The Geographic Disparity of Child Care Co-payments in New York State Is Fundamentally Unfair and Needs to Be Changed

September 1, 2005

Child care in New York State is paid for through the New York State Child Care Block Grant (NYSCCBG), which is comprised primarily of federal funds.ii   Despite the fact that New Yorkers are receiving federal dollars for a benefit which is critical to the success of low income working families, not all families are treated the same. The size of the benefit depends upon where a family lives, and bears no relationship to economic factors related to geography. Throughout New York State, families with similar financial background, or ability to pay, are required to provide different co-payments (co-pay) amounts for child care, depending upon where they live. For example, a family of three at 200% of poverty living in Otsego County will pay $1,609.00 annually for their child care co-pay.  If the family was to move to bordering Chenango or Oneida Counties, their required payment would be $5631.50 per year, an increase of 350 percent.

Federal regulation requires the Department of Social Services to establish, and periodically revise, by rule, a sliding fee scale.iii   This scale is to be based on the income and the size of the family receiving child care services, but other appropriate factors may be added.iv

State law provides that the measure of child care assistance in the NYSCCBG program is a sliding fee based on the family’s ability to pay.v   A family’s ability to pay is the only measure provided in the statute for determining the sliding fee amount they owe for child care assistance.vi

New York State’s sliding fee scale exists in regulation, which pre-dates the federal child care block grant, and gives each social services district wide latitude in establishing its co-pay scale by providing a formula that can be adjusted by each district.vii  A social services district applying New York’s formula first determines the annual gross income of the family.viii  Next, the state income standard, the most recent federal income poverty level adjusted for family size,ix is subtracted from the household gross income.x  The remaining value is then multiplied by a factor of 10 to 35 percent. This value is selected by each individual Social Services district, to determine the yearly child care assistance co-pay of the family.xi  Finally, this amount is divided by 52 to determine the weekly co-pay amount.

New York’s proposed NYSCCBG plan for 2005-2007 explains that allowing a local district a range between 10 and 35 percent in calculating the family share towards child care is due “to the wide disparity of per capita income, consumer price levels, and the cost, availability and accessibility of child care among the geographic jurisdictions.”xii   Yet the regulations provide no guidelines or factors that the local districts are to consider in determining percentage to be chosen in determining co-payment. The weight and priority of each factor is not explained and the application of each factor in relation to the co-payment is not articulated in the language of the regulation.xiii

Each county social services district is given discretion to choose any percentage between 10 and 35%, resulting in considerable variation among New York counties.xiv New York State is divided into fifty-eight local social service districts. The five boroughs of New York City are one district, and outside New York City each district corresponds to each of the remaining fifty-seven counties of New York State.xv   As a result of this unbridled discretion, as indicated on page 34 of the proposed state plan, similarly situated families may pay as little as 4.6 % or as much as 16.2 % of their income for child care.xvi

There articulated reasons for county to county disparity in co-payment bear no relationship to the differences in child co-payment (co-pay) amounts required of residents in each county of New York State or the regulation allowing the Social Service District to chose the co-pay percentage. The analysis below will compare local co-payments to each of the factors articulated in the child care plan: (1) disparity among per capita income, (2) consumer price levels, (3) and the cost and accessibility of child care among the geographic jurisdictions.xvii   The most recent values for yearly co-pay rates and other necessary statistical information will be used to demonstrate no correlation exists between the choice of co-pay percentage and each rationale.

A.  Per Capita Personal Income (PCPI)xviii  

The first stated rationale for allowing a Social Service District choose its own co-pay percentage is a disparity in per capita personal income.xix  Yet an analysis of per capita personal income for each county reveals no correlation with co-payment amounts charged by those counties.

Yates and Allegany Counties: lowest per capita incomes in the State, but families in Yates pay significantly higher child care co-payments

Two counties with the lowest per capita personal income are Yates, at $20,926, and Allegany, at $19,925. However, a family of three in Allegany County at 175% of poverty has an annual co-payment of $2,413.50; a family of three with the same income in Yates would have a co-payment of $4,223.63. A family of three in Allegany County at 200% of poverty has an annual co-payment of $3,218.00; a family of three with the same income in Yates would have a co-payment of $5,631.50. Thus, families of three with incomes at 175% of poverty in Yates County are charged an annual co-payment that is $1,820.13 more per than families of the same size and income in Allegany County; for families at 200% of poverty, the difference is $2,413.50.

Chatauqua and Schuyler Counties: low per capita incomes but families in Schuyler pay significantly higher child care co-payments

The per capita personal income in Chautaqua County is $22,263, which is comparable to Schuyler County’s at $22,099. However, families of three at 175% of poverty in Schuyler County pay $4,223.63 per year in child care co-payments while families of three of the same income level in Chatauqua County pay $3,016.88, a disparity of $1206.75. Families of three at 200 % of poverty in Schuyler County pay $5,631.50 per year in child care co-payments while families of three of the same income level in Chatauqua County pay $4022.50, a difference of $1609.

Ontario and Orange Counties: nearly identical per capita incomes but families in Orange pay the same high co-payments as those in Schuyler and Yates; Ontario parents pay on the same scale as Allegany parents.

Residents of Ontario and Orange counties have nearly identical per capita personal incomes at $28,788 for Ontario and $29,013 in Orange, but Ontario County residents have their co-payments determined on the same scale as Allegany County, described above, and Orange County residents are charged the same higher fees as those in Yates and Schuyler Counties.

Orange County has a significantly lower per capita personal income than neighboring Putnam County, but families in Putnam County have much lower co-payments.

As noted above, Orange County, with a $28,788 per capita personal income, requires the same high co-payments as Yates and Schuyler Counties, while Putnam County, with a $39,434 per capita income, charges the same low co-payments as Allegany County. The co-pay amount is Putnam is also inconsistent when compared to adjoining Dutchess County, with a lower per capita personal income of $32,604 yet requiring a family of three at 175% of poverty to pay $3,620.25 per year for a child care co-payment, and charging $4,827 if that family’s income goes up to 200% of poverty.

B.  Consumer Price Levels

Consumer price levels for low income families in New York State can be best measured by using the Self Sufficiency Standardxx  measure of county costs, and the Fair Market Rent established by the U.S. Department of Housing & Urban Development. The Self Sufficiency Standard is based on data collected from the Census and other sources and represents a number of costs including food, housing, and child care, for each county in New York.xxi  Fair Market Rent’s (FMR’s) are gross rent estimates. They include a families rent plus the cost of all utilities, except telephones.xxii

1)  The Self-Sufficiency Standardxxiii 

The self-sufficiency monthly wage does not correspond to counties with similar child co-pay rates. Allegany and Putnam counties have the same child co-pay amount even though the self-sufficiency wage in Putnam County is $2,000 more than Allegany’s each month. In Tioga and Ulster the co-pay amount is the same, but the difference in their self-sufficiency wages is $7,800 per year.
 
If counties with similar monthly self-sufficiency wages are compared there is a similar disparity. Schuyler and adjacent Tompkins County, have a monthly self-sufficiency wage of $2,617 and $2,852, respectively. A family of three in Tompkins at 175% of poverty pays a co-pay amount $1,800 less each year then someone in Schuyler County, and at 200% of poverty pays $2400 less than a similarly situated family in Schuyler County . Ontario and Onondaga Counties provide another example. With approximately the same monthly self-sufficiency wage, a family of three at 175% of poverty pays $1,800 more for a child care subsidy each year than does a family in Ontario; at 200% of poverty, the difference is just over $2400.

2)  Fair Market Rent (FMR)xxiv 

There is also no correlation between fair market rents and child care co-payment amounts. Tompkins and Putnam counties have the same child co-pay amount, yet there is a $460 difference in FMR for a three bedroom apartment each month. Saratoga and Fulton are adjoining counties with the same co-pay rate, but families in Saratoga County pay $150 more each month in FMR . In Kings and Ulster County, families pay the same for their child care co-pay amount, even though there is a $390 difference per month in FMR for a three bedroom household. Lastly, St. Lawrence and Rensselaer County have a $160 FMR difference each month while the co-pay amount remains the same.

C.   Cost and Accessibility of Child Care Among Counties in New York

The cost and availability of child care in New York Counties is compared by using the local market rates for each social service district.xxv Market rates are established in five groupings of social service districts.xxvi   When the rates for group family care and day care centers are compared to equivalent co-pay amounts there are inequities.xxvii

The weekly market rates for family care do not correlate to co-pay rates for each county.xxviii Otsego and Greene Counties have the same weekly family child care rate, yet the required co-pay amount in Greene County is $3,000 more than Otsego for a family of three at 175% of poverty and $4000 more for a family of three at 200% of poverty. The required co-pay in Steuben County is $1,000 more each year than Allegany County for families at 175% of the poverty level, and $1,360 more each year than Allegany County for families at 200% of the poverty level, even though both counties have the same weekly market rate for child care. Wayne and Yates County also have the same weekly child care rate, but families in Wayne County at 175% of poverty pay $1,200 more for their yearly co-pay and families at 200% of poverty pay $1600 more per year.
 
Day care center weekly rates also do not correspond to co-pay amounts.xxix In Delaware and Nassau Counties the co-pay amount is the same even though there is a $110 weekly difference in the weekly day care center market rate. Ulster and Orange are neighboring counties with the same weekly day care market rate. Even so, a family of three at 175% of poverty in Orange County pays $1,200 more each year for its co-pay amount than a similarly situated family in Ulster County; at 200% of poverty, the family in Orange County pays $1360 more per month in child care.

Conclusion

The time has come for New York State to revise its child care co-payment scale so that it is truly based on a family’s ability to pay. It is not fair that low income families in one part of the state pay three and one-half times what families in other parts of the state, or that the alleged rationale for such disparities bear no basis in fact. At a minimum, no family should be required to pay more than 10% of their income for child care.

End Notes

i  Michael Mule, J.D. Albany Law School, June 2005, was a legal intern at the Greater Upstate Law Project at the time that this paper was written.  He will begin as the 2005 – 2007 Hannah Cohn Fellow at the Public Interest Law Office in Rochester in September of 2005.  He gratefully acknowledges the research assistance of Erin Connolly, B.A. SUNY New Paltz, 2005, who was also an intern at the Greater Upstate Law Project at the time this project was written. 

ii  Of the $889.1 million dollars which were dedicated to child care spending in the enacted 2005-2006 New York State budget, $306 million dollars are from the federal child care and development fund; $379 million are federal Temporary Assistance to Needy Families (TANF) dollars transferred into the child care block grant.  $136.1 million is state money and $68 million is local dollars.

iii  45 CFR 98.42

iv  45 CFR 98.42

v  N. Y. Soc. Serv. Law §410-x(6).

vi  N.Y. Soc. Serv. Law §410-x(6).

vii   18 NYCRR 415.3(f)

viii  18 NYCRR 415.3(f)(3)

ix  70 FR 8373, Annual Update of the HHS Poverty Guidelines, February 18, 2005

x  18 NYCRR 415.3(f)(3).

xi  18 NYCRR 415.3(f)(3).

xii  Draft Plan for New York State Child Care and Development Fund Services, FFY 2006-2007, pg. 32.

xiii  18 NYCRR 415.3(f)(2).

xiv  18 NYCRR 415.3(f)(3).

xv  New York State Office of Child & Family Services, County Departments of Social Services, available at:  http://www.ocfs.state.ny.us

xvi  Actually, the plan understates the percentage paid by families at the highest eligibility levels.  A family of three at 200% of poverty ($32,180) in a 35% co-pay county, pays 17.5% of its income for a child care subsidy.

xvii  Draft Plan for New York State Child Care and Development Fund Services, FFY 2006-2007, pg. 32.

xviii  Per capita income amounts by county are listed in Appendix A, “Family share rates and Economic Indicators in New York State, in the column labeled PCPI 02.

xix  Per capita personal income “is calculated as the personal income of the residents of an area divided by the population of that area as of July 1 for the reference year.”  U.S. Bureau of Economic Analysis, U.S. Commerce Department, cited at www.fedstats.gov.   Personal income is defined as the income that is received from participation in production, from both government and business transfer payments, and from government interest.  It is calculated as the sum of wage and salary disbursements.

xx  See Appendix A.  The columns to the far right labeled Monthly SSW (self-sufficiency wage) and Hourly SSW contain the information referenced in this section.  In calculating the self-sufficiency wage, costs that rarely have regional variation (such as food) are usually standardized, while costs such as housing and child care, which vary substantially, are calculated at the most geographically specific level available.

xxi  Diana Pearce, Jennifer Brooks, The Self-Sufficiency Standard for New York, 2000.

xxii  Fair Market Rent Overview, U.S. Department of Housing & Urban Development Office of Policy Development & Research, October 1995 (rev), available at http://www.huduser.org/datasets/fmr/fmrover.doc.

xxiii  See Appendix B.

xxiv  See Appendix B.

xxv  See 18 NYCRR § 415.9(j), Effective October 1, 2003.

xxvi  Note:  Rates established for a group apply to all districts unless an exception is otherwise noted.

xxvii  Note:  Rates used will be for children under 1 ½ in Appendix C and D.

xxviii  See Appendix C.

xxix  See Appendix D