Analysis of new federal rule says it could help with child care costs in Ohio

An Ohio think tank is urging state support for a proposed federal rule could lower child care costs and benefit providers as well.

The importance of access to high-quality child care is not lost on the country (or Ohio), but despite that, the U.S. Health and Human Services Department said, “Most families struggle to find or afford high-quality child care for their children because of limited supply,” thus the basis for rule changes, the department stated.

“There are not enough programs to serve families who need it, many programs do not offer care the hours or days families require it, and unaffordable costs lead parents to select lower quality care or forego it altogether,” HHS said in the proposed rule.

More than half of families in the U.S. live in what HHS calls “child care deserts,” communities where the supply of child care is outpaced by demand 3 to 1.

Contributing to the lack of supply is unaffordable and inaccessible child care that still only operates with less than 1% profit margins, the federal agency said.

The new rule would place a maximum limit on the amount of “co-pay” low-income families pay for publicly-funded child care. If approved, co-payment would be capped at 7% of household income.

In Ohio, a child can be enrolled in PFCC if the family’s gross monthly household income is 145% or less of the federal poverty level, according to Will Petrik, project manager for the think tank Policy Matters.

Households can remain enrolled in the federal program so long as their income stays below 300% of the federal poverty level, or $5,758 a month for a family of three.

The cap on co-pays would alleviate the stress of paying for something that is universally considered an important starting point for the education of a child.

“These changes to the co-pay policy will lower child care costs for families — especially if Ohio lawmakers choose to pursue the optional waiver,” Petrik wrote in an analysis of the proposal.

Ohio Department of Job & Family Services would have the flexibility to waive co-payments for a child with a disability or households with a monthly income at or below 150% of the federal poverty level.

The most recent state budget pushed initial eligibility for the child care program from 142% of the poverty line to 145%, but Petrik said that “still puts Ohio near the bottom in terms of access to state-subsidized child care.”

“Ohio lawmakers could do much more for Ohio families by significantly increasing initial eligibility to 300% of the federal poverty level,” he wrote.

In terms of providers, the rule could change how base payments are calculated and would bring payment before services, rather than as a reimbursement as is currently done based on attendance.

Payments under the proposed rule would be based on enrollment, rather than reimbursed by the ODJFS based on attendance, bringing the system in line with private pay systems.

“These changes will lead to a more stable financial environment for child care providers, which in turn encourage more providers to participate in PFCC, leading to an increase in child care options, improved quality of care and expanded parental choice,” according to Petrik.

Another element of the proposed rule that Petrik said the state should consider is “presumptive eligibility,” which gives a child “temporary, immediate access” to programs while the application process is happening. Using that system would prevent “unnecessary delays for families to receive essential services,” Policy Matters urged.

The analysis of the proposed rule did acknowledge that with the expiration of the American Rescue Plan funds and a “lack of ongoing sustainable state funding from Ohio lawmakers,” the state would find it challenging to fully implement the changes in the proposal.

“As Ohio leaders work to make Ohio the best state for families, they should pursue the strategies included in the proposed rule,” Petrik concluded.

This version includes a correction to an initial eligibility percentage typo.