DATE: Wednesday, October 1, 1997            TAG: 9710010443

SECTION: LOCAL                   PAGE: B7   EDITION: FINAL 

SOURCE: BY ELIZABETH SIMPSON, STAFF WRITER 

                                            LENGTH:  110 lines

SOME POOR FAMILIES WON'T GET CHILD-CARE AID UNDER NEW PLAN

In an attempt to shift more funds to poorer families, the state begins doling out child-care dollars by a new method today.

Under the new system, some working-poor families who currently are getting help for their child care will be cut from the program, but they will have one more year of subsidies to help ease them off the assistance.

In the past, the state has used the state median income level to judge whether nonwelfare families qualify for child-care subsidies. A family of four could earn no more than 50 percent of the state median income, or $2,083 a month.

The new method uses the local median income and divides cities in the state into four categories. Families in areas where the median income is higher will be able to make more and still qualify for the child-care subsidies, with the reasoning being the cost-of-living is higher in those areas.

Statewide, the new method will send more dollars to lower-income families, according to state officials. In Hampton Roads, however, the change will have mixed results.

For instance, in Norfolk, which has a lower median income, the eligibility cap is lower - $1,873 a month for a family of four - than what it's been in the past. Some families will be cut from assistance there.

But in other cities, Chesapeake, for instance, the amount of money a family can make and still qualify goes up, because the median income is higher in that city. In that city, a family of four could make $2,141 and still qualify. So more families in that city may qualify for the subsidies.

State social service officials said even though more residents in some higher income areas may qualify for the program, the overall effect will be to shift funds to poorer families, since the bulk of cities in the state have the lower eligibility caps.

The new plan is not without its critics.

The Joint Legislative Audit and Review Commission, a state oversight agency, has called the new method flawed, saying cost-of-living can't be judged by local median income.

``Residents of high income, low cost-of-living localities are treated more favorably than residents of low-income, high cost-of-living areas,'' read the report, which was released in July. ``The state should revise its plan to consider cost of living, not local median income.''

State officials disagree and are moving ahead with the plan. They say the method will be monitored and reviewed to make sure funds are being distributed in a fair manner.

Linda Ross, a program coordinator for The Planning Council, which administers the subsidies for the cities of Norfolk, Portsmouth and Chesapeake, said early estimates show that only about 16 families in Norfolk will have to be cut from the program. Numbers for the other cities have not been calculated.

People who are currently receiving the subsidies will be informed if they are no longer eligible, but they will have one more year of subsidies from the time they are notified. The families will begin to get notification today.

``That will give us time to help them find affordable care, and to work with them on budgeting to make that transition,'' Ross said.

Two other new pieces of the child-care subsidy plan - limits and co-payments - are being postponed but will be in place within a year.

Currently, families must pitch in 10 percent of their gross income as a co-payment. Within a year, that will change. Nonwelfare families will be allowed up to three years of paying 10 percent of their gross income if they have one child, and 12 percent if they have two or more children in their family. The fourth year, a family will receive a subsidy that's equal to 30 percent of the market rate of the care in that area. The fifth year, that subsidy will drop to 20 percent of the market rate.

After that time, local Departments of Social Services can continue the 20 percent subsidy for a sixth year, but then the family is cut off from the subsidies.

Because of the complexity of the formula, the state will create software, or some type of automated system of calculating the subsidies, before requiring departments to use the new method.

Larry Mason, director of family services for the state Department of Social Services, said that should be in place within a year. ILLUSTRATION: Graphic

MAXIMUM INCOME

Maximum monthly income to qualify for child-care subsidies:

Norfolk, Portsmouth

Newport News:

Family of one: $921

Family of two: $1,238

Family of three: $1,555

Family of four: $1,873

Family of five: $2,190

Family of six: $2,507

Family of seven: $2,825

Family of eight: $3,142