February 5, 2006
Omaha World-Herald
Martha Stoddard

LINCOLN -- When Nebraska's tax receipts declined at the beginning of the decade, families that relied on state help to pay for child care took a hit.

Now that tax revenue has turned around, State Sen. DiAnna Schimek of Lincoln is pushing a bill that would reverse the cuts in child care subsidies made through a budget veto in 2002.

Her measure, Legislative Bill 1016, would once again allow subsidies for families making up to 185 percent of the federal poverty level. Legislative fiscal staff have estimated the change would cost $11.8 million a year.

The current cutoff is at 120 percent of the federal poverty level, except for families making the transition off welfare that can temporarily get subsidies up to the 185 percent level.

Then-Gov. Mike Johanns reduced the subsidies because he said the state could not afford to offer them to families above 120 percent. Nebraska had revenue shortages at the time.

But groups that work with low-income families started seeing problems as soon as the change began, Schimek said.

"It isn't encouraging selfsufficiency," she said.

Parents who made between 120 percent and 185 percent of poverty were faced with having to quit work and go on welfare, putting their children in lower quality care or leaving their children unattended.

Other parents have turned down pay raises and promotions that would put them over the 120 percent mark, said Becky Gould of the Nebraska Appleseed Center for Law in the Public Interest.

The change removed 1,563 of the 4,183 children on subsidies as of 2002, according to legislative budget analysts.

There has been a dramatic increase since -- 8,816 children are now covered by the subsidy. Gould said the increase may be due in part to the economic downturn earlier in the decade.

Legislative fiscal staff also estimated that 3,262 more children could qualify for aid if the income level was raised.

Susan Hale, a lobbyist with the Center for People in Need, said adding those children likely would not cost the state as much as estimated.

As incomes rise, families would pay a larger share of child care costs. The $11.8 million estimate did not account for such cost-sharing.