NEWS RELEASE

7/15/02

CONTACT: Elaine Ray, News Service (650) 723-7162; e-mail: elaineray@stanford.edu

Stanford expands its groundbreaking child care grant subsidy program

Stanford University's child care grant subsidy, which was believed to be the largest child care assistance program offered by any employer in the United States when it was unveiled in 2001, has been expanded to include reimbursements for child care costs for children 6 to 9 years old.

The $1.7 million child care grant program gives eligible employees with children under 6 up to $5,000 a year in tax-free reimbursements for the cost of child care and up to $1,000 per year in reimbursements for child care costs for children aged 6 to 9.

The need-based program uses an employee's adjusted gross family income and number of children to determine eligibility and grant size. The income ranges used to determine grant amounts were raised this year to a maximum adjusted gross family income of $124,999. Under the new guidelines, an employee with an adjusted gross family income of $34,999 or less and one child or more will be eligible for the maximum reimbursement of $5,000.

The adjusted income ranges were intended to make the largest grants more accessible to lower-compensated employees, said Teresa Rasco, the director of the WorkLife Office, which administers the program.

Before recommending the pilot program last year, a committee researched corporations and private and governmental institutions, including Harvard University, Cisco Systems Inc. and San Mateo County, said Lucia Savage, compliance specialist in the Human Resources department. The Stanford program exceeds the benefits offered by any of the plans they looked at, she said. For example, funding for Stanford's plan was approximately three times larger than Harvard's program at the time, she said.

The income ceiling for the program ­ $124,999 ­ is about 47 percent higher than the $85,000 ceiling widely used by child care assistance programs in calculating need.

In the program's first year, Rasco's office received 248 applications for the grants. With the increases to the income ranges and the expansion of the guidelines to include children aged 6 to 9, approximately 500 more employees will become eligible for the 2003 program, Rasco estimated.

The pilot program offered reimbursements for eligible parents for the costs of care for children from birth to age 5 because child care for that age group is most expensive, said Rasco. "But we understand the economics of Silicon Valley and that people with children over the age of 5 have financial needs, too."

In the general population, 35 percent of parents with children aged 6 to 9 have their children in structured child care for part of the day, Rasco said.

In order to be eligible for reimbursement, child care costs must be paid to a caregiver with a taxpayer identification number. The grants then will be paid as reimbursements for eligible expenses.

The child care grant subsidy program is designed to work in tandem with a dependent care spending account program, which allows employees to set aside before-tax funds for reimbursement for child care costs. Employees who receive grants for less than $5,000 can supplement reimbursement funds with deductions from their paychecks. The combined amount of the payroll deductions and grants cannot exceed $5,000 a year, the federal limit for tax-free child care assistance.

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