April 17, 2015

Child care bill would minimize ‘cliff effect’ for low-income families

A view of the Indiana Statehouse in Indianapolis. (File photo by Natalie Hoefer)

A view of the Indiana Statehouse in Indianapolis. (File photo by Natalie Hoefer)

By Brigid Curtis Ayer

A bill to assist low-income families by providing a graduated phase-out of their child care subsidy is moving through the Indiana General Assembly and is eligible for conference committee negotiation. The Indiana Catholic Conference (ICC) supports the legislation.

The proposal, House Bill 1616 authored by Rep. Ed Clere, R-New Albany, addresses the economic phenomenon known as the “cliff effect” by providing a tapering off of child care benefits rather than an automatic cut off.

The “cliff effect” phenomenon occurs when a family begins to earn above the limits set by the state, and becomes ineligible for various government subsidies for food, housing, child care and other benefits. For some low-income families, this means earning more income creates a more serious financial hardship for them.

Glenn Tebbe, executive director of the ICC), who represents the Catholic Church in Indiana on matters of public policy, said, “Helping low-income families become self-sufficient is good public policy. The legislation would have a big impact on families in need while having a minimal impact on the state’s budget.”

Clere said, “It’s a very simple bill, and I hope the beginning of a larger conversation about this concept of the ‘cliff effect’ and how we might apply this with other assistance programs where we want to help transition people off of assistance and to self-sufficiency.”

Clere added that currently the child care benefit is eliminated at 170 percent of the federal poverty level. “Someone can make just a little bit more money and lose their entire benefit. These individuals are doing better, yet are worse off financially due to the loss of their child care benefit,” he said. “This affects thousands of Hoosiers who rely on this benefit who are trying to improve themselves through education.”

Clere explained that the bill increases the phase-out for the child care subsidy from the current 170 percent of the federal poverty level to 250 percent of the federal poverty level. He added the legislation also helps families of five or more to be able to continue to receive the subsidy.

“As families get higher and higher on the income scale, they would make higher and higher co-pays to their child care subsidy,” Clere said. “The bottom line is we ought to be structuring programs such as this to encourage families to gain more skills to advance in the workforce and become self-sufficient.”

Sen. Vaneta Becker, R-Evansville, a Senate sponsor of the bill, said, “I think it’s important for us as legislators to be reminded that 69-71 percent of all jobs in Indiana do not pay a living wage. We are always talking about how great we are at economic development and job growth, but when I hear these statistics, it’s extremely alarming because it really means that these families can work all they want, and they’re still not going to have enough money. We need to be doing more about providing and incentivizing good paying jobs, not just jobs that are below the federal poverty level.”

Derek Thomas, senior policy analyst for Indiana Institute for Working Families, a program of the Indiana Community Action Agency, testified in support of the legislation.

“We’ve been researching benefit cliffs. We hear stories from families who are turning down raises and full-time work, or not gotten married in order to keep their benefits,” he said. “Poverty is still growing in Indiana. The middle class is still shrinking by even the most generous of estimates. This is just one small way that we can allow access to the middle class and reward hard work.”

Tebbe said, “This bill received strong support in the House, passing 94-0, and by a Senate panel. Even though it got held up in the Senate Appropriations committee and failed to pass the full Senate, because it passed one chamber it is eligible to be part of a conference committee process.

“We are going to continue to work to get it passed before the April 29 session adjournment deadline.”

(For more information about the Indiana Catholic Conference, its Indiana Catholic Action Network and the bills it is following in the Indiana General Assembly this year, log on to www.indianacc.org. Brigid Curtis Ayer is a correspondent for The Criterion.)

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