Maximize Federal Title IV-A At-Risk Child Care Funds

The state should ensure that all available federal funds are received for the Title IV-A At-Risk Child Care program and that existing unmatched state or local dollars, instead of general revenue appropriations, are used to draw down federal funds.


Background
According to data provided by the Children s Defense Fund, for every dollar spent on quality pre-school education, $4.75 is saved in special education, crime, welfare and other costs to society. 1 Texas currently does not take full advantage of federal funds available for child care. Of the $23 million allocated to the state in fiscal 1992 for the At-Risk Child Care program, Texas forfeited almost $8.8 million in federal funds for lack of state mat ch.

There are opportunities for the Texas Department of Human Services (DHS) and the Texas Education Agency (TEA) to work together to ensure that state and local funds are appropriately matched so that all available federal money is drawn down to meet the needs of children in this program.

By using existing, unmatched pre-kindergarten school district funds as match, the state can draw down the additional federal funds. Pre-kindergarten funds are financed through the Foundation School Program and provide a plentiful source for match. These ar e funds from existing appropriations that are not currently matched with federal dollars. (Federal law prohibits using state and local dollars to match federal funds twice.) Federal program dollars can also be matche d with local funds from city or county governments, or from voluntary donations from private third parties, as long as the funds do not revert directly to the third party.

The Title IV-A At-Risk Child Care program was created by the Omnibus Budget Reconciliation Act of 1990 and is designed to meet the needs of low-income working poor families who are not on welfare, yet require child care services to stay employed. To be eligible for this assistance, the family must not receive Aid to Families With Depen dent Children (AFDC) benefits, must require child care in order to work and must not have a total gross income exceeding 150 percent of the federal poverty level. 2 Recipients acquire child care services through a system of 27 state-funded Child Care Management Services contracts.

DHS estimates that for fiscal 1993, 456,000 children birth to 12 years of age will be served through the Title IV-A At-Risk Child Care program. DHS expects that about 8,244 children will be served each day and that the families of these children will stay employed, thereby avoiding AFDC. 3

The Title IV-A At-Risk Child Care program is merely authorized, not federally mandated, thus making it at-risk in the legislative budget process. Funding for this program is currently dependent upon a general revenue appropriation and federally-matched funds. The state s allocation of available federal funds is based on the ratio of the state s children to the number of children in the United States. 4 Texas was allocated $23 million in federal f unds in fiscal 1992, of which $8.8 million were left unmatched. The state matched the other $14.2 million with an $8 million general revenue appropriation.

Instead of funding the program match totally with general revenue, the state could use existing unmatched funds from school districts, local governments or other local organizations as match. To ensure that the state is able to provide access to the progra m statewide, as required by federal regulations, the state would need to appropriate some general r evenue to the program for areas that could not provide match. If the state funds the appropriation at a 50 percent level, the state could offer local entities a 50 percent match for their contributions. This could increase the number of districts intereste d in participating in the program.

Recommendations
A. The Legislature should mandate that the Department of Human Services (DHS) use existing, unmatched school district funds or other appropriate, unmatched funds to draw down all allocated unmatched federal funds for the Title IV-A At-Risk Child Care program. The Legislature should mandate that the Texas Education Agency (TEA) coordinat e with DHS and local school districts to ensure that all available federal funds are matched.

B. The Legislature should mandate that DHS use existing unmatched school dis trict, or other appropriate unmatched funds, for 50 percent of its current general revenue appropriation to draw down the federal match for the Title IV-A At-Risk Child Care program. To achieve the general revenue savings identified in the fiscal impact ta ble, the Legislature should reduce the general revenue appropriation for the At-Risk Child Care program at DHS by the amount specified. The Legislature should mandate that TEA coordinate with DHS and that both agencies coordinate with local school district s to ensure that districts receive sufficient technical assistance to develop viable programs.


Implications
Faced with possible budget reductions, state agencies should make every effort to ensure that the At-Risk Child Care program is adequately funded. Parents may be forced to go back on Aid to Families with Dependent Children (AFDC) if child care reimbursemen ts are lost, and it is extremely costly to provide AFDC benefits to these families.

Coordination between DHS, TEA, local governments and school districts and other funding organizations is essential to ensure that all available federal dollars are obtained for the At-Risk Child Care program.


Fiscal Impact
Of the available $23 million federal funds in fiscal 1992, the state left almost $8.8 million of available federally-matched dollars untouched for the At-Risk Child Care program. By using $4 million of unmatched local funds, the state could draw down these additional child care dollars.

Of the $23 million in federal funds available to the state, the state used $14.2 million; the state s match for these federal dollars totaled $8 million. Cost savings could be achieved by substituting half of this $8 million in general revenue match with $4 million of existing unmatched school, local government or other appropriate funds as match for the federal funds. This would result in an annual savings of $4 million in state funds.

Altogether, the state would save $4 million in state funds and draw down an additional $8.8 million in federal funds in fiscal 1994.


Savings to the
Fiscal General Revenue Gain/Loss to Change in
Year Fund 001 Federal Funds Total FTEs

1994 $3,976,000 $8,765,000 $12,741,000 0
1995 3,976,000 8,765,000 12,741,000 0
1996 3,976,000 8,765,000 12,741,000 0
1997 3,976,000 8,765,000 12,741,000 0
1998 3,976,000 8,765,000 12,741,000 0



Endnotes
1 Memorandum from Jeannette Watson, Chair, United Way of Texas/Child Care Working Group, and Peggy Boice, Director of Public Policy, to the United Way of Texas Child Care Working Group, December 14, 1992.
2 Texas Department of Human Services, 1991 Annual Report, Faces of the Future (Austin, Texas, December 1991), p. 24.
3 Interview with Clarissa Olson, Texas Department of Human Services, December 29, 1992.
4 U.S. Family Support Administration, Child Care Action Transmittal, no. CC-FSA-AT-90-1 (Washington, D.C., December 19, 1990), p. 2.