Child Care: Narrow Subsidy Programs Create Problems for Mothers Trying to Work

GAO discussed federal child care subsidies for low-income families, focusing on: (1) how current federal programs create service gaps for low-income mothers trying to work; and (2) issues pertaining to the consolidation of programs as a means of closing the gaps. GAO noted that: (1) the fragmented nature of child care subsidy programs creates service gaps that constrain low-income mothers' ability to work; (2) program differences that create service gaps include client eligibility and limits on employment-related activities, income, and the duration of subsidies; (3) current programs provide little incentive for the states to serve the working poor; (4) states tend to use funds targeted to the working poor's child care needs for welfare benefits when they deplete their welfare funds; (5) program consolidation could give states increased flexibility to tailor their programs to low-income families and provide continuity of services; (6) consolidation could create problems concerning matching state funds, allocation formulas, and funding caps; (7) trade-offs between state flexibility to determine whom to serve with subsidies and congressional interest in accountability for spending federal funds and positive program results need to be considered; and (8) welfare reform proposals could increase recipient participation in certain programs and further divert child care subsidies from the working poor.