Bill tackles child care ‘cliff effect’ by expanding eligibility

February 12, 2019

Most government safety net programs like welfare, Medicaid and food stamps have a “cliff effect” — when someone gets a pay raise that makes them ineligible for financial help from the government, causing them to lose benefits that are more valuable than the salary bump.

Advocates for working families in New Mexico are hoping to eliminate a financial cliff in child care assistance and instead create a glide path for parents who are working toward financial security.

New Mexico Voices for Children, an Albuquerque-based nonprofit child advocacy organization, said its data show that 9 out of 10 people who get help with child care costs from the state Children, Youth and Families Department are single parents with two kids. Earning one dollar more than $40,840 would cost a family of three more than $10,000 in child care assistance and plunge them back into poverty.

“A lot of lower-middle-income families that are trying to gain a foothold to sustaining themselves, once they don’t have access to those programs, they’re the ones who suffer tremendously because they’re kind of caught in between,” said Armelle Casau, a policy analyst and researcher at Voices for Children who wrote a report on the cliff effect.

“They’re not poor enough to receive a lot of those programs,” Casau said, “but they’re not rich enough to be economically secure. So it’s those families that we need to provide a little bit of continuing supports.”

That’s where House Bill 160 comes in. It would ease a sharp drop off and push the loss of child care assistance closer to when families are more economically secure.

Parents would contribute higher copays as they made more money, but they wouldn’t lose the help altogether.

Child care from a licensed center in New Mexico runs about $7,000 a year per child — more than most of the state’s universities.

“It’s so necessary,” Rep. Rebecca Dow, R-Truth or Consequences, said of the bill.

Dow runs AppleTree Educational Center, a nonprofit child care and New Mexico PreK provider in Sierra County.

She worries that proposals for increasing the state minimum wage might hurt two-parent households. “The very intent of helping them, if we don’t change the eligibility for child care assistance,” she said, “is going to harm them. They’ll have less disposable income.”

HB 160 would raise the eligibility for child care subsidies from 150 percent of the federal poverty level to 200 percent, and parents could keep the subsidy, with higher copays, until their income reached 300 percent of the federal poverty level — $63,990 for a family of three and $74,250 for a family of four.

The proposal also would help ease the financial burden for New Mexico’s poorest families by eliminating the copay altogether for parents who earn less than 100 percent of the federal poverty level.

It’s a modest savings, probably about $300 a year for a single mom with one child who lives at 50 percent of the poverty level, Casau estimated.

“When you’re living in deep poverty, $300 is a lot of food on the table, and it helps pay one more electricity bill,” said Casau. “Even though it’s not a lot for the poorest of the poor, the fact that we are having copays for families that are in deep poverty is something that is unconscionable.”

Her report found that 28 states have lower copays than New Mexico for a family of three at 100 percent of poverty level, and 19 states have lower copays for a family of three at 150 percent of FPL.

The bill adds $40 million to the CYFD budget to pay for the changes, though there is some uncertainty over how much it will cost to allow parents to keep receiving child care assistance above the 200 percent of poverty threshold, according to a fiscal impact report for the bill.

Child care assistance is paid through a combination of state and federal funds, with New Mexico paying a little more than a third of the cost.

The bill is currently waiting for its first hearing by the House Health and Human Services Committee.

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