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The Consequences of Insufficient Household Income

This new Consequences of Insufficient Household Income report provides a deeper level of understanding of the choices that ALICE and poverty-level families across the country make when they do not have enough income or assistance to afford basic necessities, and the consequences of those choices.

Strategy 3: Access Child

Strategy 3: Access Child Care Assistance Many states and local communities have programs to make child care more affordable, including subsidies and vouchers. Programs differ by state and community, and some local areas have additional nonprofit assistance. Eligibility varies based on income, family size, and type and cost of care. Access to child care assistance is often provided on the condition that a parent is working, looking for employment, or in school full time. In most states, families are required to pay for a portion of their child care costs. The eligibility level for assistance in most states is approximately 200 percent of the FPL, though in some states it may be as high as 250 percent. At these levels, many ALICE families do not qualify for assistance, but they still struggle to afford quality early care and education (Schulman & Blank, 2014). Consequences The benefit “cliff”: Parents juggling their roles as caregivers and income earners balance their resources from wages, government assistance, and support from social networks such as family, friends, and local service providers. Earning above a certain level can cause some ALICE families to lose child care benefits (the “cliff” effect). In many cases, parents have to choose not to work extra hours at their job, not to take a raise, or not to accept a job offer in order to remain eligible for their child care subsidy (The Indiana Institute for Working Families, 2012; East & Roll, 2010; Randolph, 2014). Strategy 4: Live in a District With Publicly Funded Preschool Public preschools provide great savings to ALICE and poverty-level families. Between 2014 and 2015, 42 states and the District of Columbia offered state-funded preschool programs that collectively served almost 1.4 million children nationwide. These programs allowed 5 percent of 3-year-olds and 29 percent of 4-yearolds to benefit from state-funded preschool, a significant increase from 14 percent of 4-year-olds in 2002. In addition, federally funded Head Start programs brought the national public pre-K enrollment rate to 41 percent of 4-year-olds and 16 percent of 3-year-olds (National Institute for Early Education Research, 2015; Reardon & Portilla, 2015). State-funded pre-K programs have been found to improve learning, especially for economically disadvantaged children (The Pre-Kindergarten Task Force, 2017). Consequences Persistent gaps in care: State-funded preschool enables many children in low-income families to attend preschool who otherwise would not have access. However, most publicly funded preschool programs do not offer wraparound care (before and after school hours) or summer care. ALICE families who work from 9 a.m. to 5 p.m. year-round need care from 8 a.m. to 6 p.m. (and often longer) during the school year and over the summer. Some preschools offer wraparound care for an added fee; many do not offer any programming during the summer. So while families may save costs overall by using public preschools, they often still have to pay for wraparound and summer care or patch together plans for those time periods that rely on uncertified caregivers, such as family, friends, or in-home providers. During the school year, they also have to work out transportation between those additional care sites and their preschool (The Pre-Kindergarten Task Force, 2017). Inconsistent program availability: Finding publicly funded preschools is often difficult, as they still only serve a small percentage of the population. Enrollment of 3- and 4-year-olds in statefunded preschools has grown by only one percentage point since 2010, despite an overall spending increase to over $6.2 billion nationwide in 2014 (National Institute for Early Education Research, 2015). 28 UNITED WAY ALICE REPORT – THE CONSEQUENCES OF INSUFFICIENT HOUSEHOLD INCOME

The slow progress in national enrollment is due to a wide variation in state enrollment rates as well as inconsistent funding at the state level. For example, during the 2014-2015 school year, Washington, D.C., Vermont, Florida, and Oklahoma each served over 70 percent of their state’s 4-year-olds, while 12 states served fewer than 10 percent of 4-year-olds and 7 states had no program at all. New York increased spending by $358 million from 2013 to 2014 to fund full-day public preschool programs, while three other states decreased funding by more than $10 million each (National Institute for Early Education Research, 2015). Risk of lower-quality early education: The quality of publicly funded preschool also varies between states. Out of the 42 states that have public preschool programs, only 6 met all 10 of the quality standards set by the National Institute for Early Education Research; 7 states met fewer than half of the standards. Inconsistent quality in preschool programs particularly affects families who live in low-income or rural areas, which are less likely to have high-quality preschool facilities. When preschool programs do not meet quality standards, they can lead to poorer educational outcomes (National Institute for Early Education Research, 2015; Guptaa & Simonsen, 2010; Guernsey, Williams, McCann, & Bornfreund, 2014). Strategy 5: Go Without Child Care Faced with challenges of cost and access, some ALICE families simply forgo child care. Nationally, child care attendance remains closely tied to income, particularly in terms of preschool. In 2014, less than half of 3- and 4-year-olds in families earning under $50,000 a year were enrolled in preschool, whereas among families earning more than $75,000 a year, 60 percent were enrolled, and among families in the top income quintile, 76 percent were enrolled. UNITED WAY ALICE REPORT – THE CONSEQUENCES OF INSUFFICIENT HOUSEHOLD INCOME 29

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