Who's watching the kids? Low-income parents face the threat of falling off child care assistance with a raise or promotion.

• Author: Poppe, Julie
• Position: CHILD CARE

Imagine an hourly employee being offered a raise and saying, "No thanks, not now." Some poor working parents face that tough decision too often. The problem is that even a modest raise can push a family's income over the top limit to qualify for publicly funded child care assistance.

It's called the "cliff effect" because the raise is usually not enough to cover the sudden loss of assistance. After paying for child care, parents can actually end up behind, with less money than they had before the raise.

Rich Jones, with the Bell Policy Center in Denver, recently conducted focus groups with Colorado parents who work entry-level, minimum-wage jobs with irregular hours--servers, cooks, hotel maids, etc.--and found that a third of the families had real concerns about going over their income eligibility limit and losing child care benefits.

"I get offers for part-time jobs," a kitchen cook who works at a rural truck stop told Jones. "Then I calculate how it could affect my benefits ... I've turned down offers."

"The cliff effect is real," says Jones, who thinks families should be eased out of the benefit gradually by paying a little more in fees as income rises. "We want to see families walk down the hill rather than drop off the cliff."

Softening the Fall

States have tried a couple of strategies to lessen the impact a sudden loss of benefits can have on a financially strapped family. One is to incrementally phase out eligibility as earnings increase; another is to set higher income eligibility thresholds to begin with. At least 14 states have set their income eligibility for child care assistance at or above 200 percent of the federal poverty level, which today in most states would be $48,600 for a family of four.

Nebraska offers transitional child care for 24 months for families whose income is between 135 percent and 185 percent of the federal poverty level. Oregon continues eligibility regardless of change in employment until the parents' income reaches 85 percent of the state median income, which is the federal eligibility level. Pennsylvania makes a redetermination of child care benefits every 12 months regardless of any temporary change in pay. A couple of states are doing even more.

Try, Try Again

Colorado legislators have been working to eliminate the cliff effect for several years, but tracking the number of families affected has been a challenge. They authorized a pilot program in 2012 for counties to provide families a two-year...