NEWS RELEASE

6/5/01

Barbara Palmer, News Service (650) 724-6184; e-mail: barbara.palmer@stanford.edu

Child care grant program announced

University administrators have unveiled a plan for a $1.7 million child care grant program that would give eligible employees with children under 6 years of age up to $5,000 a year in tax-free reimbursements for the cost of child care beginning Jan. 1, 2002.

Provost John Etchemendy announced the need-based subsidy program at last Thursday's Faculty Senate meeting to loud applause.

The program, believed to be the largest child care assistance program offered by any employer in the United States, must first be approved by federal government regulators, said Lucia Savage, compliance specialist in the Human Resources department. Administrators expect the plan to be approved, she added.

The program uses an employee's adjusted gross family income and number of children to determine eligibility and grant size. The grants range from $5,000 a year for a family with one child and an adjusted gross income of $24,999 or below to $1,000 for a family with two children and an adjusted gross income of $105,000 to $114,999. A family with two children and an adjusted gross income of $85,000 to $94,999 would be eligible for a $2,000 grant. All employees eligible for Stanford benefits, including part-time employees, can apply for the grants.

Teresa Rasco, WorkLife Office director and one of the program's architects, said the size and scope of the program approved by President John Hennessy exceeded her expectations. The grant program addresses the immediate need people have for help with the cost of child care, she said. "I'm real excited about it. I think that it's very far reaching."

Before recommending the plan, a committee researched corporations and private and governmental institutions including Harvard University, Cisco Systems Inc. and San Mateo County, Savage said. The Stanford plan would exceed the benefits offered by any of the plans they looked at, she said. For example, funding for Stanford's plan is approximately three times larger than Harvard's $500,000 program.

The income ceiling for the program ­ $114,999 ­ is significantly higher than the $85,000 ceiling widely used by child care assistance programs in calculating need, Savage said. The average monthly cost of care for children under 6 in the Bay Area is $1,200. In Santa Clara and San Mateo counties, the average is closer to $1,400, she said.

Applications and guidelines will be mailed to all active employees during the last two weeks in July and will be available on the BenefitSU website at http://benefitsu.stanford.edu and the WorkLife Office website at www.stanford.edu/dept/ocr/worklife, Savage said. Employees can apply between Aug. 1 and Aug. 15, and notification of employee eligibility will be mailed out on Sept. 15.

Employees who receive grants then must enroll in the Dependent Care Spending Account program during the open enrollment period scheduled to begin in November. The grants then will be paid as reimbursements for eligible expenses incurred beginning Jan. 1, 2002. In order to be eligible for reimbursement, child care costs must be paid to a caregiver with a taxpayer identification number, Savage said.

The grant program will work together with the existing Dependent Care Spending Account program, Savage said. Employees who receive grants for less than $5,000 can deduct additional funds from their paychecks. The combined amount of the paycheck deductions and grants can't exceed $5,000 a year, the federal limit for tax-free child care assistance, she said.

Administrators estimate that about 1,600 employees have children under the age of 6 and that 1,200 of them have incomes that fall below the program ceiling, Savage said.

The program was designed to reach as many people as possible, within financial constraints, Savage said. Administrators are considering the first year to be a pilot year for the program, since it is unknown how many people actually will apply for the grants, she said.

Although there are no guarantees, administrators feel certain there is enough funding to cover the grants as outlined in the program. "We're very confident we won't run out of money, Savage said.

Once it is known how widely used the program is likely to be, administrators plan to reexamine it and potentially will expand it, she said.

The pilot program was designed to help parents of children under the age of 6 because of the acute need for assistance, due to the high cost of child care, she said.

But in the future, the program also could include reimbursements for the cost of care for an elderly parent, she said.

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By Barbara Palmer