FINANCIAL ASSISTANCE FOR DAY CARE CENTERS

OLR Research Report


November 25, 2002		2002-R-0938
FINANCIAL ASSISTANCE FOR DAY CARE CENTERS

By: Saul Spigel, Chief Analyst

You asked whether any grants for day care centers are available from public or private sources.

The Department of Social Services (DSS) provides grants to day care center providers to help them become accredited, buy equipment, train staff, and repair safety problems. It can also provide grants to providers, towns, and school boards to encourage the use of school buildings for before- and after-school child care. The State Department of Education (SDE) provides grants to centers seeking accreditation and, through a federal program it administers, can partially reimburse their meal and snack costs. Other state agencies provide loans and loan guarantees to design, construct, improve, or renovate child day care facilities and tax incentives to business that support nonprofit centers, provide day care themselves, or subsidize their employees' day care costs.

We could find no private sources for grants. The Connecticut Children's Investment Partnership provides flexible financing, typically in the form of loans for capital investments. Centers can use partnership funds to purchase equipment, renovate or expand an existing facility, or build a new one. The partnership is collaboration between the Local Initiative Support Corporation, the nation's largest community development corporation, and the William Caspar Graustein Foundation. The partnership also provides project-specific technical assistance to help centers explore feasibility, select design professionals, and secure other financing. The partnership's director, Helene Figueroa, can be reached at (203) 782-4379.

Table 1 lists the various forms of state assistance for child day care centers, including grants, loans, parent subsidies, state purchase of day care slots, and tax incentives.

Table 1: State Day Care - Funding and Financial Incentives

*Funding Type*	*Description*
Enhancing Grants	DSS can provide grants to day care service providers to help them become accredited, purchase equipment, train staff, and repair safety problems, among other things. · Providers that accept DSS funds must adopt a sliding fee scale based on family income. · Providers that accept DSS funds must include parents in setting goals for their children and evaluating their progress and help involve parents in how the providers' care for their children.
Accreditation Grants	SDE provides grants to centers and other programs to pay fees associated with applications for accreditation from the National Association for the Education of Young Children. Funds are targeted to programs that serve children with disabilities ages 3 to 5 who are receiving special education and to programs that have a history of working with school districts to serve such children.
Grants for Day Care in Schools	DSS can provide grants to towns, school boards, and child care providers to encourage using school buildings for before- and after-school child care.
Grants to Towns	DSS can provide grants to towns and state agencies to plan for and construct or acquire facilities primarily for use by their employees.
Reimbursement for Food Costs	SDE reimburses nonprofit and public centers for part of their meal and snack costs. For-profit centers are eligible if at least 25% of their participants come from families with incomes below 185 of the federal poverty level.
Loans	DSS can lend up to $ 10,000 to day care providers to develop, expand, or improve facilities. They can use the money for project planning and design, legal and financial fees, acquiring permits and insurance, meeting state and local codes, and minor renovations.
	Connecticut Health and Educational Facilities Authority (CHEFA) can make low-interest loans to day care centers and group day care homes to construct new facilities, renovate existing ones, or comply with government requirements.
	DSS can provide financial help to towns and nonprofit organizations to purchase property or plan for a day care facility or construct or reconstruct one. DSS can pay for all or a nonprofit's project costs and up to 67% of a town's project.
Loan Guarantees	DSS can guarantee between 20% and 50% of loans banks make to day care providers for constructing, rehabilitating, or improving facilities.
Loans for Businesses	DSS can lend money to businesses that want to build or renovate facilities to provide day care services primarily for their employees and for employees of the town where the business is located.
Tax Incentives	Towns can offer businesses, other than day care business, that provide day care services to town residents property tax breaks up to 100% of the value of the property they use for day care.
	Businesses can get a 4% corporation tax credit (rising to 5% next year) for their expenses in acquiring, constructing, or renovating a day care facility for their employees or for subsidizing employees' day care costs in other facilities.
	Business can claim a corporate or other business tax break of up to $ 50,000 for contributing to the acquisition, construction, or reconstruction of a nonprofit day care center designated by a town under the R. E. Van Norstrand Neighborhood Assistance Act.
Child Care Subsidies	DSS subsidizes day care for children under age 12 whose families currently receive Temporary Family Assistance (TFA), used to receive TFA but now earn too much, or, in some cases, earn 75% or less of the state median income. The children can attend centers, group day care homes, and family day care homes or can be cared for by family members or in other types of situations. Depending on their income, some parents may have to pay part of the cost.
Direct State Funding	DSS directly purchases slots in about 100 day care centers around the state. It also provides grants to preschools and schools to provide day care services before and after their regular day.

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