humboldt, Lassen, Modoc, Nevada, Plumas, Sierra, and Siskiyou; 4) El Dorado and Placer; 5) Lake and Mendocino; 6) Marin, Napa, and Sonoma; 7) Monterey, San Benito, San Luis Obispo, and Santa Cruz; and 8) Sutter, Yolo, and Yuba.

[5] See Sara Kimberlin and Amy Rose, Making Ends Meet: How Much Does It Cost to Support a Family in California? (California Budget & Policy Center: December 2017).

[6] The income eligibility limit does not vary across the state, but a number of counties either have a pilot or are in the process of getting state approval for a county pilot to set income limits at a higher level. For example, San Mateo County and the City and County of San Francisco both have permanent pilots, which sets the income eligibility limit at 85% of state median income (SMI). Statewide the income eligibility limit is 70% of SMI, which is used for every county in this analysis.

[7]  The 228,100 figure reflects children enrolled in the full-day CSPP or in one of the following subsidized child care programs: Alternative Payment Program; CalWORKs Stages 1, 2, or 3; Family Child Care Home Network; General Child Care; and the Migrant Child Care and Development Program. Enrollment is for children from birth through age 12 in October 2017. This analysis also includes the full-day CSPP, which consists of part-day preschool and “wraparound” child care, because it accommodates many — although not all — families’ work schedules throughout the year, and thus approximates the experience that a child would have in a subsidized child care program. In contrast, this analysis excludes roughly 97,000 children who were enrolled in the part-day CSPP, without access to wraparound child care, in October 2017. This is because most families with low and moderate incomes likely need wraparound care in order to supplement the CSPP’s part-day, part-year schedule. This analysis reports enrollment data for a single month — as opposed to a monthly average for 2017 — because the CDE does not typically separate part-day and full-day CSPP enrollment when reporting monthly averages for a single fiscal year. The CDE also states, “Caution should be used when interpreting monthly averages as some programs do not operate at full capacity throughout the entire year (e.g., State Preschool) while other programs have seasonal fluctuations in enrollment (e.g., Migrant Child Care).” Finally, the data are for October 2017 because the CDE’s point-in-time reports are only available for the month of October. See Kristin Schumacher, Millions of Children Are Eligible for Subsidized Child Care, but Only a Fraction Received Services in 2017 (California Budget & Policy Center: January 2019).

[8] San Francisco was the first city in the United States to pass a “Children’s Amendment.” Passed in 1991, this measure dedicated local funding to early care and education, among other programs and services for children. Voters in San Francisco also approved additional funding for a “Preschool for All” program in 2004. See San Francisco Office of Early Care & Education, San Francisco Citywide Plan for Early Care and Education (2016).

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Governor Newsom’s proposed 2019-20 state budget includes $12.7 billion for state corrections.[1] The largest share of this proposed spending (55.5%, or $7.1 billion) goes to state prison operations. This includes the cost of salaries and benefits for correctional officers as well as the cost of various support services for incarcerated adults, such as meals and clothing.

The next-largest set of state corrections expenditures — totaling a proposed $3.4 billion in 2019-20 — pays for health-related services for incarcerated adults. Of this amount, $2.6 billion (20.2% of total spending on state corrections) is for medical and dental care and roughly $800 million (6.3% of the total) is for mental health care.

The fact that California spends hundreds of millions of dollars each year to provide mental health services in state prisons points to the prevalence of mental illness among incarcerated adults. Over 38,500 prisoners received mental health care in December 2017, the most recent month for which data are available.[2]

Moreover, the number of prisoners receiving mental health treatment has grown in recent years. In April 2013, these prisoners totaled 32,535 and accounted for less than 25% of all incarcerated adults.[3] By December 2017, this number had increased by more than 6,000 — to 38,561 — and was equal to nearly 30% of all incarcerated adults.[4] In contrast, during this same period the total number of adults incarcerated by the state declined by about 2,300, from 132,567 to 130,263.

Since the 1990s, a court-appointed officer has overseen mental health care delivery in California’s prisons to ensure that the state provides a constitutionally adequate level of care.[5] According to this officer, conditions are improving for prisoners who experience mental illness. “While more work remains to be done, [state officials] should take well-deserved encouragement from the progress they have made toward compliance.”[6]

Other observers note that prisons “are singularly ill-suited to house the mentally ill.”[7] People experiencing mental illness “are especially sensitive to the unique stresses and traumas of prison life, and their psychiatric conditions often deteriorate as a result.”[8] While California must continue to improve mental health care for incarcerated adults, reforms are also needed to address “the intersection between mental illness and criminal justice” so that Californians who need mental health treatment receive the appropriate care and do not end up in state prisons (or local jails).[9]

Support for this Fact Sheet was provided by the California Health Care Foundation.

[1] As used in this Fact Sheet, spending on “state corrections” reflects all funds budgeted through the California Department of Corrections and Rehabilitation (CDCR) and the Board of State and Community Corrections for state operations and local assistance. Several categories in the chart reflect the cost of both services and administration. In the case of dental and mental health care, the Department of Finance (DOF) combines the costs of administering these services into a single expenditure category. The Budget Center estimated the respective shares of administrative spending for dental care vs. mental health care in state prisons based on a methodology recommended by the DOF.

[2] California Department of Corrections and Rehabilitation, Offender Data Points: Offender Demographics for the 24-Month Period Ending December 2017 (no date), pp. 4 and 15.

[3] Matthew A. Lopes, Jr., Twenty-Sixth Round Monitoring Report of the Special Master on the Defendants’ Compliance With Provisionally Approved Plans, Policies, and Protocols (May 6, 2016), p. 3.

[4] The reasons for this increase are unclear. The CDCR suggests it may reflect the state’s improved ability “to assess, diagnose, and respond to [prisoners’] mental health treatment needs” as the prison population has declined and mental health-related staffing has increased. California Department of Corrections and Rehabilitation, An Update to the Future of California Corrections (January 2016), pp. 12-13.

[5] See Legislative Analyst’s Office, Overview of Inmate Mental Health Programs (March 16, 2017), p. 1, and California Department of Corrections and Rehabilitation, Notice: Decision in Mental Health Care Class Action (Coleman v. Brown) (no date).

[6] Matthew A. Lopes, Jr., Twenty-Sixth Round Monitoring Report of the Special Master on the Defendants’ Compliance With Provisionally Approved Plans, Policies, and Protocols (May 6, 2016), p. 123.

[7] Stanford Law School Three Strikes Project, When Did Prisons Become Acceptable Mental Healthcare Facilities? (February 2015), p. 7.

[8] Stanford Law School Three Strikes Project, When Did Prisons Become Acceptable Mental Healthcare Facilities? (February 2015), pp. 7-8.

[9] Stanford Justice Advocacy Project, The Prevalence and Severity of Mental Illness Among California Prisoners on the Rise (May 2017), p. 8.

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Medi-Cal is our state’s health coverage program for residents with low incomes, including children, seniors, and workers who may not get affordable health insurance through their jobs. Medi-Cal is a critical source of coverage for low-income seniors because it provides many services — including long-term supports and services — that are not covered by the federal Medicare program. Unfortunately, Medi-Cal’s eligibility rules place seniors at a disadvantage compared to younger adults. Specifically:

  • Adults age 64 and younger generally qualify for no-cost Medi-Cal with incomes up to 138% of the federal poverty line.[1] “No-cost” means that enrollees pay no premiums and have no out-of-pocket costs, such as co-pays or deductibles. For single adults under age 65, the “countable income” limit to enroll in no-cost Medi-Cal is $1,437 per month in 2019 (138% of the poverty line).[2] (Countable income is equal to gross income less allowable exclusions and deductions.)
  • For adults age 65 or older, the income limit for no-cost Medi-Cal is only 122% of the poverty line. Once they turn 65, many Californians with low incomes cannot access free Medi-Cal because the countable income limit for seniors, which is set by the state, is much lower than it is for younger adults.[3] For seniors living on their own, the limit is equal to 100% of the poverty line — currently $1,041 per month for an individual — plus $230, which results in a monthly threshold of $1,271 in 2019 (122% of the poverty line).[4] This is $166 less than the limit that applies to adults age 64 or younger.

In short, seniors with incomes above 122% of the poverty line but below 138% of that threshold fall into an eligibility gap that prevents them from enrolling in no-cost Medi-Cal. These seniors may still access Medi-Cal services, but only if they pay a deductible, known as a “share of cost,” that can amount to hundreds of dollars per month. In effect, Medi-Cal’s unreasonably stringent income rules impose a financial penalty on seniors.

One way to illustrate this “senior penalty” is to look at how Medi-Cal’s rules affect two people — one age 64, the other age 65 — who have the same countable income ($1,350 per month). As shown in the chart below, the 64-year-old would qualify for no-cost Medi-Cal because her income would fall below the threshold that applies to adults through age 64 ($1,437 per month). In contrast, the 65-year-old would not qualify for free Medi-Cal because her income would exceed the much-lower threshold that applies to seniors ($1,271 per month). This senior would have to spend $750 on health care in any given month — her share of cost — before Medi-Cal would begin paying for any remaining medically necessary services during that same month, leaving only $600 to pay for rent, utilities, food, and all other basic living expenses.[5]

In addition to imposing a financial burden on low-income seniors, the rules that determine an individual’s Medi-Cal share of cost are administratively burdensome for counties to implement and difficult for many seniors to understand. As the California Health Care Foundation has explained, “calculating and tracking share of cost amounts can be complicated and confusing for beneficiaries,” in part because individuals “may not understand which expenses qualify to meet their share of cost or know when their share of cost has been met.”[6]

By raising the Medi-Cal income limit for seniors to 138% of the poverty line, state policymakers would 1) create parity between older and younger adults and 2) remove the primary obstacle that prevents many low-income adults age 65 or older from accessing no-cost health care services through Medi-Cal — services that are critical to seniors’ health and well-being.

[1] Undocumented immigrant adults generally are not eligible for comprehensive no-cost Medi-Cal coverage.

[2] The federal government annually adjusts the poverty line for inflation. As a result, the dollar amount of the income limit for no-cost Medi-Cal that applies to nonelderly adults rises each year to reflect changes in the cost of living.

[3] This eligibility gap between seniors and younger adults exists for two reasons. First, seniors were not included in the federal Affordable Care Act’s expansion of Medicaid eligibility to 138% of the poverty line. As a result, decisions affecting seniors’ eligibility for Medi-Cal are largely left to the states. Second, California policymakers have consistently failed to update a key component of the formula that determines seniors’ eligibility for no-cost Medi-Cal (see endnote 4).

[4] The dollar amount of the income limit that applies to seniors generally goes up modestly each year because it is partially based on the federal poverty line, which typically rises from year to year. However, this income limit has never been fully adjusted for inflation because the $230 that is built into the state’s formula has remained frozen since this formula was established in 2000. As a result, the income limit for no-cost Medi-Cal continuously loses ground to the rising cost of living. In 2000, for example, adults age 65 and older could qualify for no-cost Medi-Cal as long as their income did not exceed a threshold that was equal to about 133% of the poverty line. However, because this threshold’s value has steadily eroded, it is equivalent to only 122% of the poverty line today and will continue to lose value relative to the cost of living unless state law is changed.

[5] In this example, the $750 share of cost results from subtracting what is sometimes called a “Maintenance Need Allowance” (MNA) — as determined by the state — from the 65-year-old’s countable monthly income. The MNA for an individual is $600, a figure that has not been adjusted since 1989. The share of cost is based on the following calculation: $1,350 (countable monthly income) less $600 (MNA) = $750 (share of cost).

[6] California Health Care Foundation, Share of Cost Medi-Cal (September 2010), p. 7.

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Without access to affordable child care, parents may struggle to find and keep jobs or to go to school. Unfortunately, California ranks as one of the least affordable states in the nation based on the cost of child care.[1] Statewide, the median annual cost of care for an infant in a licensed child care center is over $15,000. In a family with two working parents earning low wages, each parent would have to work 147 hours per week to avoid paying more than the federally recommended 7% of income on the cost of child care for their infant.[2] The annual cost of care in a licensed center for older children is also out of reach for many families — $10,200 for a preschool-age child and $5,800 for a school-age child. While prices may be lower with a licensed home-based provider, this option is still prohibitively expensive for families who are struggling to cover basic expenses.

Parents typically incur the highest-priced care — for infants and toddlers — at a younger age when they can least afford it. Even families with older children may struggle to find affordable care before or after the school day or when they are working nonstandard hours. Family supports such as subsidized child care and development programs can help boost families’ economic security by providing stable and affordable child care. According to a Budget Center analysis of federal survey data, an estimated 2 million children from birth through age 12 were eligible for child care assistance in 2017.[3] Across all age groups, only a small share of eligible children were enrolled in a subsidized program: 1 in 9 infants and toddlers (11.6%), 1 in 5 preschool-age children (22.1%), and 1 in 15 school-age children (6.7%). [4] (For additional data by age, see Tables 1 and 2 below.)

The high cost of care coupled with the large number of children eligible for child care assistance underscores the need for additional state and federal investments in California’s subsidized child care and development system. Child care assistance is critical to supporting low- and moderate-income families while parents are at work or school and is vital to helping families achieve economic security. Providing additional access to child care assistance should be a key component of state and federal budget deliberations.

This analysis is the second part of a multiphase effort to analyze subsidized child care and development programs in California. Other phases of this work examine the total unmet need for subsidized child care and unmet need by race and ethnicity. Support for this Fact Sheet was provided by First 5 California.

[1] Child Care Aware of America, The US and the High Cost of Child Care: A Review of Prices and Proposed Solutions for a Broken System (2018).

[2] The US Department of Health and Human Services updated its guidelines on child care affordability in 2016. Access the final rule at https://federalregister.gov/d/2016-22986. “Low wage” is defined as earning less than $14.35 per hour. See University of California Berkeley Labor Center, Low-Wage Work in California (August 2018).

[3] Budget Center analysis of US Census Bureau, American Community Survey data. Data limitations likely result in a conservative estimate of the number of children in California who are eligible for subsidized child care. For more information about the methodology used to calculate this estimate, see the Technical Appendix.

[4] Figures reflect children enrolled in the full-day California State Preschool Program (CSPP) or in one of the following subsidized child care programs: Alternative Payment Program; CalWORKs Stages 1, 2, or 3; Family Child Care Home Network; General Child Care; and the Migrant Child Care and Development Program. Enrollment is for October 2017, except for California Community College CalWORKs Stage 2, which reflects a Department of Finance estimate for the 2017-18 fiscal year. This analysis also includes the full-day CSPP, which consists of part-day preschool and “wraparound” child care, because it accommodates many — although not all — families’ work schedules throughout the year, and thus approximates the experience that a child would have in a subsidized child care program. In contrast, this analysis excludes roughly 97,000 children who were enrolled in the part-day CSPP, without access to wraparound child care, in October 2017. This is because most families with low and moderate incomes likely need wraparound care in order to supplement the CSPP’s part-day, part-year schedule. This analysis reports enrollment data for a single month — as opposed to a monthly average for 2017 — because the California Department of Education (CDE) does not typically separate part-day and full-day CSPP enrollment when reporting monthly averages for a single fiscal year. The CDE also states, “Caution should be used when interpreting monthly averages as some programs do not operate at full capacity throughout the entire year (e.g., State Preschool) while other programs have seasonal fluctuations in enrollment (e.g., Migrant Child Care).” Finally, the data are for October 2017 because the CDE’s point-in-time reports are only available for the month of October. See Kristin Schumacher, Millions of Children Are Eligible for Subsidized Child Care, but Only a Fraction Received Services in 2017 (California Budget & Policy Center: January 2018).

Table 1

Table 2

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Children of color are more likely than white children to live in poverty in California, largely due to a legacy of racist policies and practices and ongoing discrimination.[1] These persistent inequities have limited opportunity and economic mobility for many families of color.[2] Living in poverty increases the odds that children will experience hardships that adversely affect their development, health, and well-being.[3] California’s subsidized child care and development programs aim to mitigate the effects of poverty by boosting families’ economic security and supporting child development. Because children of color are more likely to live in families with low incomes, they are disproportionately eligible for child care and development programs. In California, children of color make up nearly 74.7% of all children ages 12 and under, but comprise 86.1% of children eligible for subsidized care. This gap is widest for Latinx children (52.3% of the 12-and-under population, compared to 68.1% of children eligible for care).

Overall, of the more than 2 million estimated children birth through age 12 who were eligible for subsidized child care and development programs, just 1 in 9 were enrolled in a subsidized child care program or the full-day, full-year California State Preschool Program.[4] The share of eligible children enrolled in a state program was low across all racial and ethnic groups, ranging from 8.3% of eligible Asian and Pacific Islander children to 30.0% of eligible black children.[5] Nearly 1.4 million Latinx children were eligible for subsidized care, but only 126,100 (9.1%) were enrolled in a state program. Even for black children — the demographic group with the highest share of eligible children enrolled in a full-day, full-year program — roughly 2 out of 3 eligible children did not receive subsidized care.

Governor Newsom has signaled the intent to continue to invest in California’s subsidized child care and development system. Boosting funding for this system is a key way to reduce barriers to success for children of color. Yet, policymakers should use a race-equity lens to ensure that new funding is targeted to children, families, and communities of color that have historically been left behind.

This analysis is the second part of a multiphase effort to analyze subsidized child care and development programs in California. Other phases of this work examine the total unmet need for subsidized child care and unmet need across different age groups. Support for this Fact Sheet was provided by First 5 California.

[1] Alissa Anderson, If The Poverty Rate for Kids of Color Were As Low as That for White Kids, 977,000 Fewer Kids Would be in Poverty (California Budget & Policy Center: April 2018).

[2] Ruth Cosse, et al., Building Strong Foundations: Racial Inequity in Policies that Impact Infants, Toddlers, and Families (CLASP and Zero to Three: November 2018).

[3] Center on the Developing Child at Harvard University, The Foundations of Lifelong Health Are Built in Early Childhood (July 2010) and Slopen, et al., “Racial Disparities in Child Adversity in the US: Interactions With Family Immigration History and Income,” American Journal of Preventive Medicine 50 (2016).

[4] Budget Center analysis of US Census Bureau, American Community Survey data. Data limitations likely result in a conservative estimate of the number of children in California who are eligible for subsidized child care. Families are eligible for subsidized child care if the child who would receive care is under the age of 13; the family establishes an appropriate eligibility status, such as by having an income below the limit set by the state; and the family demonstrates a need for care, such as parental employment. For more information about the methodology used to calculate this estimate, see the Technical Appendix.

[5] Figures reflect children enrolled in the full-day California State Preschool Program (CSPP) or in one of the following subsidized child care programs: Alternative Payment Program; CalWORKs Stages One, Two, or Three; Family Child Care Home Network; General Child Care; and the Migrant Child Care and Development Program. Enrollment is for October 2017, except for California Community College CalWORKs Stage Two, which reflects a Department of Finance estimate for the 2017-18 fiscal year. This analysis also includes the full-day CSPP, which consists of part-day preschool and “wraparound” child care, because it accommodates many — although not all — families’ work schedules throughout the year, and thus approximates the experience that a child would have in a subsidized child care program. In contrast, this analysis excludes roughly 97,000 children who were enrolled in the part-day CSPP, without access to wraparound child care, in October 2017. This is because most families with low and moderate incomes likely need wraparound care in order to supplement the CSPP’s part-day, part-year schedule. This analysis reports enrollment data for a single month — as opposed to a monthly average for 2017 — because the California Department of Education (CDE) does not typically separate part-day and full-day CSPP enrollment when reporting monthly averages for a single fiscal year. The CDE also states, “Caution should be used when interpreting monthly averages as some programs do not operate at full capacity throughout the entire year (e.g., State Preschool) while other programs have seasonal fluctuations in enrollment (e.g., Migrant Child Care).” Finally, the data are for October 2017 because the CDE’s point-in-time reports are only available for the month of October. See Kristin Schumacher, Millions of Children Are Eligible for Subsidized Child Care, but Only a Fraction Received Services in 2017 (California Budget & Policy Center: January 2019).

Child Care & Preschool

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In late 2017, President Trump signed the Tax Cuts and Jobs Act (TCJA) providing corporations substantial cuts in tax rates and other tax breaks. The TCJA means corporations will pay substantially less in federal taxes at a time when they already contribute far less of their California income in state taxes than they did a generation ago.

During the past three decades, the share of California corporate income paid in state taxes declined by more than half. In the early 1980s, corporations that reported profits in California paid more than 9.5% of this income in state corporate income taxes. In contrast, corporations paid just 4.4% of their California profits in income taxes in 2016, the most recent year for which data are available. California’s state budget would have received $10.9 billion more revenue in 2016 had corporations paid the same share of their income in taxes that year as they did in 1981. This amount is more than the state spends on the University of California, the California State University, and student aid combined.

The reduction of tax rates is one reason corporations pay less of their income in taxes today than they did in the 1980s. Since increasing the corporate tax rate to 9.6% in 1980, the state legislature has cut the rate twice: from 9.6% to 9.3% in 1987 and from 9.3% to 8.84%, its current level, in 1997.

In addition to cutting tax rates since the 1980s, lawmakers have enacted a number of corporate tax breaks that reduce the share of income that California corporations pay in state taxes. For example, beginning in 1987, California allowed multinational corporations to lower their tax liability by calculating their California income based on either their total income from worldwide operations or only from their operations within the US. This so-called “water’s edge” provision will cost the state an estimated $2.2 billion in 2018-19. In total, California is projected to spend $6.6 billion on tax expenditures for corporations in 2018-19, more than it will spend this year ($6.2 billion) on the state’s 115 community colleges.

At the national level, last year’s TCJA made several changes to federal tax law that will benefit corporations. The most significant change was slashing the federal corporate income tax rate from 35% to 21%, the largest one-time reduction to this tax rate in US history. Moreover, because the new federal tax law still includes many corporate tax breaks, including the ability to deduct state and local income taxes, the effective federal tax rate for corporations will often be lower than 21%. As a result, California corporations are likely to pay far less of their income in federal taxes beginning in 2018 than they have in recent years.

As the new Governor crafts a policy agenda that may require additional state resources, policymakers should consider the fact that corporations pay far less of their income in state taxes than they have in the past. And now that corporations are likely to pay less of their income in federal taxes as well, they can afford to contribute more to support the state’s public systems and supports. Increasing the state’s corporate income tax rate may be one way to boost revenue. However, policymakers have other options for increasing the amount corporations pay in state taxes. For example, they could review existing corporate tax rules, such as corporate tax credits, exemptions, and deductions, and reduce or eliminate those that are not achieving the state’s policy goals, including limiting state tax breaks in accordance with the new federal tax law. By reducing spending on corporate tax breaks, the state would have more resources available to invest in systems and programs such as higher education and workforce development that would not only help improve the lives of Californians, but also boost the state’s economy and produce an educated workforce that would benefit the state’s employers, including major corporations.

Taxes & Revenue

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Support for this Fact Sheet was provided by First 5 California.

Child care keeps parents working and families afloat, yet the high cost of care across California often forces parents to make difficult choices about who cares for their child while they go to work. This can be detrimental for families with low incomes, who often struggle to simply afford the basics. California’s subsidized child care and development system is designed to serve families with low and moderate incomes, but there are far more children eligible for subsidized child care than what is funded by the state and federal governments.[1] This means that families with few resources are often unable to secure affordable care for their children.

In 2017, just 1 in 9 children eligible for subsidized child care and development programs in California were enrolled in a program that could accommodate families for more than a couple hours per day and throughout the entire year.[2] According to a Budget Center analysis of federal survey data, an estimated 2 million children from birth through age 12 were eligible for care, but only 228,100 were able to participate in a subsidized full-day, full-year program.[3] This mismatch between eligibility for care and available spaces largely reflects inadequate state and federal funding. Moreover, decades of wage stagnation has dampened families’ incomes, making it difficult to afford the high cost of child care.[4] In fact, in 2017, roughly 1 out of 3 California workers with children earned low wages. [5]

State and federal policymakers have begun to increase funding for subsidized child care and development programs in recent years.[6] In California, policymakers have incrementally increased the number of spaces for children and boosted provider payment rates. State policymakers also took an important step forward by updating the decade-old income eligibility limits and implementing a 12-month eligibility period. These positive changes were long overdue and allow families to retain subsidized care for their children while they build a secure economic foundation for their families. However, these changes also mean that the small share of families receiving care remain eligible for longer periods of time, while substantially more families have become eligible. Without additional investments in new spaces for children, these changes could further limit access for low-income families.

Governor Newsom’s proposed 2019-20 budget includes a large investment in young children. However, while the proposal expands full-day, full-year preschool and sets aside hundreds of millions of dollars in one-time funding for subsidized child care facilities and teacher training, it does not immediately expand access to subsidized child care programs for children from low- and moderate-income families, instead signaling that the Administration intends to significantly expand the number of children served in the years ahead. Since some parents have been waiting for child care for years, substantial investment in California’s subsidized child care and development system must include increased access to child care programs for children and families.

This analysis is the first part of a multiphase effort to analyze subsidized child care and development programs in California. Future phases of this work will examine the unmet need for subsidized child care across different age groups and by race and ethnicity.

[1] Families are eligible for subsidized child care if the child who would receive care is under the age of 13; the family establishes an appropriate eligibility status, such as by having an income below the limit set by the state; and the family demonstrates a need for care, such as parental employment. Families generally must meet the same income guidelines applicable to child care to qualify for the California State Preschool Program (CSPP), which is funded solely with state dollars. State law, however, allows up to 10% of families in the state preschool program to have incomes up to 15% above the income eligibility limit, but only after all other eligible children have been enrolled. The CSPP is a part-day program offered for roughly nine months of the year. Some children receive “wraparound” services that provide subsidized child care for the remainder of the day and throughout the entire year. To be eligible for the full-day CSPP, families generally must meet the same guidelines regarding eligibility status that are applicable to subsidized child care.

[2] Budget Center analysis of US Census Bureau, American Community Survey data. Data limitations likely result in a conservative estimate of the number of children in California who are eligible for subsidized child care. For more information about the methodology used to calculate this estimate, see the Technical Appendix.

[3] The 228,100 figure reflects children enrolled in the full-day CSPP or in one of the following subsidized child care programs: Alternative Payment Program; CalWORKs Stages One, Two, or Three; Family Child Care Home Network; General Child Care; and the Migrant Child Care and Development Program. Enrollment is for October 2017, except for California Community College CalWORKs Stage Two, which reflects a Department of Finance estimate for the 2017-18 fiscal year. This analysis also includes the full-day CSPP, which consists of part-day preschool and “wraparound” child care, because it accommodates many — although not all — families’ work schedules throughout the year, and thus approximates the experience that a child would have in a subsidized child care program. In contrast, this analysis excludes roughly 97,000 children who were enrolled in the part-day CSPP, without access to wraparound child care, in October 2017. This is because most families with low and moderate incomes likely need wraparound care in order to supplement the CSPP’s part-day, part-year schedule. This analysis reports enrollment data for a single month — as opposed to a monthly average for 2017 — because the California Department of Education (CDE) does not typically separate part-day and full-day CSPP enrollment when reporting monthly averages for a single fiscal year. The CDE also states, “Caution should be used when interpreting monthly averages as some programs do not operate at full capacity throughout the entire year (e.g., State Preschool) while other programs have seasonal fluctuations in enrollment (e.g., Migrant Child Care).” Finally, the data are for October 2017 because the CDE’s point-in-time reports are only available for the month of October.

[4] See Amy Rose, Modest Gains for California’s Low- and Midwage Workers (California Budget & Policy Center: January 2018).

[5] Estimate based on data from the University of California Berkeley Labor Center, Low-Wage Work in California (August 2018). “Low wage” is defined as earning less than $14.35 per hour.

[6] Kristin Schumacher, Dollars for Child Care and Preschool in 2018-19 Near Pre-Recession Levels With Boost From One-Time Funding (California Budget & Policy Center: September 2018).

California Budget
Child Care & Preschool

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