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Vouchers for Housing and Child Care

Common Challenges and Emerging Strategies

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Document date: August 01, 2007
Released online: September 20, 2007

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

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Abstract

Vouchers play an important role in federal efforts to help low-income families obtain both housing and child care.  These programs constitute essential components of the promise of welfare reform to encourage and support work among low-income families.  And both types of vouchers have the potential to enhance long-term outcomes for children.  Although federal housing and child care voucher programs differ in important respects, they also face common challenges, and innovations in one area can potentially inform efforts in the other.  This brief highlights promising strategies for tackling challenges to the success of child care and housing vouchers.  


Introduction

Vouchers play an important role in federal efforts to help low-income families obtain both housing and child care. Historically, most federal funding went directly to child care centers or rental housing developments that served low-income families. In recent decades, however, federal funding has increasingly shifted toward vouchers. In the mid-1970s, the federal government began offering vouchers to help low income families pay for rental housing in the private market. By the early 1980s, funding for new construction of traditional public and subsidized housing developments had essentially stopped, while what is now called the Housing Choice Voucher Program gradually expanded. Today, about 2.1 million low-income households receive housing vouchers, compared with about 2.6 million living in public or other federally subsidized housing developments (Center on Budget and Policy Priorities 2003)1. In child care, the shift to vouchers occurred more recently and more rapidly. Beginning in 1988, the federal government required states to offer parents the choice of receiving a voucher rather than enrolling with a contracted care provider2. Consequently, many states provide federally funded Child Care and Development Fund (CCDF) assistance exclusively through vouchers (U.S. Department of Health and Human Services [HHS] 2006, table 2). And, of the $9.4 billion in annual CCDF spending in 2005 (Matthews and Ewen 2006), 85 percent of children were served through vouchers (HHS 2006, table 2).

Federal housing and child care voucher programs differ in important respects. The Child Care and Development Fund is a block grant to states, allowing substantial variability in design and implementation, which essentially leads to a different voucher program in each state (and sometimes within states). In contrast, the Housing Choice Voucher Program is a nationwide program administered by local housing agencies with much more limited discretion and greater uniformity in policies and procedures across the country. Child care subsidies tend to be used for relatively short periods (Meyers et al. 2002). This pattern is thought to be related to the tight link between subsidy eligibility and work, the dynamic work patterns of low-income families, what families must do to retain subsidies, and the changing nature of the child care needs of low-income families. In contrast, many low-income families remain eligible for, and receive, rental housing assistance continuously for several years. Finally, housing vouchers offer low-income families the opportunity to move to different neighborhoods—or even different jurisdictions—that may have better job access or higher-quality services. However, families generally use child care in the neighborhoods where they currently live (or in some cases, where they work), so child care vouchers are highly dependent on the services available in particular neighborhoods.

Despite these important differences, vouchers for child care and housing face common challenges. First, the success of both programs in helping families access high-quality services depends upon the supply of these services in the private market and the willingness of providers to accept voucher families. If acceptable rental housing units or child care slots are not available where families need them, vouchers are not effective. In addition, low-income families may face challenges in negotiating the private market, gathering information about available child care or housing options, or identifying providers that meet their needs and offer good quality. Finally, both housing and child care voucher programs have to balance requirements to avoid any overpayment of subsidies (either by serving ineligible families or by miscalculating the appropriate subsidy amount) with a mandate to support work and enhance well-being among low-income families.

1 The federal government continues to subsidize housing production through the Low Income Housing Tax Credit. However, as discussed in greater detail below, these tax subsidies are relatively shallow and do not result in units that are affordable for the lowest income families. In addition, new public housing is being produced under the federal HOPE VI program, but only to replace severely distressed units that are demolished.
2 This requirement was originally part of the Family Support Act (FSA) of 1988. With the passage of the 1996 welfare reform legislation, this FSA program, along with subsequent federal child care programs, became part of the Child Care and Development Fund.

(End of excerpt. The entire paper is available in PDF format.)



Topics/Tags: | Children and Youth | Housing | Poverty, Assets and Safety Net


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