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HomeMy WebLinkAboutAgenda - 11-14-2006-7bORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: November 14, 2006 Action Agenda Item No. i~ ~'~; SUBJECT: Final Report of the Child Care Task Force DEPARTMENT: Social Services PUBLIC HEARING: (Y/N) No ATTACHMENT(S): INFORMATION CONTACT: Child Care Task. Force Report Nancy Coston, 245-2800 PURPOSE: ~To present the report of the Child Care Task Force to the Board of Commissioners. BACKGROUND: In March 2006 the Board of County Commissioners appointed a Child Care Task Force to address specific issues that had been identified at various community meetings earlier in the year. The Task Force was to complete its assignments and then report back to the Board of County Commissioners with its recommendations. Commissioner Foushee agreed to chair this effort and the charge given to the task force included: • To create community awareness of and support for the benefits of early childhood education • 'To increase private, business and public financial contributions for child care subsidies or scholarships • To improve workplace support for children and families The task force met numerous times and also utilized special sessions to gather input from consumers and providers. Also, a subcommittee organized with the help of the two chambers of commerce focused on employer issues and the discussions of this subcommittee were critical to the success of the task force. The report summarizes the current status of the subsidy programs ,in Orange County and provides information on some options for partnership among providers, funding organizations and employers so as to enhance the available resources to serve all families. There was consensus on many issues including the need to acquire more funds for subsidy to assure that families can receive assistance in a timely manner. Last year a number of factors had resulted in persons being on the waiting list for over a year and all task force members found this to be unacceptable. There was considerable discussion about the need to provide affordable care to a all families, to assure that quality care is provided and to solicit the support from employers for the needs of families. Employers who were involved in the task force were able to discuss their needs for dependable employees and to discuss the role that dependable child care contributes to successful employees. A list of recommendations is included in the report and includes the following: 1. Establish a baseline for subsidy programs so that performance can be measured. Include total subsidy dollars, average length of time on wait list before receiving assistance, and total number of unique funders. 2. Continue to seek additional support for child care subsidies from all county employers. 3. Request that the local chambers of commerce continue work with local businesses and county agencies to educate and include more employers in creative problem solving regarding child care. 4. Explore financial and nonfinancial incentives, including but not limited to tax breaks, special recognition, etc., for employers who assist employees with child care needs. 5. Request that county staff work with schools, developers, UNC, Twin Creeks, Carolina North, Durham Technical Community College and other entities that may be expanding their sites so that child care needs will be considered during new development. 6. Request that county staff work on efforts to educate the public on the value of early child development. . 7. Agencies who provide subsidy money should explore issues of access, including but not limited to common applications. 8. Request that Orange County Government, UNC, Town of Chapel Hill, Town of Carrboro, and other agencies, at a minimum, maintain their current level of support. Some of the recommendations in the report are already being implemented in Orange County. Specifically additional funds have been provided by the state and by the Orange. County Board of County Commissioners for subsidy. Many families from the waiting list will receive subsidy due to these changes. The County has also implemented a model approach of paying back an equivalent amount of funds for any county employees who received subsidy in the previous year. Hopefully this approach will be duplicated by other employers. The issues related to child care and subsidies can be complex and at times it is difficult to assess the impact of the community's efforts to address the problem. Therefore one of the recommendations is that initial benchmark data be developed and that the Social Services Board report annually on the progress as shown in this data. FINANCIAL IMPACT: There is no immediate and direct financial impact associated with accepting the report. RECOMMENDATION(S): The Manager recommends that the BOCC accept the report from the Child Care Task Force, assign'the responsibility for implementing the recommendations to the Social Services Board with help from the County Manager's Office and sunset the Child Care Task Force. ORANGE COUNTY, NC ORANGE COUNTY CHILll CARS TASK FORCE CHILD CARE IN ORANGE COUNTY ORANGE COUNTY CHILD CARE TASK FORCE BACKGROUND On November 29, 2005, a special briefing for Orange County employers on the impact of clld care on today's workforce was sponsored by the Orange County Board of Coininissioners and other local organizations. The purpose of this briefing was to begin a community discussion about the current chld care resources and the needs of children in our community., The briefing included information about the economic impact of child care on businesses and some of the options currently available to employers. Commissioners Foushee and Carey attended the briefing. At the end of the meeting, Commissioner Foushee recommended that the Board of Commissioners appoint a task force with broad representation including employers and charge the group with raising community awareness, encouraging greater financial participation by the private, business and public sectors in providing child care resources, and championing workplace support for children and families. During the BOCC annual retreat and work sessions, the Commissioners further discussed establishing a Task Force to study the various issues related to chid care. The Commissioners indicated their interest and support for tlis concept and provided additional input about the purpose of the task force. Based on tlis information, the Commissioners established the Orange County Chld Care Task Force. The following is the charge given to this task force. • To create community awareness of and support for the benefits of early childhood education • To increase private, business and public .financial contributions for child care subsidies or scholarships • To improve workplace support for children and families The Task Force members include individuals representing university, business, chld care providers, schools, non-profit, and local government interests. Attaclunent A is a list of those organizations and persons serving on the task force. INTRODUCTION This report provides a broad picture of the significant contribution that child care subsidies make to working families receiving them, to the children who benefit directly from the care, and to the economic well-being of the county as a whole. It also contains discussion of the issues examined, do'curnents that describe the current resources and current needs for child care subsidies, and a description of the considerable economic advantage for both families and businesses that child care subsidies provide. Finally, this report provides recommendations for the BOCC on continuing to lead the way in providing affordable chid care for Orange County residents. WHY IS CHILD CARE NECESSARY? Child care is an important and necessary part of the lives of most working families in Orange County. Parents or guardians map utilize child care for a variety of reasons. The parent(s) may work full or part-time, attend school, have an illness necessitating chid supervision, or require a break from the 2 5 demands of child care. Without available child care, aparent/guardian may be in danger of losing a job or forced to leave a clvld in less than ideal conditions. For the majority of families there are relatively few options for safe and secure child care. Fanvlies map utilize relatives, babysitters, and neighbors, but most tend to seek more permanent solutions in the form of licensed child caxe homes or centers. COSTS OF PRIVATE CARE There are several types of licensed child care available; the type of care appropriate for one family map not be the best for another. A child care home is licensed to care for five or fewer preschool age children, and an additional three school age children. Licensing as a center is required when six. or more children are cared for in a residence or when three or more children are in care in a building other than a residence. Additionally, many schools, both public and private, offer before and after school care. In order to increase the quality of child care in North Carolina, in September 2000, the Division of Child Development issued star rated licenses to all eligible Child Care Centers and Family Child Care Homes.l The star rated license is a voluntary licensing system where a child care program can earn points in two different areas: ^ Program Standards ^ Staff Education Programs that are meeting higher standards can receive recognition for their efforts; and families can use this information to search for a clvld care program. The increased focus on quality has led costs to rise sharply in the last fifteen years. In 1991, the average cost for a clvld to attend private dap care was $239. In 2001, monthly clvld care costs for an infant, the most expensive children to care for, was in the neighborhood of $700. Today, parents can pap over $$1100/month for an infant to receive full-time dap care. Care for preschool and school-age (part-time) clvldren is less, although it is important to note drat in Orange County the monthly cost of clvld care for all age groups, on average, ranges from X800 to $1,100. These costs put private care out of the reach of most low and middle-income families. FEDERAL, STATE AND COUNTY SUBSIDY RESOURCES The subsidy programs, offered by all North Carolina counties and financed with public money, are the only hope dzat low-income families have of secw.~ing dais quality, cosily care. Parents making less dean a prescribed income, currently based on 75% of state median income for most funds, and meeting certain eligibility criteria maybe eligible for help to pay part of d7eir clvld care costs. The amount of funding allocated to each county in Nortlz Carolina is determined by legislation and is directly affected by die amount of funding in die federal budget. In Orange County die majority of this funding is administered by die Department of Social Services. Child Care Services Association adtniu.isters 1.8 million dollars for scholarships with funding from Smart Start, LTNC, United Way and other funding sources. If a family meets the eligibility criteria for the Orange County Department of Social Services, a portion of the cost of child care will be paid for them. Parents are free to choose a child care arrangement that best fits their needs as long as the provider chosen participates in the Subsidized Child Care Program. The amount the state paps for child care depends on the family's situational criteria, dze family's income, and die cost of the clvld care provided. (See Attaclunent B for state market rates paid by Orange County). Most families must qualify based on need and income, and are required to pap a percentage of clvld care costs based on their countable monthly income. The percentage depends on the number of people in the family, but ranges from,8 to 10 percent of income. As mentioned above, additional sources of subsidy come from specialized funding that map target specific groups. Examples of this type of funding are Smart Start, More at Four, the I7NC Chancellor's Fund, and the additional funding allocated by the Board of County Commissioners in the Orange County budget. WAITING LISTS In recent years, the costs of and need for care have become so high that the demand for dze subsidy system has far outweighed the supply. In Orange County, when insufficient funds are available to meet demand, waiting lists are implemented. There have been long child care subsidy waiting lists for the last few years, with Fiscal Year 2005- 2006 proving to be the worst. Not a single child was taken off of the waiting list at Social Services between March 2005 and June 30, 2006, so that some families lzad been waiting over a year to receive subsidy. While funding to Social Services has increased the last few years, the increase was not enough to cover all the fanvlies requiring subsidy when rising costs are taken into account. The state budget crisis has also affected funds available through Smart Start, causing them to either hold steady or decline in recent years. At the same lime, child care providers in Orange County worked very hard to improve their quality by sending more of the staff to school, Hiring better educated staff, improving their clvld-to-staff ratios and earning higher star ratings. To support these changes in quality, they needed to increase their tuition rates for care. Higher tuition rates mean higher payment rates for child care subsidy. Higher costs per child per month without a commensurate increase in funds available has meant tliat fewer children can be served and waiting lists have increased. It also means that fewer parents are able to afford the costs of care on their own. , The parent(s) in the majority of families both receiving subsidy and waiting are employed. The income generated by these working parents is simply not enough to be able to meet all the family's basic needs and afford child care. (See Attaclunent C for a list of the top employers of parents wlzo are waiting for or currently receive Child Care Subsidy through the Orange County Department of Social Services.) Clvld care subsidy waiting lists remain a critical issue for Orange County. Additional funds for fiscal pear 2006-2007 were allocated by the state and die Board of County Coininissioners in Orange County so that families who have been waiting die longest are now receiving subsidy. While Orange County is currently serving roughly 600 clvldren in the subsidy program, tlzere are still over 150 clvldren in Orange County who are eligible for subsidy assistance, but are not receiving it due to lack of funds. These clvldren and their families are waiting. DISCUSSION ISSUES Because of the various backgrounds and interests of the Task Force Members, subcommittees were created to allow participants to identify issues and attempt to solve problems specifically relevant to their pursuits. The consumer subcommittee consisted of county-wide focus groups offered on two separate evenings during the week, one in Hillsborough and one in Chapel Hill. The child care 4 provider subcommittee consisted of a discussion held at the Child Care Providers Association June Meeting. The business subcommittee met on three occasions at the Chapel Hill-Carrboro Chamber of Commerce. The committee consisted of large and small employers from the northern and southern portions of the county. For a list of all employer participants, please see Attachment D. The following is a list of issues identified by die various subcommittees. • The number one issue related to subsidy is the lack of sufficient funding so as to assure that all eligible families can receive needed service in a timely manner. • Waiting for subsidy is a hardship on families trying to work. • For parents with no child care and no way to afford the high costs, high quality is not as important as a safe place for the child(ren) that allows the parent to gain or maintain employment. • Costs for child care are too high. • Families need support from employers. • Even a small amount of financial assistance would make a difference between working and losing a job. • Orange County Government should explore the possibility of a county-run center for county employees and/or residents. • Providers are paid rates for subsidy that are lower than what private paying parents are being charged. • Continuity of care for children should be a priority. • Employers are interested in child care so drat they can have dependable employees who attend work regularly and who can focus on dleir jobs. • There are many employers wlio are willing to support employees' clvld care needs, and who map be able to provide on-site child care or other support. • All government employers in Orange County should provide some type of support for child care subsidies and be models for other employers. • There are various models for employers to provide support for employees' child caxe needs including sponsorslvps, onsite child caxe centers and flexible spending programs. • Some of the eligibility requirements of the subsidy program may actually penalize employees if they take advantage of employer financial incentives. • Families whose income falls outside of the guidelines for scholarships or subsidies also have financial issues in attaining quality child care. • Government should explore ways to incept private enterprise to aid employees with child care. . Wlvle participants did not agree on all issues, die one common thread through all discussions was die need for additional money for clvld care subsidies. SOLUTIONS Based on discussions and feedback from the subcoirunittees outline above as well as on die charge given to die committee, the Task Force focused efforts on exploring possibilities for increasing private, business and public financial and in-kind contributions and support for child care. The Task Force worked with local businesses and local business leaders to determine what kinds of information employers would find helpful when attempting to assist employees with d~eir child care needs. The three main ideas drat the business community expressed interest in were exploring different benefit models that might be tailored to suite individual business needs, investing in 5 8 scholarship and/or funding models that would allow businesses to contribute to existing subsidy programs for the benefit of their own employees or for the benefit of all, and building or contributing to the building of on-site centers designed to serve the needs of the business's employees. BENEFIT MODELS There are several benefit models that employers can utilize to pap or help employees pap for clvld care expenses. Some, like the "cafeteria plans" are utilized more often by smaller businesses or as a portion of the benefit package at a larger employer. Standard. benefit packages are more widely used and are found at most larger businesses. Internal Revenue Code Section 125 describes an arrangement by which an employer establishes a plan so employees map choose to reduce pay before taxes (pre-tax contributions), thereby avoiding tax on those dollars used to purchase benefits. The amount set aside is exempt from federal and state income taxes and FICA (Social Security) and Medicare taxes for the employee, and it is exempt from the Social Security and Medicare payroll tax match for the employer. Benefits that may be included in a Section 125 Plan include medical, dental, vision, group-term life, disability, and dependent care assistance. In Code Section 125, the IRS refers to these types of plans as "cafeteria plans." The term "cafeteria plan" is used by the IlZS to describe any arrangement in which a participant leas a choice between cash (taxable) and benefits (pre-tax). The most common types of Section 125 Plans are explained below: Insurance Premium Conversion: for payment by the employee of a portion of the cost for qualified insurance benefits, such as health, disability, or dental. Flex Plan or Flexible Benefit Plan: Premium Conversion with Reimbursement Accounts (Medical, Dependent Care, Adoption Assistance). Full-Flex Plan or Cafeteria Plan: a wide choice of benefits, usually with employer credits that the employee may allocate towaxd the cost of one or more benefits (including cash). In addition to these "cafeteria" style plans, employers map opt to provide child case costs as a direct benefit in a standard plan, similar to health, dental and life insurance plans offered by many large employers. In these cases, employees without children would get none of the benefit, much like an employee who does not use the employer health plan. SCHOLARSHIP AND. OTHER FUNDING MODELS For businesses that are not able to adjust their benefit plans, scholaxsliip and other funding models are another option for assisting employees with child care needs. VoucherModel.• Employers contract with child care providers or child care centers in the community for services for their employees. Parents are given vouchers for all or part of their child care costs and the child care programs redeem the vouchers for payment through the employer. KeimburrementModel.• Employees choose the child care arrangement best suited to their needs (child care center, family clvld care home, after-school program) and then receive a reimbursement from the company for some portion of the costs. 6 i Purchase of Space: The employer arranges to "own" a specified number of spaces in a local chld care program. Parent fees may cover most or all of the cost of any spaces used, but the company typically covers all or a portion of the cost of the unused spaces so that the program can afford to keep the spaces open for the company. Conso~~ium Model.• A number of employers come together on an industrial or geographic basis and pool resources to conduct joint child care projects. Consortium members generally share start-up costs and in return receive priority enrollment for their employees' chldren. Sometimes a specific number of slots are set aside for each company. Operating costs, however, are usually funded tlzrough a combination of parent fees and contributions from the employers. Member corporations may choose to subsidize their employees' fees through a voucher or reimbursement program (see first option). On-Site or Off-Site Center An on-site or off-site center sponsored by an employer at the work site or at another location. The center can be operated by the employer or by a nonprofit or for-profit child care provider. Employers usually pay all start-up costs; any operating losses that occur in the early stages of the center before it is fully enrolled; and some portion of the ongoing operational expenses. Parent fees cover the balance of the center's operating expenses. CURRENT PRACTICES There are currently several Orange County employers that have established child care support for their employees and/or are doing innovative tlings to provide additional money for chid care in the county. Subsidy KeimbursemeJZt.• Employers can pay back in to the subsidy system for subsidy dollars used by their employees. Orange County Government currently participates is this program and is helping to free up subsidy dollars for other families. . On-Site Child Care: Employers run centers on-site for their employees, often at a reduced rate. Carol Woods has an on-site five star center that is run by the YMCA. The center accepts age eligible children of employees and is subsidized at a rate of X225/month for Carol Woods' employees. There is no cost for children of YMCA employees to attend the center. The Center is also open to non- Carol Woods affiliated children between the ages of tliree and five at a regular rate. LTNC and UNC Health operate Victory Village, a child care center that serves students and employees of the university and the hospital. Tlis particular center does not subsidize employees and students because of the scholarship program offered by UNC. SAS, Inc. aCary-based corporation partnered with Bright Horizons to run its two on-site child care centers, and two near-site centers. The day-to-day operations are managed by Bright Horizons, a child care center. SAS subsidizes the cost of child care in the centers for its employees, so drat they play a flat rate of X300 a month. Also partnering with Bright Horizons in the State of North Carolina are GlaxoSmitlzK7ine, Blue Cross/Blue Shield, IBM, Duke University, and Wachovia. 7 ~~ Scholarrhp Funds/Matchi~zg Funds: Employers set up scholarship funds so that tlzeir employees get help to pay for child care. This is similar to the government run subsidy program, but the funds are private, and are earmarked for the employees of a specific business. These programs can be managed by the same groups that manage regular subsidy funds; Orange County Social Services and Child Care Services Association. The amount of money comnvtted by the employer may also be matched by Orange County under the Department of Social Services scholarship plan. UNC works with Clvld Care Services Association to fund scholarships for students and university employees. Students give to their own scholarship fund via activity fees, and the university donates money to directly subsidize eligible employees. Direct Donations: Direct donations can be made to subsidy programs to help alleviate the waiting by all families. This method is used more often by public entities. The Town of Chapel Hill donates X10,000 annually to Child Care Services Association to support clvld care in Orange County. Tlie Town of Carrboro donates X5,000 annually to Clvld Care Services Association to support clvld care in Orange County. Underzvriting.• Costs of starting up or running a child care program can be underwritten by donating space, utilities, etc. to help lower costs of care. Orange County currently donates space uti]ized by several child care centers in the county, including Cedar Grove Dap Care Center and Community School for People Under 6. Benefit Option.r.• Many employers in Orange County, including Orange County Government, offer flexible spending accounts and/or other benefit plans to their employees that aid families in meeting their child care needs. POSSIBLE STRA.T'EGIES Based on the information above provided to the Task Force, the following possible strategies were identified. 1. Seek additional funds for subsidy including requests to government entities and private funding organizations. 2. Develop partnerships with employers to create additional opportunities to maximise resources. This may include sponsorslvps, matching funds, benefit packages, direct contributions for subsidies or direct provision of child care. 3. Identify alternative incentives available for employers to provide to their employees that will not adversely impact any subsidy payments. Provide information to all employers on subsidy rules and these alternatives. 4. Continue to explore other child care models that map work for local employers. 5. Initiate a marketing campaign to inform employers of the role that clvld care plays in their workplace and educate employers regarding options to assist their employees in secui7ng affordable, quality care. 6. Plan for clvld care sites at new large developments. 7. Explore the possibility of child care sites at public schools, and plan for these sites when building new schools. 8. Explore expediting processes, tax incentives, and/or no interest loans for new child care programs aging to open up. RECOMMENDATIONS used on the subcommittee reports and the initial charge of the Task Force, the group compiled the following list of recommendations to the Board of County Coimnissioners. 1. Establish a baseline for subsidy programs so that performance can be measured. Include total subsidy dollars, average length of time on wait list before receiving assistance, and total number of unique fenders. 2. Continue to seek additional support for child care subsidies from all county employers. 3. Request that the local chambers of commerce continue work with local businesses and county agencies to educate and include more employers in creative problem solving regarding clvld care. 4. Explore• financial and nonfinancial incentives, including but not limited to tax breaks, special recognition, etc., for employers who assist employees with child care needs. 5. Request that county staff work with schools, developers, LTNC, Twin Creeks, Carolina North, Durham Tecluucal Community College and other entities flzat may be expanding their sites so that child care needs will be considered during new development. 6. Request that county staff work on efforts to educate the public on the value of early clvld development. 7. Agencies who provide subsidy money should explore issues of access, including but not limited to common applications. 8. Request that Orange County Government, LTNC, Town of Chapel Hill, Town of Carrboro, and other agencies, at a rninitnum, maintain their current level of support. It is recommended that the Social Services Board report back to the Board of County Coininissioners annually on the activities that have occurred and on the progress being made in these areas, particularly on the effort to increase financial support for subsidy programs.