Legislation Would Save Parents From Child-Care Benefits ‘Cliff’

By Andrew Staub | PA Independent

Most working parents with children in day care would welcome a raise. But they might have good reason to turn down a pay increase if they rely on subsidies to pay for expensive child-care services, a group of state lawmakers said Monday.

In some cases, accepting even a slight raise means a parent will make too much money to qualify for government subsidies — making child care more affordable.

Lawmakers call it falling off the benefits cliff.

That leaves parents stuck. They can accept the raise and take on child-care payments they can’t afford or forgo the salary increase to continue receiving benefits. Such requirements can keep people trapped in public-assistance programs, the lawmakers said.

“It’s forcing parents to make a choice between the best of two bad situations,” said state Rep. Stephen Bloom, R-Cumberland.

Bloom and state Rep. Tom Murt, R-Montgomery, are sponsoring legislation that would help with the benefits cliff. It would allow a parent who accepts a raise to continue receiving subsidies — though at a reduced amount — until he or she can make enough to support the entire cost of child care.

Under the current system, a single parent with two children would hit the cliff when making just less than $900 a week. Up until that, a single parent with two-children would pay a weekly co-pay of $96 and receive a weekly subsidy of $117. Going over the cliff means the parent would lose the subsidy.

Murt filed it among the examples of government crafting laws that can have unintended consequences.

“We’re searching for a better way to help these families who struggle,” Murt said.

Co-payments would also be discounted for those working 25 or more hours a week.

It would cost about $10 million to $12 million to make the change, said Bloom, who added that increased costs in the short-term could eventually mean less stress on the public-assistance program. Federal block grant funds would cover the expenses, Murt said.

The United Way of Pennsylvania and the Commonwealth Foundation, a free-market think tank, support the idea. It’s part of House Majority Leader Dave Reed’s broader push to lift families out of poverty. He called the unveiling of the benefits cliff bill “very momentous.”

“This important reform is essential to help people fulfill their own American Dream and not become more dependent upon additional government assistance programs,” the three lawmakers said in a statement. “It represents the beginning of a process to remove government barriers that keep people from working additional hours and accepting hard-earned promotions.”