Mo. bill targets parents facing ‘poverty trap'

Monday, June 4, 2012

JEFFERSON CITY, Mo. -- While most people would welcome a pay raise, the idea terrifies some Missouri parents who stand to lose thousands of dollars a month in day care subsidies if their incomes increase even the slightest bit.

To address the problem, the legislature passed a bill on the final day of the session that creates a pilot program geared toward parents who often have to turn down raises because the loss of child care help would be devastating. The program would let participating parents avoid a sudden loss of child care by paying a monthly premium of 50 percent of their income that exceeds the maximum allowable to keep the benefit.

"So if you make $1 over the limit, you could pay 50 cents of that to keep your benefits that cost thousands of dollars," said Sen. Rob Schaaf, a St. Joseph Republican who sponsored the bill creating the pilot program. "People would be able to work themselves off the program by contributing to their child care as they make more and more money."

The Kansas City Star reported that about 50,000 Missouri families receive state-subsidized child care. Thousands of them face the same dilemma: Either take a promotion or raise and lose child care assistance, or turn them down and continue receiving the aid -- which often is far more than what the raise would cover.

"Women will get a quarter [an hour] raise, and it's not enough to change their life, but it can get them something like management experience that they can add to their resume so the next offer could take them off the system," said Kahtea Murrell-Bobo, a 31-year-old single mother of four from Kansas City. "But they have to decline it because 25 cents isn't enough to cover the loss of their child care. So not only do they keep themselves in that cycle, but then they set themselves up for failure down the road as well.

"This is trapping women in poverty. That's all it's doing."

A single mother with a baby and a preschooler starts losing benefits when she makes more than about $23,000 a year. The subsidy goes directly to the day care provider, and the amount depends on the day care's location. Rates for an infant in Jackson County, for instance, can run up to nearly $30 an hour for one child.

"By taking on the total cost of child care herself, (a working mother) would have to make nearly $50,000 a year, more than double her income, before she has any more take home pay than she had before," Schaaf said. "That's really perverse, and it needs to be fixed."

He said the pilot program will run for two years, with the goal to get about 300 families to participate to see if they would pay a premium to keep benefits, and if the changes would save the state money in the long run.

If the program is successful, Schaaf said he wants it applied to other forms of public assistance.

"If it works," he said, "it could save the state millions of dollars and at the same time allow people to work themselves out of poverty."


Information from: The Kansas City Star, http://www.kcstar.com

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