Child Care in Michigan:
A Short Report on
Subsidies, Affordability, and Supply
This report summarizes recent child care information for the state of
Michigan. The first section provides new information on
child care subsidies, based on eligibility estimates
generated by the Urban Institute and state administrative data reported to
the U.S. Department of Health and Human Services (HHS). The second
two parts, on affordability and
supply, draw on state and local data collected by the
Urban Institute during the summer of 1999 under contract with HHS.
A companion document to the national report entitled
"Access to Child Care for Low-Income
Working Families," the Michigan report is one in a series of nine state
reports. [The other reports are:
California, Connecticut,
Delaware, Florida,
Louisiana, Pennsylvania,
Texas, and Utah]
Figure 1. Child Care and Development Fund (CCDF) Eligibility and
Receipt in Michigan
Sources: Urban Institute simulations and state administrative
data reported to the Child Care Bureau.
-
1,137,000 children under age 13 (or under age 19 if disabled) live
in families where the family head (and spouse if present) is working or is
in an education or training program, as shown in Figure 1. Children across
all family income levels are included in this estimate. Most of these children
(1,092,000) are under age 13 and living with working
parents.1
-
375,000 of these children, and 226,000 families, are estimated to
meet Michigans income guidelines for child care assistance under the
Child Care and Development Fund (CCDF) October 1997 state plan. The eligibility
estimate would be even higher 545,000 children
if Michigan raised income eligibility limits to 85 percent of State Median
Income, the maximum level allowed under Federal
law.2
-
To be eligible under Michigans October 1997 state plan, a family of
3 had to have income below $26,064, or 59 percent of State
Median Income.
-
Nearly all eligible children (91 percent) live in families with annual income
below 200 percent of the Federal poverty threshold and more than one-third
(37 percent) are living in poverty. One-fifth (20 percent) live in families
that report receiving cash welfare.
-
Most (342,000) eligible children are under age 13 with working parents; the
remaining children have parents in education/training programs or are disabled
youth under 19.
-
92,000 children in Michigan received child care subsidies funded by
CCDF in an average month in 1998. This estimate suggests that 25 percent
of the eligible population under state limits (and 17 percent of children
who would be eligible under the Federal maximum limits) were served with
CCDF funds. In addition, Michigans state administrative data system
indicates that 29,100 children were served with other Federal and state
funds.3
-
In Michigan, relative care accounted for nearly half (46 percent) of child
care settings receiving funds from CCDF in 1998, as shown in Figure 2. The
next most common settings were center-based (18 percent) and in-home care
by non-relatives (16 percent). The remaining settings include family child
care homes (11 percent) and care in group homes (9
percent).4
Figure 2. Child Care Settings Subsidized by CCDF in Michigan
Source: State administrative data for April-September 1998 reported
to the Child Care Bureau.
-
The Child Care and Development Fund (CCDF) is the major source of Federal
funding allocated to states to subsidize the child care expenses of low-
and moderate-income families so they can work, or attend education or training
programs. Using CCDF dollars along with state funds, Michigan has designed
its own child care program within broad parameters specified under federal
law. CCDF-funded subsidies, and the number of children that the state reported
were served with these subsidies, are highlighted in this report because
CCDF is a primary source of funding in most states. Also, CCDF administrative
data is the most comparable source of child care data across states. It should
be noted, however, that Michigan, like many other states, also uses other
funding sources to provide child care subsidies.
-
Currently there is no waiting list for government subsidies. The state
of Michigan serves all eligible families who apply for
care.5 However, both state
staff and staff from Michigan child care resource and referral agencies believe
that there are eligible families that do not apply for subsidies.
-
Prices for child care vary considerably, by such factors as geographic area,
type of provider and age of child. Figure 3 shows the average monthly prices
for child care in Detroit and Lansing, Michigan. Given that these are average
prices, it is clear that many families pay more or less than this amount.
-
Centers in Detroit, Michigan charge an average of $384 per month for
preschool care and $513 per month for infant care, as shown in Figure
3. This means that a family with $15,000 in income and one preschool child
in an average-priced center would spend close to one-third (31 percent) of
its total monthly income on child care expenses. Average-priced infant care
would represent an even higher share (41 percent) of monthly income for a
family earning $15,000.
-
Centers in Lansing, Michigan charge even more per month for care. Average-priced
preschool care costs $482 a month, or 39 percent of monthly income
for a family earning $15,000. If this low-income family had an infant, rather
than a preschooler, in average-priced care, the $619 per month price
would consume 50 percent of the familys total monthly income.
Figure 3. Child Care Prices and Co-Payments for Hypothetical Michigan
Families
of Three Earning $15,000 with One Child in Care
|
WITHOUT SUBSIDY |
WITH SUBSIDY |
Average Monthly Prices
(Full Time Care) |
% of Income
(Family Income of $15,000 Annually) |
Monthly Co-Payments*
(If receive subsidy) |
% of Income*
(Family Income of $15,000 Annually) |
FAMILY LIVING IN DETROIT, MICHIGAN |
INFANT (1 year) |
Center-based |
$513 |
41.1% |
$28 |
2.2% |
Family child care home |
$395 |
31.6% |
$20 |
1.6% |
PRESCHOOLER (4 years) |
Center-based |
$384 |
30.7% |
$22 |
1.8% |
Family child care home |
$345 |
27.6% |
$20 |
1.6% |
FAMILY LIVING IN LANSING, MICHIGAN |
INFANT (1 year) |
Center-based |
$619 |
49.5% |
$29 |
1.7% |
Family child care home |
$454 |
36.3% |
$24 |
1.5% |
PRESCHOOLER (4 years) |
Center-based |
$482 |
38.6% |
$24 |
1.5% |
Family child care home |
$428 |
34.2% |
$24 |
1.5% |
* State policy does not prevent providers from charging parents
additional amounts, above the co-payment, if the providers rates exceed
the state reimbursement level. Figures in this table represent the
minimum co-payment.
Source: Price data collected by the Urban Institute from the
Office of Young Children and the Detroit-Wayne 4C, child care resource and
referral agencies serving Lansing and Detroit, respectively, summer 1999.
Co-payment data collected by the Urban Institute from the Michigan Family
Independence Agency, the state child care agency, summer 1999.
-
Family child care homes in Detroit, Michigan charge an average of $345
per month for preschool children and $395 per month for infants. This
means that a family with $15,000 in income and one child in an average-priced
family child care home would spend 28 percent of its monthly income on care
for a preschool child or 32 percent for an infant. A family in Lansing with
the same annual income using average-priced care would spend 34 percent of
its monthly income ($428 per month) for preschool care or 36 percent
($454 per month) for an infant in a family child care home.
-
Families who receive child care subsidies usually pay much smaller monthly
co-payments rather than the full market rate. Such co-payments are
established under a sliding fee schedule, and are based on family size, income
and the state maximum reimbursement rate for the type of care used. In Michigan,
co-payments range from 5 to 70 percent of the maximum reimbursement rates
for the type of care used. Maximum reimbursement rates vary by region.
-
For example, a family with $15,000 in income and one preschooler in an
average-priced center in Lansing, Michigan would be charged a monthly co-payment
of $24, or less than 2 percent of monthly income, as shown in Figure 3.
-
In Michigan, families participating in the welfare-to-work program (Family
Independence Program), Food Stamp-only families, families in protective services,
foster care families and child-only welfare cases are not required to make
co-payments.
-
State policy does not prevent providers from charging parents additional
amounts, above the co-payment, if the providers rates exceed the state
reimbursement level. For example, the maximum CCDF rate for infant center
care in Lansing, Michigan is $575* per
month7, which is $44 less than
the $619 average price shown in Figure 3. If the $44 differential is paid
by the family, the total cost to the family is $73 per month, or more than
twice the official co-payment of $29 shown in Figure 3. If the fee is not
charged to the family, the provider loses $44 per month for providing service
to a subsidized child. The differential could be much larger than $44 for
some child care centers, including accredited centers and other centers with
higher than average rates.
-
Not all providers in Michigan accept children who receive subsidies. Of the
providers listed in a statewide child care resource and referral agency database,
only 47 percent of centers, 54 percent of family child care homes, and 53
percent of group child care homes accept subsidies.
-
According to the state plan for 1997-1999, the state of Michigan calculates
different maximum CCDF reimbursement rates, set at the 75th percentile
of the local market rate, for six regions in the state. Providers may be
unwilling to accept subsidized children, or may limit their enrollment, when
the state reimbursement rates are lower than their prices (see the example
in section II). As a result, families receiving subsidies may have limited
choices of caregivers.
-
A report written by the Michigan 4C Association, a statewide child care resource
and referral agency, finds a critical shortage in the supply of licensed,
non-relative care. The report concludes that statewide there are only enough
child care slots to serve 80 percent of the children needing licensed,
non-relative care. Staff from the statewide agency, and from resource and
referral agencies serving Lansing and Detroit, report shortages in the supply
of infant/toddler care, care during odd hours, and care for children who
have special needs or are ill. Specifically:
-
Parents of infants and toddlers often call the state administrator,
as well as resource and referral agencies serving Lansing and Detroit, for
additional child care referrals. Vacancy checks by the agencies reveal few
available slots for infants and toddlers.
-
Care for sick children is not permitted in licensed/regulated facilities
in Michigan. In a study conducted by Public Sector Consultants (February
1999), 42 percent of parents surveyed in Michigan reported having trouble
finding care when their child was ill.
-
Among parents of children with special needs in Michigan, the Public
Sector Consultants report found 35 percent have trouble finding care for
their special needs children.
1. Estimate based on microsimulations using the
Urban Institute's TRIM3 model, guidelines in the state's 1997-99 CCDF state
plan, and three years of Current Population Survey data (calendar years
1995-97). Back to text
2. Ibid. Back to text
3. Estimates based on state administrative data
reported to the Child Care Bureau and adjusted to reflect children funded
through CCDF only. 1998 figures based on April-September 1998.
Back to text
4. Ibid. Back to text
5. Waiting list data were obtained and compiled
by the Urban Institute from the Michigan Family Independence Agency, the
state child care agency. Back to text
6. Information in this section was obtained and
compiled by the Urban Institute from the Michigan 4C Association, a statewide
child care resource and referral agency, the Office of Young Children (a
child care resource and referral agency serving Lansing), and the Detroit-Wayne
4C (the resource and referral agency serving Detroit).
Back to text
7. State maximum rates were obtained and compiled
by the Urban Institute from the Michigan Family Independence Agency, summer
1999. Back to text
8. Information in this section was obtained and
compiled by the Urban Institute from the resource and referral agencies serving
the state of Michigan and the cities of Lansing and Detroit, see note 6.
Back to text
* This calculation assumes that a child is in care
for 45 hours per week. If the child is in care for 50 hours per week,
the maximum reimbursement rate would be $639. Back
to text
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