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Think Tank Offers Policy Prescriptions on Early Childhood

Allowing states to use combined state and federal funds to offer child care and preschool, and expanding the Child and Dependent Care Credit so that more money goes to poor families are among the early-childhood proposals outlined in a policy blueprint released this month from the American Enterprise Institute: 

Called "A Safety Net That Works," the policy prescriptions cover many federal programs meant to support low- and moderate-income families. The American Enterprise Institute, a free market-oriented think tank, may see more traction for its proposals now that Republicans control all three branches of government.

Katharine B. Stevens, whose work at AEI focuses on early-childhood programs, suggests that a handful of states—no more than five, to start with—be given the power to combine local, state, and federal money to create a seamless early-childhood program, with a particular focus on supporting high-quality child care as opposed to what she sees as a "misguided" push for public pre-K. (I have written before on Stevens' research on effective early-childhood programs and how those programs compare to pre-K.) 

The federal money that Stevens envisions using for this purpose is currently distributed through Head Start, the Child Care Development Fund, and Temporary Assistance for Needy Families, which is also known as welfare. She said that many states have already proven that they have a strong commitment to quality early childhood, including through their participation in Obama-era programs such as the Race to the Top-Early Learning Challenge. Twenty states received over $1 billion through that program to revamp their early-childhood systems. 

"This plan aims to encourage, support and highlight states that are ahead of the curve," Stevens said. And, such a pilot program could also produce innovative models that could "inspire and inform" the efforts of other states, she said.

Stevens' proposal could find a receptive audience at the U.S.Department of Health and Human Services, which oversees all three federal funding streams referenced in Stevens' policy document. Tom Price, a former House member from Georgia who was confirmed as HHS secretary Feb. 10, has advocated for a pilot program that would allow states to oversee Head Start.

The point, Stevens said, is to tear down the siloed system that currently exists. "What we want to to do is recognize that there are states that are way ahead of the federal government in understanding how important [quality early-childhood programming] is, and the efforts that they've taken to make this happen," Stevens said.

Refundable Tax Credits for Child Care

Angela Rachidi, a research fellow in poverty studies at AEI, focuses on helping low-income families find child care through tax reform. She proposes increasing the Child and Dependent Tax Credit for low-income families. Currently, the credit is not refundable, meaning that it functions by reducing a family's tax burden. But many low-income families do not pay taxes, so the credit does not apply to them. 

Rachidi suggests that the credit could be made refundable, meaning that money would flow back to low-income families regardless of their tax bill. Doing that would allow families to find child care that works for them; current child-care subsidies go primarily to center-based care during normal working hours, which presents a challenge for parents who work nights or weekends.

"We need to have more child-care assistance for those low-income families so they don't feel like they have to stick their children just anywhere," Rachidi said. "If they have a little bit more flexibility, they might be able to find a higher-quality person to offer night-time care," she said. The system would also have to be changed so that families could receive periodic payments throughout the calendar year, rather than one payment at tax time.

This flexibility would be particularly important because of recent reforms to the Child Care Development Fund, Rachidi said. Those reforms created a shift toward supporting child-care quality, but small, informal providers may not be able to meet those quality standards, making it harder for families to find providers who will accept subsidies.

(CCDF is an umbrella term for two programs: the TANF Child Care Block Grant and the Child Care Development Block Grant, or CCDBG.)

Rachidi said that President Donald Trump signaled his interest in the issue on the campaign trail, which may provide the impetus for change. 

"There's still some reluctance on the right to provide high levels of assistance directly. It comes from this issue or belief that you're penalizing stay-at-home parents, or incentivizing people to not be a stay-at-home parent," Rachidi said. Though it's unlikely that the current interest represents a complete shift away from such concerns, "I recognize there is an opening right now," she said. 


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