Testimony of Audrey Kasselman, Policy Analyst, before the Committee on Housing

April 9, 2024
Person Testifying: Audrey Kasselman
Title: Policy Analyst, DC Action
Testimony Heard By: Committee on Housing
Type of Hearing: Budget Hearing

Councilmember White, members of the Committee on Housing, and staff, thank you for the opportunity to submit written testimony. My name is Audrey Kasselman and I am a resident of Ward 1. I am the Early Childhood Policy Analyst at DC Action and a member of the Under 3 DC coalition. Under 3 DC is a coalition that is committed to building a racially just early childhood system and to securing a strong start for every infant and toddler in the District. My testimony will focus on the critical need to fully fund the Child Care Subsidy program. 

Child Care Subsidy Program

Impact of the Child Care Subsidy Program

Many families with young children in the District rely on child care so that they can go to work or school, knowing that their children are developing and growing in a safe, nurturing, and positive early learning and care environment. High-quality early education supports children’s cognitive, physical, social, and emotional development. Yet, the cost of child care is out of reach for too many DC families. According to OSSE’s 2023 Cost of Care report, the average cost of center-based infant care for one child in DC is $2,123 per month. At this rate, child care costs for just one child make up more than 20% of the median income ($108,492) of families with children in the District. For context, according to the U.S. Department of Health and Human Services, child care is considered affordable when it represents less than 7% of a family’s income. To be able to afford child care, according to this definition, a family with an infant or a toddler would have to make $364,000 or $334,729 a year, respectively. This is where the Child Care Subsidy program comes into play. 

The Child Care Subsidy program in DC depends on federal and local funds to help families with very low incomes afford child care by covering the full cost of their child care fees. Families with moderate and low incomes make a co-payment that does not exceed 5.5% of their income based on a sliding income scale. The subsidy program, via OSSE and DHS, then makes payments to child care providers to cover part of the difference between the family’s contribution and the cost of running an early learning program through a daily reimbursement rate designated by the District. 

Eligibility and Participation in the Child Care Subsidy Program

District families with children under age 13, whose income is below 300% of the federal poverty line (approximately $74,000 per year for a family of three), are eligible for the Child Care Subsidy program if a parent is working or in school. In FY23, 4,720 infants and toddlers in DC benefited from the Child Care Subsidy program and 267 or 60% of all child development homes and centers participated. This does not mean, however, that 60% of all child care seats accept subsidies, as some participating programs have very few subsidy-eligible seats and others have a majority subsidy-eligible seats.

There is great potential for the Child Care Subsidy program to increase access to affordable, high-quality early learning opportunities for thousands of DC children, but to do so it requires full funding. This critical program serves as the lifeline for thousands of DC families and any funding cuts will likely result in fewer families with access to child care for their children. 

Child Care Subsidy Application Process at DHS

Over the past six months, the Under 3 DC Coalition has heard directly from parents and providers about the challenges and barriers that exist with the Child Care Subsidy program. Families and providers shared that the application process is burdensome and complicated. Families can apply for the program in person at a DHS processing center, in person at a Level II child care provider, or online. Across the application types, it takes too long for a Child Care Subsidy application to be processed. Some families cited waiting up to two to three months for their application to be approved. This means months without child care for their baby, which, for many, means they are unable to work or continue their education. In some cases, if the application is not assigned a case worker within 30 days, the applicant has to start over and resubmit their application. OSSE and DHS must work together to ensure a smooth, timely, minimally burdensome application process for families. And, both agencies require full funding for their portion of the Child Care Subsidy program to be able to fully staff and process subsidy applications in a timely manner. 

Risks of Not Fully Funding the Child Care Subsidy Program

The Child Care Subsidy program supports the well-being and development of infants and toddlers, while promoting economic stability for their parents. Local funding for the Child Care Subsidy program sits at OSSE and DHS (via a transfer from the Temporary Assistance for Needy Families (TANF) program). In the FY25 budget, Mayor Bowser proposed a $10 million recurring cut to the OSSE Child Care Subsidy program funding and proposed to level fund the TANF transfer at DHS. We urge the Council to protect all TANF transfer dollars for the critical Child Care Subsidy program and to restore all cuts to the OSSE Child Care Subsidy program funding.  If the Council does not fully fund the Child Care Subsidy program, there are a number of risks that would negatively impact the early care and education system in the District. 

First, reducing funding for the Child Care Subsidy program would likely result in fewer families being served. For many families with low incomes, the subsidy program is their only option for accessing high-quality child care. Cutting funding would force many families to make a choice between continuing to work or pursue their education and their child’s participation in a child care program, placing them at an increased risk of financial instability. 

Furthermore, reduced funding for the Child Care Subsidy program could lead to lower reimbursement rates for child care providers who receive child care assistance through the program. If subsidy reimbursement rates are too low, early learning programs will not be able to participate in the program and cover their costs, leading to lower quality education and care, and fewer choices for families paying for child care with a subsidy. It is important to note that subsidy reimbursement rates are already lower than the cost of care for child care centers serving infants and toddlers across all quality rating levels. Cutting funding will only exacerbate the shortage of affordable child care options in the District, increasing stressors and pressures on a currently underfunded system. 

FY2025 Budget Ask for the Child Care Subsidy Program

We urge you to prioritize fully funding the Child Care Subsidy Program at $89 million in local funds ($64.7 million at OSSE and $24.3 million from TANF via DHS). Given the current state of child care affordability in DC, the District budget should be increasing, not decreasing, funding for the Child Care Subsidy program to ensure that more families are able to participate and to increase reimbursement rates to make participating providers whole. 

Thank you for the opportunity to share about the dire importance of fully funding our early childhood education system, including the Child Care Subsidy program.