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Issue 10: July/August 1996

Child Care Financing

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Contents

up arrowChild Care Financing: Challenges and Opportunities

Over the past two decades, there has been a growing demand for child care and an increased recognition of the need for more funding for child care services. Many families are limited in what they can afford to pay, although they often spend a significant portion of their income for child care. According to Census Bureau figures, child care costs are on the rise. A family with a preschool-age child spent an average of $15 more per week on child care in 1993 than in 1986. In addition, poor families who paid for care spent 18 percent of their income on child care, compared with non-poor families who spent 7 percent.

Currently, the federal government supports child care directly with approximately $2 billion in funding for services through Child Care for Aid to Families with Dependent Children (AFDC) Recipients, Transitional Child Care (TCC), At-Risk Child Care (ARCC), and the Child Care and Development Block Grant (CCDBG). Another major source of funding is through tax relief with the Dependent Care Tax Credit, at $2.5 billion. With this benefit, families can receive credit for 20-30 percent of their child care expenses, depending on income. Several states also offer tax credits for child care. Yet, there is a substantial gap between what this provides and what parents must pay for quality child care services.

The growing demand for child care calls for creative financing to build the supply of available services, to help parents afford quality care for children, and to ensure investments in training and in other quality protections.

Such creative financing strategies are beginning to emerge across the country. This presents opportunities for involvement and partnering in new ways and on many different levels. Federal government agencies, states, and municipalities are joining with representatives from businesses, foundations, and other sources of private sector support to find new ways to raise revenues, manage collaboration, and deliver services to support children and families.

This issue of the Child Care Bulletin represents part of the Child Care Bureau's effort to stimulate a new national dialogue on child care financing. It identifies states that are exploring innovative financing mechanisms, such as Colorado, Florida, Indiana, and Washington. It also highlights some of the various foundations' efforts to bring attention to this fundamental need of families. In addition, this issue looks at local trust funds, state loan programs and tax credits, along with funding for inclusive programs, training initiatives, and facilities. It also recognizes employee retention, the costs of staff turnover, and other aspects of providing quality child care.

up arrowThe Future of Financing Child Care by Deanna S. Gomby and Nora J. Krantzler

Financing drives the delivery of services for children and families. The financing of child care and early education services, along with proposals for financing reform, are the topics of the Fall issue of The Future of Children, a publication of the David and Lucile Packard Foundation, due out in November 1996. The issue's purpose is to review today's child care system and how it is financed and to present alternatives that can help strengthen the ability of child care to serve all children and families.

The journal issue begins with an article that contains the analysis and recommendations of the editorial staff of The Future of Children. The issue includes four articles that describe and analyze child care services and financing in the United States, two articles that propose new policy alternatives, and commentaries evaluating the proposals. Journal appendices describe statewide financing initiatives and provide additional information on ways of financing child care resource and referral agencies and early childhood facilities.

Past and Present Financing

Many experts in the field have contributed to the journal. Abby Cohen, from the Child Care Law Center, summarizes 60 years of federal funding for child care and early education programs, and how it has fluctuated in amount and purpose. Sandra Hofferth, from the University of Michigan's Institute for Social Research, describes parental choices of child care arrangements, and the availability, quality, and affordability of child care. The cost and quality of child care are further explored by Suzanne Helburn and Carollee Howes, members of the Cost, Quality and Child Outcomes Study Team.

Early childhood policy consultants Louise Stoney and Mark Greenberg, from the Center for Law and Social Policy, estimate that as much as $40 billion is spent annually on child care by parents, government, business, and philanthropy. They describe the principal sources of public and private funding; the implications of a fragmented system of finance; conflicting policies for child care, early education, and tax issues; and the potential effect of welfare reform legislation on child care. These articles detail concerns about the affordability, availability, and quality of child care services; and about inequities in the access of families of differing income levels to services; a poorly paid child care work force with high turnover rates; and the maze of funding systems. The articles suggest that more funds are needed.

Alternative Financing Strategies

Many policy alternatives have been suggested to examine these issues and the need for additional resources. The remaining articles address these key questions: How much more is needed? How should new funds be raised and distributed? What services should be delivered?

Edward Zigler and Matia Finn-Stevenson, of the Yale Bush Center in Child Development and Social Policy, propose a system of care for 3 and 4 year-olds to be financed through the public education system. Economist James Walker, from the University of Wisconsin at Madison, proposes two strategies: one to address needs of low-income families through a child allowance, and the other to enable all parents to meet the child care needs of infants through a parental leave system.

Commentaries follow from Lenny Goldberg, a tax reform advocate, Thomas Schultz, an advisor to education leaders on early childhood programs, and Michele Piel, who administers public child care funds for low-income families in Illinois.

Free copies of the Financing Child Care issue of The Future of Children will be available by sending a request to: Circulation Department, Center for the Future of Children, David and Lucile Packard Foundation, 300 Second Street, Suite 102, Los Altos, CA 94022, fax: (415) 948-6498, or send an e-mail to: CIRCULATION@futureofchildren.org

Deanna S. Gomby is the Director of Research and Grants, Child Development, and Nora J. Krantzler is a consultant for the Packard Foundation. To learn more, contact Deanna at: (415) 948-3696, or Nora at: (408) 662-2841.

up arrowState-based Approaches to Child Care Financing

Most child care professionals are familiar with federal public revenue sources such as the Child Care and Development Block Grant (CCDBG), Head Start, At-Risk Child Care, Transitional Child Care, and each state's child care appropriations used to match federal funds. Many states also fund pre-kindergarten child care from general revenues. These are significant sources of funding for child care, but they are not the only sources.

The Pew Charitable Trusts and the Ewing Marion Kauffman Foundation are sponsoring development of a compendium on state-based approaches to child care financing. Early childhood policy specialists, Louise Stoney and Anne Mitchell, are completing this work. The Pew Trusts and the Kauffman Foundation are seeking to provide information to organizations and individuals working to improve public and private child care policy, as well as to inform child care program development at the two foundations.

The compendium of child care finance mechanisms will identify the spectrum of options for child care financing. Both new sources of revenue and innovative ways of using traditional revenue streams are being investigated. It will include public and private sector mechanisms, as well as public/private partnerships. Each entry will describe the approach, the amount generated annually, how funds are distributed, the population served, and key issues to consider in replicating the strategy.

Some examples of financing mechanisms:

  • A local sales tax is dedicated to affordable housing and child care in Aspen, Colorado. It generates more than $200,000 for child care scholarships for families and improvement grants for programs.
  • A union in New York City, in partnership with its members' employers, generates nearly $8 million yearly for child care services defined by worksite committees.
  • The Georgia state lottery generates $185 million annually for full-day prekindergarten programs for all families who desire these services. It also provides similar amounts for college scholarships for high school students and for technology grants to public schools.
  • County voters in Florida have established special taxing districts, similar to school districts, to levy a property tax for children's services. This has raised an average of $10 million annually for a range of children's services, including child care.

Look for more information in the fall of 1996 about obtaining a copy of the compendium.

Contacts for this project include: Harriet Dichter, Program Officer, The Pew Charitable Trusts, at: (215) 575-4866, e-mail: hdichter@pewtrusts.com Stacie Goffin, Program Officer, The Ewing Marion Kauffman Foundation, at: (816) 932-1129, e-mail: sgoffin@emkf.org or Anne Mitchell, Early Childhood Policy Research, at: (518) 966-4198, and Louise Stoney, Stoney Associates, at: (518) 463-3677.

up arrowState Involve Business Community in Child Care Financing

Florida: The Florida Children's Forum and the Child Care Action Campaign have joined in promoting public/ private partnerships to make quality child care more affordable. They sponsored a Symposium on Child Care Financing followed by employer roundtables held across the state. Together, these meetings drew more than 200 business leaders, lawmakers, and child care experts. Symposium attendees learned about the challenges of providing quality child care at a price parents can afford, and about successful business initiatives to assist employees. Heidi Gomula, Corporate Vice President of NationsBank, discussed how work-family programs such as subsidized child care and temporary care arrangements have decreased employee turnover and absenteeism.

Other symposium speakers included legislators involved with child care appropriations, and managers of subsidized programs in Florida, Illinois and Wisconsin. Among the proposed financing models was a state bill to establish a Child Care Partnership program that would encourage employers, charitable foundations, and local governments to share in the cost of child care for low-income workers. Under this model, approximately one third of the cost of child care would be paid by the state, the employer, and the parents. Local child care coordinating agencies submit a plan showing how they will obtain matching funds from employers or other sources.

In addition to co-sponsoring the symposium, the Florida Children's Forum was awarded one of three federal research partnership grants sponsored by the Child Care Bureau. Representing a tri-state partnership of Alabama, Florida, and Massachusetts, the research team is studying how child care choices are influenced by family and community characteristics, and by child care policy variables. Initial findings from a study of businesses that employ families receiving subsidized child care were presented to the state legislature. This data, combined with the symposium efforts, contributed to the passage of the Child Care Partnership Act. The Partnership Act is a part of Florida's welfare reform legislation and is aimed at expanding child care options for low-income working families.

For more information, contact Susan Muenchow, Executive Director, Florida Children's Forum, (904) 681-7002, or e-mail: smuenchow@nettally.com

Colorado: A Business Commission on Child Care Financing is helping to develop a strong child care industry (see "Child Care Partnerships Emerge Across the Country," Child Care Bulletin, November/December 1995). The Commission was appointed by Governor Romer to examine child care from a business perspective, and to propose ways to help finance quality care that is affordable and accessible. After reviewing research and discussing issues with child care experts, the Commission has published its recommendations.

Several bills that passed during the recent legislative session also resulted from these recommendations:

  • A voluntary child care check-off on state tax returns helps to fund quality enhancement in licensed facilities.
  • A child care credit for parents to claim on state income tax returns is based on a percentage of the federal child care tax credit.

The Commission's recommendations have also resulted in the publication of a child care resource guide for employers and a consumer guide for parents. Further, they are working toward establishing a multi-bank community development corporation to supply loans and assistance for providers. Local business leaders will be attending meetings on child care financing in five cities, and a financing summit will be held in October 1996.

To learn more or to obtain a copy of The Report of the Colorado Business Commission on Child Care Financing, contact the Division of Child Care, at: (303) 866-5958.

Indiana:A Symposium on Child Care Financing was convened last fall (see Child Care Bulletin, November/ December 1995), and another is planned for October, 1996. Governor Bayh's Step Ahead initiative coordinates the continuing project work at the local level. With support from 25 corporate sponsors, 17 Indiana counties are participating in a collaborative effort. County plans include conducting public awareness campaigns, creating mentoring programs for family child care providers, surveying employees, creating corporate child care consortia, renovating facilities to serve children with special needs, and developing community child care funds. Technical assistance workshops conducted by public and private sector specialists support the county projects.

Indiana's key advances in local community planning and development include:

  • The new Indiana Child Care Fund will become part of the Indiana Donors Alliance, a membership association serving the grantmaking community.
  • A public awareness video, The Business Case - A Reason to Care, will be available for distribution in September 1996. It recognizes child care as a critical economic development issue and defines the challenges for working families.
  • Findings of a documentation process will be the basis of an Indiana Guide to Child Care Financing Strategies.

To attend the financing symposium on October 9, 1996, or to learn more, contact Carole Stein, Indiana Family and Social Services Administration, at: (317) 232-1148, or e-mail: cstein@ideanet.doe.state.in.us

up arrowMaryland Helps Finance Loan Funds by Joan Case

Obtaining financing to build a new child care center or to improve an existing one can be a major obstacle. The Maryland Department of Business and Economic Development's Day Care Financing Programs offer three options. These include a loan guarantee fund, a direct loan fund, and a special loan fund to assist child care providers in meeting state and local standards.

Through these programs, Maryland has helped to finance 173 projects, totaling $12.5 million. These financing programs have become a national model. So far, the states of Arkansas, New York, Tennessee, Virginia, and North Carolina have passed legislation patterned after one of Maryland's programs.

Loan Guarantees

The Maryland Day Care Facilities Loan Guarantee Fund guarantees up to 80 percent of loans made by commercial banks, thrift institutions, or private lenders to support the development and expansion of child care facilities. Through this fund, the state guarantees $80 out of every $100 borrowed, making the proposal more attractive to lenders. The loan funds can be used for construction, renovation, purchase of land and building, equipment, supplies, and working capital needs.

Since loan guarantees are made on bank loans, the borrower pays conventional interest rates. Typical payback terms are 15 to 20 years on real estate, and from 5 to 10 years on equipment.

Applications for a loan guarantee are open to non-profit and for profit entities, individuals, or companies arranging child care for their employees. All types of child care are eligible for the loan guarantee fund: infants, toddlers, preschoolers, and school-age care, as well as adult day care. The guarantee loan fund can be used in conjunction with other funding sources such as grants or corporate contributions, and other private or public funds.

Lending Money Directly

Under the Child Care Facilities Direct Loan fund, the state lends directly to the borrower. Loans can be used to buy, build, or renovate space, or to purchase permanent fixtures, such as playground structures.

There are important limitations to the direct loan fund. The proceeds of the loan cannot be used for equipment or supplies, for working capital, or to refinance an existing loan. A loan cannot exceed 50 percent of the eligible "hard cost" of the project. The program's interest rates are generally below prevailing bank rates. It is also possible to use both the Loan Guarantee Fund and the Direct Loan Fund for the same project, with some restrictions.

Funds to Meet Quality Standards

The newest fund is the Child Care Facilities Special Loan Fund, which is made possible through the Child Care and Development Block Grant. This fund will finance direct loans between $1,000 and $10,000 to assist child care facilities in meeting state and local standards, and to improve the quality of care.

Joan Case is the Day Care Financing Programs Director, Maryland Department of Business and Economic Development. For more information, contact: Day Care Financing Programs, 217 East Redwood Street, Suite 2246, Baltimore, Maryland, 21202, or call: (410) 767-6346.

up arrowOhio's Day Care Grant and Loan Program by Bernard Johnston

The Ohio Departments of Development (ODOD) and Human Services (ODHS) have worked together to establish an innovative revolving loan program to help child care providers access capital. The majority of child care centers in the state are either small proprietary businesses or are run by local non-profit organizations. Since they work to encourage economic and community development, ODOD's Small Business Office was eager to participate in a collaborative program with ODHS.

The Child Day Care Grant and Loan Program strives to help create a business environment in Ohio that is sensitive to the particular needs of the child care industry. To offer loans to providers, ODOD entered into working relationships with 16 agencies. They have established regional service areas and created a revolving loan fund in each by awarding $3 million to capitalize the revolving loan funds. The agencies have experience in making decisions on whether to grant loans, as well as experience in servicing loans and accepting repayments.

The "micro-loans" that are made through these revolving loan funds provide up to $25,000 to start or expand family child care homes and centers. Loans are awarded for up to five years for a maximum prime rate, plus 2 percent. Then, as the lending agencies receive the repayments, the funds remain in a local revolving account to create an ongoing source of funding for child care providers.

Although these funds cannot fully finance start up operations, the micro-loans are often used in partnership with private lenders.

Bernard Johnston is the Coordinator, Child Day Care Grant and Loan Program, Ohio Department of Development. For more information, contact Bernard at: (614) 466-7821.

up arrowChild Care Initiatives Across the Country

Arkansas: Financing to Create a Quality System

The Arkansas Early Childhood Commission (AECC) works to develop financing mechanisms for early childhood programs. Their initiatives address financing for facilities, equipment, and staff development. These include a CDA scholarship program, enhancement and training grants, and specialized contracts for programs serving infants and toddlers, teen parents, school-age children, or extended Head Start. There also is a Child Care Facilities Guarantee Loan Fund to help develop facilities in low-income, rural areas.

A separate initiative, the Child Care Facilities Funding/Community Development Block Grant, helps to develop child care programs. AECC provides a pre-application review and the Arkansas Industrial Development Commission (AIDC) determines the viability of potential projects. AIDC grants funds for construction or renovation of facilities serving children of low to moderate income families.

Several model projects have been developed, such as the Magazine Opportunities Program. This brought together the AIDC and AECC, the public schools of Magazine and Paris, and various community partners to develop a child care program in Logan County. The AECC provided technical assistance and grants for equipment and materials and the AIDC provided a grant to the city for construction funding. Magazine School District donated the property for the building, and both school districts pooled financial and human resources. Local corporations provided financial and in-kind support. The accredited center now serves children in a community that previously had no services available.

To learn more, contact Glenda Bean, Executive Director, Arkansas Early Childhood Commission, at: (501) 682-4891.

Washington: Quality Child Care Financing

Those in the child care field met with Washington state business leaders in a child care "think tank" to develop new strategies for funding the child care system. With leadership from the corporate community including Microsoft, Boeing, several banks, and others, the planning has involved many key members of the child care community, such as the University of Washington Human Services Policy Institute, the state's Child Care Coordinating Committee, and the City of Seattle Child Development Program.

One result of these meetings is a report on "Quality Early Childhood Care and Education," that calls for a partnership of parents, employers, and government. Under the proposal, parents would pay a percentage of costs for child care, based on family income. Individual flexible employee benefits accounts would be established. Working poor families would be eligible for government contributions to benefits accounts, and very low-income working families would be eligible for direct vouchers for child care. The benefit accounts would be voluntary for businesses, and efforts to promote implementation could include favorable tax treatment, developing benefit pools for small businesses, and providing technical assistance to businesses in developing programs.

Another recommendation is that financing should be directly linked to quality. Ensuring this link would require the availability of training, a competency-based credentialing system, along with a system of peer/ parental/licensor monitoring, and a public education campaign to help parents in making informed choices about quality care.

In the coming months, the report will be shared with the state's business, civic and child care leaders, as well as with policy makers.

Marty Jacobs is Executive Director of the Washington Association for the Education of Young Children (WAEYC) and a member of the financing work group. For copies of the summary report or for more information, contact WAEYC at: (206) 854-2565, or e-mail: WAEYC@oz.net or contact Rick Brandon at the Human Services Policy Institute, at: (206) 543-8483.

Minnesota's Response to Child Care Financing

Two tax laws in Minnesota offer financial assistance to low-income working families with preschool children. The first is a state child and dependent care credit that models a similar federal credit. Parents earning less than $29,700 last year were entitled to claim up to $1,440 in a credit on their state tax return, based on a sliding scale. Minnesota also extended the credit to licensed family child care providers. Instead of claiming how much they paid someone else to care for their children (as parents do), providers claim how much they charge a parent to care for a child of the same age as their own.

The second law offers families who are eligible for the federal earned income credit a state working family credit which equals 15 percent of the federal credit. Licensed family child care providers are also covered under both federal and state credits.

For several years the Minnesota Alliance for Children has conducted a major public education campaign about the credits. In three years, there has been a 66 percent increase in the number of families claiming both credits. The average combined refund has been about $1,400 per family.

For more information, contact Tom Copeland, Director, Redleaf National Institute, 450 N. Syndicate #5, St. Paul, MN 55104; (612) 641-6626 or e-mail: FZPG63A@Prodigy.com

up arrowDeveloping Inclusive Programs for Children with Disabilities by Sheryl Dicker and Ellen Schall

The child care community is aware of the importance of educating young children with disabilities with their peers, but efforts to create inclusive programs have been limited by lack of knowledge of the funding possibilities1. A major source of funds for these efforts is the federal Individuals with Disabilities Education Act (IDEA). Using IDEA and other resources, states, communities, and providers can serve children with disabilities in inclusive programs.

IDEA has two separate entitlement programs that focus on young children. The preschool grants program provides states with federal funding to assist local school districts to provide a free, appropriate, public education to children with disabilities ages 3-5. Another program, Part H, is administered by state lead agencies such as the Departments of Health, Developmental Disabilities, Education or Social Services. It provides funding for early intervention services for infants and toddlers who have, or are at risk of disabilities, and their families.

Under both entitlements, school districts or state lead agencies are required to make available all services specified on the individualized education plan (IEP) for children ages 3-5, or an individualized family services plan (IFSP) for children from birth through 2. For instance, services identified collaboratively by parents, teachers, and school officials can include specially designed instruction and related services to assist a child, such as speech, occupational or physical therapies, counseling, parent counseling, or an aide. Early intervention services under Part H may also include family support services, such as parenting education, parent support groups or respite care. Depending on a state's Part H policies, a provider may be able to meet the qualifications to effectively perform the functions of a service coordinator.

Services specified in the IEP/IFSP must be provided in the "least restrictive environment" for 3-5 year olds and in a "natural environment," to the maximum extent appropriate for the needs of children ages 0-2. These are settings that are typical for a child's peers, such as a regular preschool class, home, child care, or other community setting. When a placement is made, according to a child's IEP, to a program such as a child care center, the school district must fund the cost of the program to the extent that it is necessary to implement the child's IEP. Although child care is not considered an early intervention service under Part H, all services enumerated on the IFSP, including child care programming to enable interaction with a child's peers, are reimbursable if provided by "qualified personnel." States develop standards for defining "qualified personnel." Some states, such as Illinois and Maine, have created new occupational categories which enable child care personnel to provide certain covered services.

By viewing IDEA as the cornerstone for programs for young children with disabilities, one can begin to develop and fund inclusive services. IDEA services are tied to the IEP or IFSP. It is critical that child care providers, teachers, and parents are present at the IEP/IFSP meetings and clearly specify all of the services that a child needs, particularly programming to enable interaction with his or her peers. Unraveling the complexity of IDEA can provide significant funds. For example, New York's unit rate system for Part H reimburses a 2-3 hour developmental toddler group that can include non-disabled children at a rate almost comparable to a full day in care.

School districts or state lead agencies have funded the IDEA entitlement by utilizing a variety of sources in addition to federal IDEA funds such as state special education funds and Medicaid. It may be possible to augment Part H funds with sliding fees established by state law and, in some cases, with private insurance. But, the IEP/IFSP typically covers only part of the day and for those children who require additional hours in child care, Head Start, or other preschool programs, a range of funding streams should be explored. Head Start and Child Care and Development Block Grant (CCDBG) funds can be used. A new federal source, the Family Support and Preservation program, also can be used to fund early childhood programs under its family support provisions. Thus, the creative use of IDEA provisions, coupled with federal and other child care resources, can help to make inclusive programs a reality for young children with disabilities.

1. S. LaMorcy & D. Bricker. "Integrated Programs: Effects on Young Children and Their Parents," Integrating Young Children with Disabilities into Community Programs. Peck, Odom & Bricker, eds. Baltimore: Brookes (1993); S. Odom & M. McEvoy, (1988), Integration of Young Children with Handicaps and Normally Developing Children, Early Intervention for Infants and Children with Handicaps. Odom & Karnes, eds. Baltimore: Brookes. (Less than one third of young children with disabilities are in inclusive programs).

Sheryl Dicker is Executive Director, and Ellen Schall is Co-Chair of the New York State Permanent Judicial Commission on Justice for Children (PJCJC). The PJCJC focuses on the problems of young children and the courts, and has initiated reforms in three areas: assuring access to early intervention; creating a statewide system of Children's Centers in the courts; and assessing and improving foster care proceedings. For more information, contact Sheryl at: (914) 422-4425.

up arrowInnovative Approaches to Financing Facilities by Jan Stokley and Emily Heumann

Innovative joint ventures between government, business, and philanthropy are helping to finance child care facilities through various combinations of loans, grants, and technical assistance. A few of these approaches are listed below.D

  • Child Care Capital Investment Fund is a $3.5 million technical assistance and capital loan fund for nonprofit child care centers serving low-income children (see "Private Capital Works to Enrich Care," in the Child Care Bulletin, November/ December 1995). It was created by the United Way of Massachusetts Bay, the Ford Foundation, and a group of local foundations and corporations. This fund provides grants of up to $7,500 for facilities assessments. Child care providers are eligible to apply for flexibly structured, low interest facility loans of up to $120,000. The Fund also links providers with lenders outside of the traditional child care universe, including assisting four agencies to obtain loans totaling $6 million from private banks accessing the Federal Home Loan Bank. As of December 1995, the Fund had provided 117 loans and grants to 53 child care providers.
    • Contact: Carl Sussman, Fund Manager, Sussman Associates, 294 Washington St., Suite 330, Boston, MA 02108, (617) 357-8555, fax: (617) 728-3028.
  • The Illinois Facilities Fund (IFF) Child Care Facility Development Program is a statewide nonprofit organization which provides credit and technical assistance to community based human service providers. The program is a partnership with the Illinois Department of Children and Family Services (DCFS). Under the agreement, the IFF borrowed funds, designed, built, and now owns seven child care centers in low-income communities. The DCFS is paying back the IFF debt over 10 years, using annual appropriations from the state's general funds, and it also subsidizes the centers' operating expenses. Nonprofit child care agencies run the centers and will receive title to the buildings at the end of the 10 years. The IFF raised a total of $21 million from corporations, foundations, and a tax-exempt bond issue to create the centers, which serve more than 1,500 children.
    • Contact: Trinita Logue, President, Illinois Facilities Fund, 300 W. Adams St., Chicago, IL 60606, (312) 629-0060, fax: (312) 629-0065.
  • The Early Childhood Facilities Fund works nationally to increase the supply of quality early childhood facilities in low-income communities. Rather than lending money directly, the Fund provides workshops on facilities management and development issues, technical assistance for facilities development, design of finance demonstration projects, and loan packaging. The Fund has also developed a comprehensive guide for facilities financing. Projects assisted by the Fund have received more than $15 million in facilities funding, creating spaces for approximately 1,700 children.
    • Contact: Susan T. Holman, Early Childhood Facilities Fund, 65 S. Main St., Building D, Pennington, NJ 08534, (609) 730-1070, fax: (609) 730-1075.
  • The Ohio Community Development Finance Fund's Ohio Facilities Project is a statewide vehicle for financing community revitalization. The Ohio Facilities Project provides training, technical assistance, and planning grants to Head Start agencies, with funding from the Ohio Department of Education. The Ohio Nonprofit Facilities Fund, a division of the Ohio Facilities Project, provides capital for the purchase, rehabilitation, or construction of Head Start facilities, using direct subordinate loans and linked deposits to reduce the interest cost on construction loans. The fund has granted $403,750 to 41 projects and placed $450,000 in linked deposits for projects with a combined budget of more than $21 million.
    • Contact: James R. Klein, Executive Director, Ohio Community Development Finance Fund, 42 E. Gay Street, Suite 1000, Columbus, OH 43215, (614) 221-1114, fax: (614) 221-7493.
  • SELF-HELP North Carolina Community Facilities Fund is part of a statewide community development bank. The fund makes loans ranging from $500 to $850,000 for facilities, equipment, and start-up costs. The staff also develop technical assistance workshops, conferences, and a business reference manual for child care providers. The loan fund's capital sources include the Child Care and Development Block Grant, monies from the Rural Development Agency, the Small Business Administration, along with the assets of SELF-HELP. Since 1987, the fund has made loans totaling $3.5 million, with a default rate of less than one percent.
    • Contact: Laura Benedict, Director, The SELF-HELP North Carolina Community Facilities Fund, P.O. Box 3619, Durham, NC 27702-3619, (919) 956-4400, fax: (919) 688-3615.

Jan Stokley is the Child Care Project Manager, and Emily Heumann is the Project Assistant for the National Economic Development and Law Center. To learn more, contact Jan at: (510) 251-2600.

up arrowReinvesting in Child Care Financing by Richard Ferlauto

Access to credit, along with business capacity development, is an integral part of a community strategy to expand and develop child care facilities. The Center for Policy Alternatives' (CPA's) "Reinvesting in Child Care" facilities financing program helps to build partnerships with banks to finance lines of credit and loans for family child care providers and for centers.

CPA has educated bankers nationally about the special lending needs of providers. CPA's work with the federal banking regulatory agencies has led to the inclusion of regulations in the Community Reinvestment Act that support investments in child care facilities financing.

CPA's progress at the federal level has been used to motivate its state project activities. "Reinvesting in Child Care in Washington, DC" has convened a diverse group who share an interest in child care facilities financing. Child care providers and other experts in the field, along with human services agencies, philanthropic institutions, banks, and employers are developing model facilities financing programs that can be replicated in other areas. Three lending programs have been developed along with loan guarantees. This $1.5 million child care financing pipeline can leverage public resources thirteen to one.

The training and technical assistance component assists child care providers who have an interest in increasing their business expertise and improving their skills as early childhood educators. CPA is working on developing similar loan guarantee projects in communities around the country. Last January, CPA convened 60 national experts in child care facilities financing to discuss best practices and to share their successes and lessons learned. Participants developed a state policy action agenda for facilities financing that underscores the need for a centralized system of information sharing in the child care field. CPA is also developing a web site to serve as a clearinghouse on child care facilities financing issues.

Support for facilities financing is growing in many locations. CPA will provide information and technical assistance to states that are interested in developing new programs. These programs will increase economic activity in low-income areas, and will give child care providers and families access to the support they need.

Richard Ferlauto is Associate Director for the Center for Policy Alternatives. For more information about child care facilities financing, contact Richard Ferlauto, or Tracey Arvin at (202) 387-6030.

up arrowNational Community Development Intermediary

The Local Initiatives Support Corporation (LISC) is a national intermediary established by the Ford Foundation to help revitalize distressed areas. LISC pools resources from public and private sources and channels them to community development corporations (CDCs) as grants, loans, and equity investments to assist in rebuilding the physical, economic, and social infrastructure of neighborhoods. To date, LISC has raised more than $1.5 billion to support over 1,400 CDCs.

LISC's experience in child care facilities development began through a collaboration with the City of New York, CDCs, early childhood programs, and Child Care Inc. (the local resource and referral agency), to build five early childhood centers in low-income neighborhoods. The first center was finished in January 1996 by the Manhattan Valley Development Corporation and the Bloomingdale Family Head Start Program.

The lessons learned by this project have helped to shape LISC's National Child Care Initiative which will create facilities in 10 sites across the country. In partnership with the National Head Start Association, LISC offers technical assistance to CDCs and providers in program design and facility development, and also helps them to secure financing.

To learn more, contact Amy Gillman, Program Officer for LISC's National Child Care Initiative, at: (212) 455-9840.

up arrowCreative Financing for Training Maximizes Efforts by Sue Connor

The Rhode Island Child Care Training System at Children's Friend and Service provides training, resources, and professional support to the child care community. From initial funding of $150,000 from the Child Care and Development Block Grant (CCDBG) and the Rhode Island Department of Human Services, the Training System staff have used creative ways to maximize their efforts. The advisory board has representatives from the state's child care and education professional organizations, government agencies, training institutions, resource and referral agencies, and other experts in the field. They have provided guidance and in-kind support by obtaining resources, designing and implementing training programs, and serving on committees to generate additional financial support.

The child care and education community supports the Training System by helping with conferences, developing prop boxes for loan to child care providers, and donating videos, publications, and other resources. Training space for has been obtained by providing free training slots for child care programs that allow their sites to be used for the sessions, and also by collaborating with local college programs and the Women and Infants Hospital.

The Training System also collaborates on conferences with organizations such as the Rhode Island Association for the Education of Young Children, Family Child Care Homes of Rhode Island, and School Age Coalition. Collaborative efforts with national organizations have also contributed trainers and resources.

In many initiatives, it has been possible to combine the goal of cost effectiveness with the goal of mentoring professionals. Graduate students have provided in-kind services to the Training System through the implementation of a Family Child Care Accreditation Project and a Director's Academy. A formal evaluation which documents the effectiveness of the Training System was also completed. Outreach to professionals interested in sharing their knowledge has generated mutual opportunities for mentoring.

Through a major collaborative effort, the Training System was recently awarded a $100,000 grant from the Rhode Island Foundation. Along with contributions from other sources, the funds will be used for the "Quality 2000" initiative, to promote accreditation and to inform parents about quality care and education.

Other collaborations have involved the Centers for Disease Control, The United Way, and Maternal and Child Health. Each of these efforts to obtain supplementary resources has contributed an additional piece to the viability of the Training System. In each instance, the strategy has been to look at the goals of the collaborating organization or individual, and to maximize the resources available for all.

Sue Connor is Project Manager for the Rhode Island Child Care Training System. For more information, contact Sue at: (401) 729-0765.

up arrowEvaluating the Costs of Employee Turnover by Marcy Whitebook

Research has demonstrated a relationship between high rates of turnover and negative developmental outcomes for children. Until now, however, few interventions have been proposed or initiated to reduce the disruptive effect that employee turnover can have on child care programs, families, and other staff.

The National Center for the Early Childhood Work Force (NCECW) has received a grant from the Center for the Future of Children at the David and Lucile Packard Foundation to work with center directors and staff and develop a resource manual on how to manage turnover. It will cover recognizing and calculating direct and indirect expenses incurred when a teacher leaves, intervening to reduce these expenses and to increase staff retention, along with strategies that minimize the extent of change and stress that children and staff experience when turnover occurs.

Many businesses identify turnover costs and determine how dollars spent on turnover can be redistributed to address staff retention. Across industries, three major intervention strategies to redirect turnover costs involve improving compensation packages, hiring practices, and work relationships. Many businesses also routinely examine the practices they employ when faced with a turnover event which may exacerbate its negative effects and undermine the quality of products or services. In child care, for example, centers may lessen the loss that children experience when a teacher leaves by hiring one long term substitute, rather than a steady stream of substitutes.

By applying lessons from other industries and examining best practices within the field, concrete strategies for reducing and managing turnover can be identified.

To learn more about the project or share your insights, contact Marcy Whitebook, Senior Research Policy Advisor, National Center for the Early Childhood Work Force, 2625 Alcatraz Ave. #199, Berkeley, CA 94705, or contact NCECW at: 733 15th St., NW, Washington, D.C., 20005, or call: (202) 737-7700.

up arrowShort Items

The California Task Force on Financing Early Childhood Facilities in Low-Income Communities

includes representatives from the community development, Head Start, and child care fields, foundations, banks, and state government. The Task Force studied county level demographic trends, assessed the condition of child care facilities in California, and surveyed the current level of funding for facilities development. Their action plan recommends five financing strategies: a statewide loan guarantee fund and standardized loan products, elimination of regulatory barriers to using state contracted funds to pay debt service, increased investment in housing related child care, increased use of local economic resources for facilities development finance, and increased technical assistance to providers and education of lenders.

To learn more about the Task Force, contact: Jan Stokley, Child Care Project Manager, National Economic Development and Law Center, 2201 Broadway, Suite 815, Oakland, CA 94612, (510) 251-2600, fax: (510) 251-0600, e-mail: HN0186@handsnet.org

The Working Parents Assistance Trust Fund in Montgomery County, Maryland

Like many metropolitan areas, Montgomery County, Maryland has had a long waiting list for child care subsidies for working families with low incomes. The state-funded Purchase of Care Program has been increasingly used to assist AFDC clients, and the county's nationally-recognized model, the Working Parents Assistance Program, has been overwhelmed by the need for additional subsidies for eligible families.

When waiting lists for child care subsidies grew to more than 2,000 families, local officials began to address the problem with a broad base of community support. Lacking sufficient government funds to meet these needs, they designed the Working Parents Assistance (WPA) Trust Fund to reach out to the business and faith communities to contribute to the pool of available funding. Donations are solicited by a volunteer coordinator, deposited in the county's revenue system, and are used only for child care services. Within four months, the WPA Trust Fund received substantial contributions from a bank, a large insurance company, a church, a financial management firm, and several small businesses and individuals. The marketing plan for the WPA Trust Fund includes outreach to civic organizations, foundations, and local employers of low and moderate income workers. Contributions are recognized through sponsored events and press releases. Organizers see the WPA Trust Fund as a way to increase funding, and to inform others of the needs of low-income working families and the importance of safe, licensed care for all children.

Data on outcomes is collected regularly, and the benefits of the WPA program are clear. The cost of WPA subsidies compares favorably with traditional welfare costs, and families in the program have an excellent track record of becoming self sufficient.

To learn more, contact Debbie Shepard, Director of Child Care Services, Montgomery County Health and Human Services, at: (301) 217-1168.

The National Children's Facilities Network

shares information and works to advance the practice and feasibility of developing early childhood facilities serving low and moderate income families. The group focuses on designing demonstration financing models and programs, disseminating information about successful efforts, and empowering the early childhood community to invest more strategically in facilities in order to increase the supply of quality services. The Network's members are nonprofit organizations engaged in lending or facilitating financing, real estate development services, technical assistance, policy analysis, or research and development:

Local Initiatives Support Corporation
National Economic Development and Law Center
(Boston) Child Care Capital Investment Fund
(New Jersey) Early Childhood Facilities Fund
Illinois Facilities Fund
(New York City) Non-profit Facilities Fund
(Maine) Coastal Enterprises, Inc.
(North Carolina) Center for Community Self-Help
(Minneapolis) Development Corporation for Children
Ohio Community Development Finance Fund
(Philadelphia) Delaware Valley Community Reinvestment Fund

For more information about the Network, contact Carl Sussman, Senior Project Advisor for the Child Care Capital Investment Fund at: (617) 357-8555.

up arrowResources in Child Care

With each issue, the Child Care Bulletin highlights resources available to the child care community. We encourage providers, parents, administrators, and other readers to share knowledge of what is available so that we may pass it on to the field.

Publications

Financial Resources for Training, an "Action Pack"
Louise Stoney
A tool to help in establishing career development systems. It explains how to navigate the financing system that supports training for early care and education practitioners. The Action Pack provides a framework to help identify those that administer training funds in a wide range of public and private agencies, and to coordinate funds and training opportunities from many different sources. A step by step approach is included, along with interview questions, and an adaptable financing "neighborhood." (Available for $25 from the Center for Career Development in Early Care and Education, Wheelock College, 200 The Riverway, Boston, MA 02215-4176, or call: (617) 734-5200).

Publications below are available from the Child Care Law Center, 22 Second Street, 5th Floor, San Francisco, CA 94105, or call: (415) 495-5498.

The Child Care Tax Credit: A Booklet for Parents
This explains the federal and California child care expense tax credits in an understandable, step-by-step manner. It includes information about school-age child care, overnight camp, and recreational programs. ($6).
Summary of Federal and California Tax Provisions Relating to Child Care
This publication explains federal and California tax credits available to employers. It includes sample dependent care assistance plans (DCAP) and cafeteria plans ($15).

For a fact sheet about the Earned Income Credit or the Child and Dependent Care Credit, contact the National Women's Law Center, 11 Dupont Circle, Suite 800, Washington, DC 20036, or call: (202) 588-5180.

Publications below are available from the Child Care Action Campaign, 330 Seventh Ave., 17th Fl., New York, NY 10001-5010, or call: (212) 239-0138.

Investing in the Future: Child Care Financing Options for the Public and Private Sectors
This report identifies key barriers faced by family child care and center providers in obtaining start-up and operating financing. It highlights successful financing models, including grants and loans, bank reinvestment strategies, community initiatives, bonds, pension funds, and employer partnerships.
Not Too Small to Care: Small Businesses and Child Care
This publication profiles 29 small businesses (employing less than 250 workers) that have implemented child care benefits: on-site or near-site child care centers, flexible work hours, employee subsidies, parental leave, family child care homes, and Dependent Care Assistance Plans.

For a two page Information Guide (#16) on How to Use the Federal Child Care Tax Credit, call: (212) 239-0138, or e-mail: HN5746@handsnet.org The ACF Fact Sheet describes the child care programs administered by the Child Care Bureau within the Administration on Children, Youth and Families. These include Child Care for Aid to Families with Dependent Children (AFDC) Recipients, Transitional Child Care (TCC), At-Risk Child Care (ARCC), and the Child Care and Development Block Grant (CCDBG). (Free publication, available from the National Child Care Information Center, 301 Maple Avenue West, Suite 602, Vienna, VA 22180, or call: (800) 616-2242, fax: (800) 716-2242, TTY: (800) 516-2242, or e-mail: agoldste@nccic.org).

[CCB Editor's Note: As of 4/1/2005, the address for NCCIC has changed. The new address is: 10530 Rosehaven St., Suite 400, Fairfax, VA 22030.]

This page is being maintained on the NCCIC web site for historical purposes. As a result, not all information may be current.

 
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