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SB12-022: Concerning

Maintaining Child Care Assistance for Working Families

Possible Scenarios

Bell Policy Center

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THE CLIFF EFFECT Occurs when an increase in income, which causes a client to become

ineligible, does not cover the loss of public benefits the client was receiving (1)

Subsidy cliff vs. real cost cliff

Child Care Cliff Food stamp Cliff

CHP+Cliff

Cliffs for a Single Parent with Two Children in Denver County (2)

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CCCAP BACKGROUND A federally funded program

CCDF block grantRequirements

<13 years of age Eligible activity Income below 85% SMI

County administeredEligible activities Income eligibility levelsProvider reimbursement rates

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STATE’S ROLE Sets the parent fee schedule for the entire

state (3)

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SB12-022 (4)

Attempts to mitigate the cliff by providing terminated clients with a transition period of 2 years

How this transition would occur is not fully known

Possible scenarios

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ASSUMPTIONS 3 Counties: Logan, Denver, Mesa Family of three: 1 parent, 2 children (1<school

age; 1>school age) Income stays the same over two years Center based care, at the highest quality level Those who may be affected by the bill/cliff

effect have incomes 30-40% below the eligibility cutoff point

The family is right at the eligibility cutoff point

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COUNTY DATACounty Logan Denver Mesa

Type Rural Urban Urban

Number of Low Income CCCAP Families (5)

70 cases 2,099 cases 837 cases

Waitlist/Number (6) no waitlist 401 cases/790 children 48 cases/82 children

Income Eligibility Cutoff (6) 130% 165% 225%

Income when Terminated (3) $2,007/month $2,548/month $3,474/month

Cost of Child Care (7) $1,010/month 1,623/month $1,010/month

Child Care as % of Income 50.32% 63.70% 29%

Parental Contribution at Termination (3)

10% of income=200.70~ $201/month

12% of income = $306/month 14% of income = $486

Cliff in Benefits upon Termination

$809/month $1,317/month $524/month

Who may be affected? (5)

19/70 cases or 27.14~27% of low income

CCCAP families in Logan

411/2,099 cases or 19.58%~20% of low income CCCAP families in Denver

76/837 cases or 9.08%~9% of low income

CCCAP families in Mesa

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SCENARIO 1: EQUAL MONTHLY INCREMENTS OVER TWO YEAR PERIOD

Monthly Increment Logan = $34 Denver = $55 Mesa = $22

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SCENARIO 2: STEEPER INCREMENTS IN YEAR 2 (33/66 BREAKDOWN)

Monthly Payment Increments County Logan Denver Mesa

Monthly Increment: Year 1 $23 $37 $15

Monthly Increment:Year 2 $45 $73 $29

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SCENARIO 3: STEEPER INCREMENTS IN YEAR 2 (25/75 BREAKDOWN)

Monthly Payment Increments County Logan Denver Mesa

Monthly Increment: Year 1 $17 $28 $11

Monthly Increment:Year 2 $51 $82 $33

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THE STATUS QUO

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Benefits Provides families with support to successfully

transition off the CCCAP program Provides parents with support to continue

working Provides children with consistent, safe, and

stimulating care Allow counties to maintain control over whether

they decide to participate in the program Potentially reduces worker turnover and

associated costs for employers Provides the state and this committee with

much needed data

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References and Notes (1) Dinan, K.A., Chau, M., & Cauthen, N.K. (2007). Two steps forwards and three steps back:

The ‘Cliff Effect’—Colorado’s curious penalty for increased earnings. Denver, CO: The Women’s Foundation of Colorado. This piece was the seminal academic work, that proved quantitatively, that the cliff effect existed.

(2) (Dinan, Chau, & Cauthen, 2007, p. 3). This graph was constructed in 2007 when the minimum wage was $6.85. The current minimum wage is $7.64. However, this increase in minimum wage does not alter the cliffs. If anything, the increase results in termination occurring at a quicker pace, especially since many counties have dropped their eligibility levels since 2007.

(3) Colorado Division of Child Care (2011). Child care and development fund for Colorado: FFY 2012-2013. Denver, CO: Colorado Department of Human Services. Attachment 2.4.1: Sliding Scale for Child Care Services

(4) An act concerning maintaining child care assistance working families. S.B. 022, 68th Colo. Gen. Assembly (2012).

(5) Colorado Division of Child Care (2010). CCCAP annual program information: State and county for 2010. Received through personal communication with Leslie Bulicz, Associate Director of the CO Division of Child Care on 10/28/2011The numbers for the number of CCCAP families and who may be affected, is from the CCCAP Annual program information in 2010, encompassing the period between July 1, 2009 and June 30, 2010. Due to the new CHATS system and the transition, a new annual report for the whole state hasn’t been acquired as of yet. Thus, with the data we have, these are the best estimates of the number of cases in each county as well as the percentage of CCCAP recipients who may be affected

(6) Data retrieved from Leslie Bulicz, personal communication, 11/2/2011(7) Colorado Division of Child Care (2011). Child care and development fund for Colorado: FFY

2012-2013. Denver, CO: Colorado Department of Human Services. Attachment 2.7.1: Payment Rates for Child Care Services

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