Good afternoon, Chairman Gray and members of the Committee. Thank you for the opportunity to speak today. My name is Katie Kerstetter, and I am a Policy Analyst with the DC Fiscal Policy Institute. DCFPI engages in research and public education on the fiscal and economic health of the District of Columbia, with particular emphasis on policies that affect low- and moderate-income residents.
I am here today to share our questions and concerns with the Mayor’s proposed FY 2011 budget for early care and education, including our concern about the proposed cut for the Child Care Subsidy Program. Early education and child care services are provided in the District through two main sources. The Early Care and Education Administration (ECEA) funds and facilitates early child care and education services for children from birth through 12 years of age, and to age 19 for those with disabilities. These programs are supported with both local and federal funds and primarily support child care subsidies for low- and moderate-income families. ECEA also supports out-of-school time programs. In addition to ECEA, the District began implementing a universal Pre-K effort in FY 2009, with the goal of achieving access to pre-K education for all young children in the District over five years.
Decrease in Funding for the Early Care and Education Administration
The proposed FY 2011 budget for services provided by the Early Care and Education Administration is $86 million. This includes $38 million in local funds and $48 million in federal funds, including the federal child care block grant and federal TANF funds.
The proposed funding level represents a decrease of $6 million or 7 percent, from the approved FY 2010 budget when adjusted for inflation. This includes a reduction in both local funds and federal funds. (The FY 2011 budget also indicates that roughly $4 million is being cut for FY 2010 from the approved budget for this year.) Funding for child care in the District has been falling since FY 2007. The decline totals $27 million, or 24 percent, after adjusting for inflation.
The impact of these reductions is not clear. According to information provided by the Office of the State Superintendent of Education, the number of children served in the city’s child care programs ‘ which include a child care voucher program, the DC Public School After School for All program, and other smaller programs ‘ fell from 22,400 in 2007 to 20,000 in 2009. The FY 2011 budget and OSSE performance documents do not provide similar information for 2010 or 2011.
Moreover, the FY 2011 budget document states that the funding reduction reflects “current year spending trends and detailed historic utilization data” and that the reduction will be made “without reducing childcare slots.” This seems to suggest that the reduction in funding reflects a reduction in demand for child care vouchers.
Yet child care advocates and analysts have highlighted significant unmet demand for certain types of child care, including infant care, children with special needs, and care during non-traditional work hours.
- Nearly 10,000 children under age 3 across the city were on a waiting list with a child care provider in 2008. (This includes both families with child care subsidies and families seeking market-rate child care.) About 86 percent of child care centers have waiting lists.
- Reimbursement rates for child care providers have not been adjusted since 2004 and lag far behind market rates. A report last year on the market rates for child care in DC noted that low reimbursement rates create a risk that “more [child care] providers, particularly those with higher quality programs, may opt out of the system.”
- From 1998 to 2008, the number of active licensed family providers decreased from 193 to 162, and the number of active licensed centers decreased from 345 to 329. 
The 2008 Market Rate Survey concluded that there “is a need for expanded quality child care services in the District of Columbia” and noted that “child care providers are both able to enlarge their facilities and to expand services; however, they need financial assistance to do so.” Given the challenges facing the Child Care Subsidy Program, it does not make sense reduce its funding in the FY 2011 budget.
Pre-K for All Funding Remains Level, While DCPS Funding Increases
The proposed budget for Pre-K for All in FY 2011 is $7.2 million. While this is $1.2 million below the 2010 approved budget of level of $8.4 million, the decline largely reflects a transfer to another agency of the administration of training services for early childhood education workers. (It is not clear from the budget what agency now handles this function.) When this is taken into account, Pre-K for All funding in FY 2011 is about the same as in FY 2010.
However, the proposed FY 2011 budget for DC Public Schools includes an increase in funding for early childhood education — which covers pre-school programs, pre-K programs, and Head Start. Funding would increase from $42 million in FY 2010 to $55 million in FY 2011, mostly due to an increase in local funding. The total number of children in these classes would increase by 900. The number of children in pre-school or pre-K classes in public charter schools is expected to grow by 300.
Thank you for the opportunity to provide testimony, and I am happy to answer any questions you may have.
Until FY 2009, this program was called the Early Childhood Development program and was housed in the Department of Human Services (DHS). In fiscal year 2009, administration for this program, as well as funding, was transferred to the Office of the State Superintendent (OSSE).
 Deborah L. Lyons, “2008 District of Columbia Child Care Market Rates and Capacity Utilization: A Study of Family Home and Child Care Providers in the District of Columbia,” April 2009.
 Lyons, p. xx.
 Lyons, p. xvii.
 Lyons, p. xxi.
 These figures are based on a comparison of enrollment projections in the FY 2010 budget and in the FY 2011 budget. The text of the FY 2011 budget for DCPS refers to an increase of 184 pre-K classrooms.