Child Care Funding, Mired in the Flex Fund, Remains Below 2005 Levels

February 1, 2007

Author: Susan C. Antos

In describing the human services portion of his 2007-2008 budget, Governor Spitzer announced that “One New York means a state that does not just get a working parent off the welfare roll, but one that helps lift him out of poverty.”  Despite this promise, Governor Spitzer’s budget leaves the most important support for most working parents - child care funding - in a precarious position. 

In New York State, child care is funded primarily from two federal sources:  block grant money specifically designated to pay for child care - the Child Care Block Grant, and money from the Temporary Assistance to Needy Families (TANF) block grant. Under federal law, up to thirty percent of TANF money can be transferred into Child Care Block Grant funded programs.  In the past, although New York never came close to transferring 30% of its TANF money into child care, it transferred such significant amounts that two years ago New York had $929 million dollars appropriated for child care.

Governor Pataki created a block grant called the Flexible Fund for Family Services (hereinafter the Flex Fund) two years ago (2005-06) when it appeared that TANF surplus funds would not be sufficient to support all the TANF initiatives funded in previous years.  Instead of appropriating money for each TANF funded program as had been done in previous years, the TANF money was dumped into county level block grants from which the counties could choose to fund a menu of programs: child welfare programs, including Title XX and JD PINS programs; employment demonstration programs; and drug screening and treatment programs.  In that first year, child care advocates fought successfully to keep child care out of the Flex Fund, but overall, child care funding declined to $899 million. 

Last year advocates were not able to protect child care from the Flex Fund.  Governor Pataki appropriated $506 million for child care and directed that if local social services districts wanted to spend additional money on child care, they would have to take that money from the Flex Fund.  Over one billion dollars of TANF money was put into the Flex Fund and local districts took $352 million from the Flex fund for child care, bringing the total spent on child care to $858 million, the lowest amount spent since 2002-03.

In this year’s budget Governor Spitzer has slightly increased the child care funding base to $533 million, but like his predecessor leaves hundreds of millions of additional child care dollars in the Flex Fund.  Governor Spitzer’s Flexible Fund contains just over 1 billion dollars, but contains about 28 million fewer dollars than last year’s Flex Fund.  Again, child care funds remain vulnerable because counties may choose to use the money in the Flex Fund for initiatives other than child care.  

As the chart illustrates, even if the local social services districts were to spend $352 million from the Flex Fund on child care (the amount that they spent from the Flex Fund on child care last year), that amount, together with the $533 million proposed by the Governor would total $885 million - an increase over last year, but significantly lower than the three previous years.

Child care advocates are urging Governor Spitzer to move child care out of the Flexible Fund to ensure that the funds are directed to child care and to restore funding to at least the 2005 levels.  The Flex Fund was first created in the 2005-06 budget and child care was not included in the Flex Fund at that time.  Last year for the first time, child care funding was included in the Flex Fund and overall, child care funding declined from $899 million to $858 million.

The Governor’s tepid support for child care funding stands in stark contrast to several other initiatives that support low income children - $99 million for pre-kindergarten expansion, $165 million over two years to provide health care coverage for 400,000 children without insurance, and $2.1 million for increased prenatal and postpartum home visits.  The Pre-K increase brings the state’s annual pre-kindergarten expenditure to $395 million in FY 2007-8, with a commitment from the Governor to raise the annual Pre-K budget to $645 million by FY 2010-11.   

The Governor’s commitment to pre-kindergarten expansion is both welcome and needed, but is not a substitute for child care funding.  Indeed, Pre-K and child care are complementary parts of a whole.  Pre-K targets only one age group; child care is needed by children of all ages from infancy to adolescence.  Pre-K covers only part of the day; child care is needed throughout the day and often into the night and over the weekends to cover the varied schedules of low wage parents.  Pre-K is offered only during the school year; child care is needed throughout the year. 

A robust commitment to Pre-K without an equal commitment to child care can have unintended adverse consequences.  For instance, Pre-K programs are often able to pay their teachers more than child care centers and thus attract qualified teachers away from child care centers which provide full day care.  Because the cost of caring for younger children is higher than the cost of caring for four-year-olds, the budgets of many day care centers with the youngest children are strained when children leave centers to attend Pre-K. 

By moving child care funding out of the flex fund, making sure it is clearly targeted to child care, and increasing the state’s investment in these critical services, New York will be providing a tremendous support to working families across the state.