This Legislative Session, policymakers should appropriate federal and state dollars to ensure that quality child care is accessible to more children and working families. By funding more child care subsidy slots and extending eligibility with a phased-in co-payment to reduce a benefits cliff, working families will be able to get back to work knowing that their children’s education and healthy development is being supported.
We recommend that policymakers:
- Appropriate $250 million in American Rescue Plan dollars and $250 million in General Fund dollars in each year of the next biennium to ensure the state is matching the federal commitment made to child-care assistance;
- Remove the parent co-payment requirement for working families with incomes under 200 percent of the federal poverty level as these families face significant cost barriers to affording child care; and
- Establish a phase-in of the parent co-payment for working families between 200 and 300 percent of the federal poverty level to reduce the benefits cliff.
A strong and stable child-care system is essential to North Carolina’s recovery from COVID-19. Working parents returning to jobs need to have accessible and affordable educational opportunities for their children. Children need stable and high-quality learning environments that support their healthy development.
North Carolina needs to expand access to child care assistance for children and families.
There are over 187,000 children aged 0 to 5 who are eligible but do not receive child care assistance. With families facing income losses during COVID-19 and stagnant wages for years before that, the high cost of child care can prevent children from getting high-quality early education that prepares them for future success in school, work, and life.
Current design of child care assistance eligibility creates a benefit cliffs for working families as their earnings increase.
In North Carolina, as working parents earn more income, they lose access to child care assistance abruptly once their earnings reach 85% of the state median income. This reduces families’ overall financial security despite their increased earnings. Legislation can address this so-called “benefits cliff” by extending eligibility for children already enrolled in child care assistance to families earning up to 300 percent of the federal poverty level. With a phased-in copayment, as a working family’s income increases above 200 percent of the federal poverty level, the share of income that they contribute to child care costs increases as well.
Many working parents aren’t able to return to work without quality childcare.
During the COVID-19 pandemic women have left the labor force in large numbers, and they have been far more likely than men to not work due to childcare reasons, according to data from the US Census Bureau Household Pulse Survey. For North Carolina’s recovery to be just and sustained, the state needs a greater public investment that ensures childcare is accessible and affordable.