Senate Banking, Housing and Urban Affairs Committee


Hearing on S.2178, "The Childrens Development Commission Act"


Prepared Testimony of Ms. Melinda Green
Director
African-American Early Childhood Resource Center
National Black Child Development Institute

11:00 a.m., Tuesday, October 5, 1998


Summary of Testimony

The Children Development Commission Act's (S. 2178) Role in Increasing the Availability of High-Quality Child Care

NBCDI supports the objective of the Children's Development Commission Act (S. 2178) to increase the availability of quality child care. This is a critical need given: 1) the developmental needs of young children; and 2) the demand for child care among working parents, exacerbated by the work requirements of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (P.L. 104-193).

S. 2178 would expand the availability of quality child care by making loans more readily available to child care providers for the construction, expansion and improvement of child care and development facilities. In addition, the legislation offers reasonably priced liability insurance to child care providers to prevent the cost of insurance from becoming a barrier to starting a child care facility. NBCDI is pleased that the legislation provides mechanisms for improving the quality of child care. These mechanisms include: 1)the establishment of federal standards and requirements by the Department of Housing and Urban Development regarding child care and development facilities, designed to ensure that mortgage insurance is provided only for safe, clean and healthy facilities that provide appropriate care and development services for children; 2) the requirement that the Children's Development Commission must certify that child care facilities are in compliance, or will be within 12 months, with local, state and federal child care standards as a condition for HUD to insure mortgages; 3) the provision of small purpose loans to help child care facilities improve the quality of their care; and 4) the establishment of a foundation to support research relating to child care and development facilities, to fund pilot programs to test innovative methods for improving child care, and to engage in public education activities and publish materials to guide those interested in mortgage insurance and other assistance provided by the Commission. These provisions begin to respond to the pressing need to improve the quality of child care.

The quality and safety of child care varies widely between states (Working Mother, 1997). Research indicates that "states ... with more demanding licensing standards have fewer poor-quality centers; centers that comply with additional standards beyond those required for basic licensing (such as those required for funding or accreditation) provide higher quality services" (Helburn, et al., 1995).Therefore, NBCDI supports the provision of S. 2178 (Section 3 (d)(1) and (d)(2)) that establishes that no mortgages may be insured by HUD unless the Children's Development Commission certifies that the child care facility is in compliance or will be in compliance within 12 months with: 1) state and local licensing and registration requirements; and 2) standards and requirements regarding child care and development facilities established by the Secretary of Housing and Urban Development that are designed to ensure that mortgage insurance is provided only for safe, clean and healthy facilities that provide appropriate care and development services for children. The authorization of the establishment of "standards and requirements regarding child care and development facilities" in Section 5(c)(2), offers a precious opportunity to ensure that facilities receiving loans through this legislation offer high quality child care, regardless of their individual states' licensing and registration requirements.

Recommendations for Improvement to S. 2178

I. -- Model Federal Child Care Standards After National Accreditation Systems to Ensure that Participating Child Care and Development Facilities Provide High Quality Child Care

NBCDI recommends that the Secretary of Housing and Urban Development adopt the accreditation system of the National Association for the Education of Young Children. This is a professionally sponsored national, voluntary system that represents the consensus of the early childhood profession regarding the definition of a high quality program for young children (NAEYC). In addition, NBCDI recommends that the Secretary of Housing and Urban Development also establish standards regarding family day care that reflect a national, voluntary accreditation system such as the one being developed by the National Association for Family Child Care and the National Family Child Care Accreditation Project at Wheelock College.

II. -- Expand Function and Requirements Regarding Small Purpose Loans

NBCDI recommends amending Section 5 (c)(3) to expand the function of small purpose loans to include helping facilities comply with state licensing and registration standards and federal standards that meet NAEYC's accreditation requirements. Additionally, this subsection should be amended to state that loans shall be made only for such facilities that will comply with these standards of quality no later than 12 months after certification of compliance by the Children's Development Commission. These changes, combined with the current language of the subsection, will ensure that small purpose loans will function to improve the quality of child care.

NBCDI is pleased that the House Banking Committee is discussing increasing the length of maturity of the small purpose loans from 7 to 15 years in the House version of the Children's Development Commission Act. This is an improvement we strongly recommend for S. 2178. Extending the maturity of the loan will make it more affordable for child care providers.

III. -- Provide Technical Assistance to Child Care and Development Facilities

NBCDI is pleased by the technical assistance provisions being discussed by the House Banking Committee; but we have some additional recommendations for strengthening them.

Equally important as providing loans to child care facilities is providing technical assistance to help providers: 1) qualify for loans, and 2) use the loans to effectively manage child care and development facilities and increase the quality of child care. Child care providers typically know more about caring for children than financial management, fund-raising, or facility construction and renovation (Mitchell, Stoney, Dichter, 1997). NBCDI recommends that a mechanism is provided in S. 2178 for the provision of technical assistance to child care providers seeking loans. This technical assistance should be provided by stakeholders in the community in which the child care facility is or will be located, and who have expertise in early childhood education, and the fiscal and legal aspects of child care.

The value of technical assistance lies in its ability to: 1) strengthen child care facilities financially through the development of a sound business plan; and 2) improve the quality of child care through staff development and training.

There are five phases of technical assistance provided by the Child Care Collaboration, an ongoing New Jersey project that provides technical assistance and low-interest loans through a revolving loan fund to child care centers, that NBCDI recommends using as a guide for the development of technical assistance provisions in S. 2178: 1)selection of child care and development facilities, 2) diagnosis and evaluation of child care and development facilities, 3)staff development and training, 4)ongoing technical assistance, and 5) evaluation of outcomes. A description of each phase is included in the body of the testimony.

IV. -- Conclusion

Child care facilities in general, particularly nonprofit programs in low-income neighborhoods, have difficulty securing loans. There are several reasons. First, many facilities are operating in space occupied at reduced rent, thereby allowing them to charge reduced fees to parents. Incurring debt means they would have to raise fees or receive increased reimbursement rates from the government. Second, child care programs often do not have the equity needed to secure a loan. Third, often child care providers know more about teaching children than they do about managing a loan (Mitchell, Stoney, Dichter, 1997). Therefore, it is critical that additional legislation is enacted to provide grants, rather than loans, to child care providers, particularly in low-income communities.


Full Text of Testimony

I am Melinda Green, director of the National Black Child Development Institute's (NBCDI) African American Early Childhood Resource Center. I am pleased to provide testimony on the Children's Development Commission Act (S. 2178) on behalf of the National Black Child Development Institute. For the past 27 years, NBCDI and our nationwide affiliate network have worked to improve and protect the lives of African American children and families by focusing on the areas of early care and education, health, child welfare, and education. NBCDI and our affiliates provide our constituents with direct services, public education programs, leadership training, and research.

NBCDI supports the objective of the Children's Development Commission Act (S. 2178) to increase the availability of quality child care. This is a critical need given: 1) the developmental needs of young children; and 2) the demand for child care among working parents, exacerbated by the work requirements of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (P.L. 104-193). In 1994, the most recent year for which Census Bureau data are available, more than half of children under age 5 (10.3 million) were in need of child care while their mothers worked (Casper, Lynn, 1994). The labor force participation rate of women with children under 6 increased from 39 percent in 1975 to 65 percent in March, 1998 (U.S. Dept. of Labor). Parents need access to affordable, high quality child care to stay in the work force.

S. 2178 would expand the availability of quality child care by making loans more readily available to child care providers for the construction, expansion and improvement of child care and development facilities. In addition, the legislation offers reasonably priced liability insurance to child care providers to prevent the cost of insurance from becoming a barrier to starting a child care facility. NBCDI is pleased that the legislation provides mechanisms for improving the quality of child care. These mechanisms include: 1)the establishment of federal standards and requirements by the Department of Housing and Urban Development regarding child care and development facilities, designed to ensure that mortgage insurance is provided only for safe, clean and healthy facilities that provide appropriate care and development services for children; 2) the requirement that the Children's Development Commission must certify that child care facilities are in compliance, or will be within 12 months, with local, state and federal child care standards as a condition for HUD to insure mortgages; 3) the provision of small purpose loans to help child care facilities improve the quality of their care; and 4) the establishment of a foundation to support research relating to child care and development facilities, to fund pilot programs to test innovative methods for improving child care, and to engage in public education activities and publish materials to guide those interested in mortgage insurance and other assistance provided by the Commission. These provisions begin to respond to the pressing need to improve the quality of child care.

The Need to Expand the Availability of High Quality Child Care

Eighty-seven percent of the centers studied in a 1995 national study, Cost, Quality and Child Outcomes in Child Care Centers, provided mediocre- or poor-quality services. Seven in ten centers provided mediocre care which may compromise children's ability to enter school ready to learn. Forty percent of the infant and toddler rooms studied endangered children's health and safety (Helburn, et al., 1995). Lack of quality of child care provided in the homes of providers has also been documented (Galinsky, et al., 1994).

This is particularly troubling within the context of brain development research that confirms the first three years of life are critical to the healthy development of children. Lack of a stimulating environment during these early years can have a long-lasting impact on children's development (Carnegie Task Force on Meeting the Needs of Young Children, 1994). On the other hand, research indicates that higher quality child care for children ages 0 to 3 is consistently related to high levels of cognitive and language development (NICHD Early Child Care Research Network, 1997; Child Care Bureau, 1998).This points to the need to ensure that every child has access to high quality child care.

The quality and safety of child care varies widely between states (Working Mother, 1997). Research indicates that "states ... with more demanding licensing standards have fewer poor-quality centers; centers that comply with additional standards beyond those required for basic licensing (such as those required for funding or accreditation) provide higher quality services" (Helburn, et al., 1995).Therefore, NBCDI supports the provision of S. 2178 (Section 3 (d)(1) and (d)(2)) that establishes that no mortgages may be insured by HUD unless the Children's Development Commission certifies that the child care facility is in compliance or will be in compliance within 12 months with: 1) state and local licensing and registration requirements; and 2) standards and requirements regarding child care and development facilities established by the Secretary of Housing and Urban Development that are designed to ensure that mortgage insurance is provided only for safe, clean and healthy facilities that provide appropriate care and development services for children. The authorization of the establishment of "standards and requirements regarding child care and development facilities" in Section 5(c)(2), offers a precious opportunity to ensure that facilities receiving loans through this legislation offer high quality child care, regardless of their individual states' licensing and registration requirements.

Model Federal Child Care Standards After National Accreditation Systems to Ensure that Participating Child Care and Development Facilities Provide High Quality Child Care

NBCDI recommends that the Secretary of Housing and Urban Development adopt the accreditation system of the National Association for the Education of Young Children. This is a professionally sponsored national, voluntary system that represents the consensus of the early childhood profession regarding the definition of a high quality program for young children (NAEYC). In addition, NBCDI recommends that the Secretary of Housing and Urban Development also establish standards regarding family day care that reflect a national, voluntary accreditation system such as the one being developed by the National Association for Family Child Care and the National Family Child Care Accreditation Project at Wheelock College.

Expand Function and Requirements Regarding Small Purpose Loans

NBCDI recommends amending Section 5 (c)(3) to expand the function of small purpose loans to include helping facilities comply with state licensing and registration standards and federal standards that meet NAEYC's accreditation requirements. Additionally, this subsection should be amended to state that loans shall be made only for such facilities that will comply with these standards of quality no later than 12 months after certification of compliance by the Children's Development Commission. These changes, combined with the current language of the subsection, will ensure that small purpose loans will function to improve the quality of child care.

NBCDI is pleased that the House Banking Committee is discussing increasing the length of maturity of the small purpose loans from 7 to 15 years in the House version of the Children's Development Commission Act. This is an improvement we strongly recommend for S. 2178. Extending the maturity of the loan will make it more affordable for child care providers.

Provide Technical Assistance to Child Care and Development Facilities

The importance of providing technical assistance as an integral part of child care financing has been supported by my own experience in the child care field, as well as by research based on financing strategies for child care facilities.

NBCDI is pleased by the technical assistance provisions being discussed by the House Banking Committee; but we have some additional recommendations for strengthening them.

Equally important as providing loans to child care facilities is providing technical assistance to help providers: 1) qualify for loans, and 2) use the loans to effectively manage child care and development facilities and increase the quality of child care. Child care providers typically know more about caring for children than financial management, fund-raising, or facility construction and renovation (Mitchell, Stoney, Dichter, 1997). NBCDI recommends that a mechanism is provided in S. 2178 for the provision of technical assistance to child care providers seeking loans. This technical assistance should be provided by stakeholders in the community in which the child care facility is or will be located, and who have expertise in early childhood education, and the fiscal and legal aspects of child care.

As the former executive director of Child Care Connection, Inc., a child care resource and referral agency in New Jersey, I led the organization in a collaboration with other organizations to expand the number of child care slots serving low income families and to strengthen the management capability of existing centers. The collaboration, called The Child Care Collaboration or Building Stronger Centers, is an ongoing project that provides technical assistance and low-interest loans through a revolving loan fund to child care centers. The Child Care Collaboration has served 16 centers in New Jersey and receives public and private funds.

The current focus of the Child Care Collaboration is on centers. Because of their larger and more formal structure, centers have historically served as a major provider of high quality child care for low income families. The Child Care Collaboration plans to expand to serve family day care (care provided in the home of providers for small groups of children) in the future.

Centers served by the Collaboration receive technical assistance prior to the disbursement of loans to promote effective use of the loans. NBCDI strongly recommends that this technical assistance model be adopted by S. 2178. The value of technical assistance lies in its ability to: 1) strengthen child care facilities financially through the development of a sound business plan; and 2) improve the quality of child care through staff development and training. It is important to note that although the Child Care Collaboration focuses on centers serving primarily low-income populations, NBCDI recommends adopting this technical assistance model for centers and family day care serving moderate income families as well.

There are five phases of technical assistance provided by the Child Care Collaboration that NBCDI recommends using as a guide for the development of technical assistance provisions in S. 2178: 1)selection of child care and development facilities, 2) diagnosis and evaluation of child care and development facilities, 3)staff development and training, 4)ongoing technical assistance, and 5) evaluation of outcomes. A description of each phase follows.

Selection of Child Care Centers

The selection criteria used by the Child Care Collaboration, which could be applied to S. 2178, include threshold and weighting criteria. Threshold criteria have to be met in order for an applicant center to be eligible and include: low income population served, ability to demonstrate near term potential to expand, capacity to carry out expansion, identification of need, commitment to participate, and qualifications of director of child care center. Weighting criteria indicate additional considerations for final selection for the project. They include: financial condition, program philosophy, marketing strategy, track record, community-basedness, future operating strategy, and strategy to link parents to jobs (applicable to community development agencies). In making the final selections, consideration was also given to achieving a mix of child care centers served to include urban, suburban and rural centers.

Diagnosis and Evaluation

Diagnosis and evaluation of the facilities is needed to determine the needs, strengths and weaknesses of each center in order to develop viable financing and quality-enhancement strategies.The Child Care Collaboration uses this information to help fashion the training and follow-up technical assistance work.

Staff Development and Training

Staff education is intimately tied to quality of child care (Helburn et al., 1995). Yet, only one-quarter of centers included in a recent study by the Center for the Child Care Workforce required a bachelor's degree for teachers and only 19 percent required any college course work for assistants. Further, there is some indication that the average educational background of child care teaching staff may be decreasing (Whitebook, Howes, Phillips, 1998). This points to the need to include staff development and training within the technical assistance structure that leads to a credential or degree such as a Child Development Associate or baccalaureate.

Ongoing Technical Assistance

As child care facilities prepare to expand and improve the quality of their care, they will need ongoing technical assistance to meet their individual needs. Sustained technical assistance is needed to support positive outcomes for centers.

Outcome Measures

NBCDI recommends that outcomes relating to participating child care facilities are assessed to determine: 1) whether quality of child care is being improved, 2) whether the financial health of the facilities is being improved, and 3) the populations being served. This will help guide the development of future policies regarding child care financing strategies. The Child Care Collaboration uses the following outcome measures.

Short-Term: Based upon participation in the year-long initiative, each center should come away with:

In addition, the Child Care Collaboration aggregates summary data to: 1)illustrate how the participating centers are surviving and growing in a welfare reform environment; and 2) develop a plan for advocacy of specific needs at the state and/or federal level.

Long-Term: Over the long-term, there are several outcome measurements that the collaboration tracks:

Conclusion

S. 2178 takes an important step toward increasing the federal government and private sector roles in child care financing. However, NBCDI maintains that our recommendations delineated in this testimony are critical to ensuring that the Children's Development Commission Act promotes the healthy development of children. Equally important as increasing the supply of child care, is improving the quality of care.

Child care facilities in general, particularly nonprofit programs in low-income neighborhoods, have difficulty securing loans. First, many facilities are operating in space occupied at reduced rent, thereby allowing them to charge reduced fees to parents. Incurring debt means they would have to raise fees or receive increased reimbursement rates from the government. Second, child care programs often do not have the equity needed to secure a loan. (Mitchell, Stoney, Dichter, 1997). Therefore, it is critical that additional legislation is enacted to provide grants, rather than loans, to child care providers, particularly in low-income communities.

In closing, the National Black Child Development Institute looks forward to working with the Senate Committee on Banking, Housing, and Urban Affairs to strengthen the Children's Development Commission Act (S.2178) so that it is able to improve the availability and quality of child care.


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