Success from the session: Easing child-care 'cliff effect' | The Bell Policy Center

Success from the session: Easing child-care 'cliff effect'

Reps. Crisanta Duran and Tony Exum and Sen. Jeanne Nicholson
flank Gov. John Hickenlooper as he signs bills. Rich Jones
of the Bell is in the rear.

Child care will be more affordable for low- to moderate-income working families in Colorado as a result of a trio of bills signed into law last week by Gov. John Hickenlooper.

The Bell strongly supported and testified in support of each bill.

One of the bills, HB14-1072, fixes a glitch in the Child Expenses Income Tax Credit that will allow more families earning $25,000 or less to claim a state tax credit to partially cover their child-care costs. Previously, the state tax credit was based on a federal credit that many of these families could not claim because they earned too little to qualify. This change reflects the intent of the legislature when it enacted the credit.

Another bill, HB14-1317, makes broad changes in the Colorado Child Care Assistance Program (CCCAP) to ensure that more children receive high-quality care. It makes child care more affordable, expands child-care in hard-to-serve areas and ensures that families throughout Colorado who are enrolled in higher education or job-training programs can access CCCAP benefits. It also contains several provisions to alleviate the "cliff effect," which occurs when parents earn slightly more money but then lose all their child-care benefits. It requires counties to provide CCCAP benefits for up to 90 days to families that go over the income limit and make information on income limits and rules more readily available and easier for parents to understand.

Finally, SB14-003 provides incentives for counties to offer pilot projects aimed at alleviating the cliff effect. One way to address the cliff effect is to allow families to remain eligible for CCCAP benefits if their income exceeds the limit as long as they pay an increasing amount toward the cost of child care. This was the concept behind legislation in 2012 to allow counties to offer cliff effect pilot projects. We supported that legislation (SB12-22) and worked with counties to implement the pilots. However, several factors, including lack of funding, limited counties' willingness to offer pilots. SB14-003 addresses these concerns and provides funding to counties to implement the pilots. The counties supported the bill, and several have already indicated they are likely to offer pilots.

The approaches taken in these bills to alleviate the cliff effect match up with what CCCAP parents told us in a series of focus groups last year. The moms we talked to greatly appreciate the financial support they receive to help pay for child care and the ability to enroll their children in high-quality programs. They said they would be willing to pay a bit more for their child care as their incomes increase.

But these moms were very afraid of losing their benefits all at once if they made a little too much money. As a result, they were very conservative in accepting raises, promotions or working more hours. This makes sense over the short term but holds them back economically over the long term.

By ensuring they will not lose their benefits all at once (HB14-1317) and that they can stay on CCCAP a while longer if they participate in a pilot program (SB13-003), these families are more likely to earn more, advance economically and, ultimately, reach self-sufficiency.