11 SB12-022: Concerning Maintaining Child Care Assistance for Working Families Possible Scenarios Bell Policy Center

22 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)

33 CCCAP BACKGROUND A federally funded program CCDF block grant Requirements <13 years of age Eligible activity Income below 85% SMI County administered Eligible activities Income eligibility levels Provider reimbursement rates

44 STATE’S ROLE Sets the parent fee schedule for the entire state (3)

55 SB (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

6 ASSUMPTIONS 3 Counties: Logan, Denver, Mesa Family of three: 1 parent, 2 children (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 6

7 7 COUNTY DATA CountyLoganDenverMesa TypeRuralUrban Number of Low Income CCCAP Families (5) 70 cases2,099 cases837 cases Waitlist/Number (6)no waitlist401 cases/790 children48 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/month1,623/month$1,010/month Child Care as % of Income50.32%63.70%29% Parental Contribution at Termination (3) 10% of income=200.70~ $201/month 12% of income = $306/month14% 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

8 SCENARIO 1: EQUAL MONTHLY INCREMENTS OVER TWO YEAR PERIOD Monthly Increment Logan = $34 Denver = $55 Mesa = $22 8

99 SCENARIO 2: STEEPER INCREMENTS IN YEAR 2 (33/66 BREAKDOWN) Monthly Payment Increments CountyLoganDenverMesa Monthly Increment: Year 1 $23$37$15 Monthly Increment: Year 2 $45$73$29

10 SCENARIO 3: STEEPER INCREMENTS IN YEAR 2 (25/75 BREAKDOWN) Monthly Payment Increments CountyLoganDenverMesa Monthly Increment: Year 1 $17$28$11 Monthly Increment: Year 2 $51$82$33

11 THE STATUS QUO

12 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

13 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 (3) Colorado Division of Child Care (2011). Child care and development fund for Colorado: FFY 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, 68 th Colo. Gen. Assembly (2012). (5) Colorado Division of Child Care (2010). CCCAP annual program information: State and county for Received through personal communication with Leslie Bulicz, Associate Director of the CO Division of Child Care on 10/28/2011 The 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, 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 Denver, CO: Colorado Department of Human Services. Attachment 2.7.1: Payment Rates for Child Care Services