Grants, Credits for Child Care Called Historic

In the final throes of completing its work for the year, Congress approved ground-breaking legislation Saturday that for the first time provides working families with federal dollars to help care for their children.

The measure, part of the budget package approved on the final day of the session, includes $2.5 billion in block grants over three years for states to enhance day-care programs and earmarks another $13 billion over five years in tax credits for poor families.

The legislation would primarily benefit an estimated 750,000 children below age 13 whose families earn well below the average income for their states.

Final passage was hailed as historic by advocates of child care on Capitol Hill, where efforts to achieve such legislation have been thwarted for nearly two decades.

“This was a long time in coming, and a tremendous battle,” said Sen. Christopher J. Dodd (D-Conn.), one of the bill’s primary authors. “I’m just delighted.”

Federal policy-makers, in supporting the legislation, finally had recognized that “the demographics have changed in this country, and that people are not abandoning their children or refusing to care for them,” Dodd said.

“People are in the work force because they have to be,” he added.

A long-standing deadlock over the fate of the legislation was resolved nearly two weeks ago by the Bush Administration and Senate leaders.

House Democrats, led by Reps. Augustus F. Hawkins of Los Angeles and Thomas J. Downey of New York, had championed a far more sweeping and expensive child-care entitlement bill. House and Senate negotiators had been stalled in several committees since last spring, largely over the issue of tax credits.

Indeed, until this year’s legislative logjam finally broke up in the near fiasco of the budget crisis, any child-care bill seemed doomed for this session.

In the end, negotiations continued to the wire. While the basic three-year, $2.5-billion block-grant program picked up crucial House support late in the week, tax-writing committees worked until the last minute to hammer out details of a five-year, $12.4-billion expansion of the earned income tax credit to provide additional breaks to members of working families with children.

The bill also provides for a new $500 tax credit for families with children less than a year old, adding another $600 million to the cost of the legislation.

The new federal benefits will be financed by extending the 3% telephone excise tax, which was due to expire at the end of the year.

The $2.5-billion block-grant program requires that 25% of the funds be used by the states to establish standards for day-care providers, which Dodd called “the most important element” of the measure.

“Even if you are affluent and will never receive a nickel from the legislation, the fact that we will require basic standards to be met should raise the level of confidence that when you leave your most precious possession in the world . . . (the child) will be properly cared for,” Dodd said.

The act also makes the existing dependent care credit for employment-related expenses 90% refundable. This means that taxpayers who do not have sufficient taxable income to offset the existing credit will be entitled to receive 90% of any unused credit amount in cash. The provision would apply only to those with adjusted gross incomes up to $28,000.

The bill also includes $5.2 billion over five years to provide tax credits for lower income families to help pay for health insurance.

When White House negotiators and Senate Democrats, led by Dodd, initially reached agreement on the $2.5-billion grant program on Oct. 16, House child-care advocates were absent, and both Hawkins and Downey said they were unhappy with the compromise. Hawkins had sought a block-grant program with a price tag of up to $1.75 billion a year, compared to the lower sums set aside in the compromise: $750 million in 1991, $825 million in 1992 and $925 million in 1993.

The agreement calls for “such sums as may be necessary” in the following two years, and Dodd has said he expects the total bill to reach $5 billion over five years. At the insistence of the Administration, however, the funding must go through the regular appropriations process, which means that the program must compete with other health, education and welfare entitlements.

Under the block-grant proposal, 75% of the funds to each state must be used for an array of child-care services in compliance with state and local law, whether at schools, churches or private day-care providers. This addresses Administration fears of excessive regulation of the process by local public education authorities.

To meet demands of child-care advocacy groups for more quality control, the proposal requires 25% of the funds to go to improvement programs--including strengthened regulation and increased teachers’ salaries. Some of this money would go for early childhood education and “latch-key” after-school care, based in schools or run by community groups.

This compromise formula was endorsed by the Children’s Defense Fund, an advocacy group that has been in the forefront of the yearlong lobbying effort for a child-care bill.

“This is a start, a beginning of a federal child-care program that provides a strong base on which to build,” said Helen Blank, lobbyist for the Children’s Defense Fund. Added Amy Wilkins, a fund spokeswoman: “The negotiators did a remarkable job retaining the key elements, the key purposes of the bill. This agreement is true to the bill’s origins.”

But some of those who supported the more costly House version remained unsatisfied. Rep. Patricia Schroeder (D-Colo.) vowed to “take whatever it is and build on it next year.”

Staff writers Tom Redburn and Paul Houston contributed to this story.