EVERY weekday for three years, Cindy Shaddox of Lowell, Mass., took her daughter, Ania, to a child-care center in a nearby town, then went to work as a secretary. Ania liked the center, and Ms. Shaddox, a former welfare recipient, liked the stability state-subsidized child care brought to her job.
Then last June, the center told Shaddox she had 30 days to find other child care. Because the state's reimbursement rate for subsidized care has been frozen since 1989, the director could no longer afford to accept vouchers for low-income children.
''I just couldn't believe it,'' says Shaddox, who could not afford higher day-care payments. She eventually found another center that accepts vouchers, but describes the experience as ''a hassle.''
That kind of challenge is becoming more common around the country as growing numbers of low-income parents like Shaddox compete for limited subsidized child care.
Child-care providers, caught between rising operating costs and inadequate state subsidies, are turning away poor children in some states. Wisconsin, Michigan, and Massachusetts are among states seeking substantial increases in child-care budgets. But child-care experts expect the growing number of state welfare-to-work measures to create what Helen Blank, director of child care at the Children's Defense Fund in Washington, calls ''huge new demands'' for subsidized care that many states are ill-equipped to meet.
High costs, low subsidies
''There's nowhere to put some of these children,'' says William Eddy, executive director of the Massachusetts Association of Day Care Agencies. ''You can't talk welfare reform in 1995, putting people to work, without talking subsidized child care in 1996, because the two are linked.''
In Massachusetts, Republican Gov. William Weld this week requested a $50 million increase in child-care funds to serve more children, but no increase in subsidy rates.
Those remain nearly 40 percent below the market rate for child care, according to the state's own survey. Three-quarters of providers in the state do not accept subsidized children. Last summer 13 percent of centers north of Boston refused to renew voucher contracts.
Among them was the Learning Tree in Tewksbury, where Shaddox formerly took her daughter.
''For every voucher child I took in, I was losing about $40 a week,'' explains director Deborah Berthiaume. The state reimbursed her $83 a week for each preschooler, while other parents paid $125. For infants, the state rate was $150, compared with $185 for private-paying parents.
Child-care providers in other states face similar problems. In Indiana, some centers have turned away subsidized children because of inadequate reimbursement rates and 60-to-90-day waits for payment. In Rhode Island, some programs now refuse to accept any state-subsidized children, while others limit the number.
And in Colorado, where some providers charge $20 a day, subsidies for poor working families average $12, according to Gail Wilson, director of the Colorado Office of Resource and Referral Agencies in Englewood.
Noting that many centers operate on a profit margin of about 2 percent, Ms. Wilson says, ''They can't take many children who are not able to pay the full cost. The full-paying parent is not going to say, 'I'll pay you $40 more so you can take more subsidized kids.''
A study of child care for low-income families in six communities, conducted by the Urban Institute in Washington, found insufficient subsidies in five locations. Four had long waiting lists.
Queuing up for care
In Birmingham, Ala., 6,000 families remain on waiting lists for subsidized care. Statewide, those numbers swell to 21,000, with waiting times averaging 18 months or longer. San Francisco counts 6,000 to 8,000 low-income families on waiting lists. The average wait is two to three years.
''We're already in total crisis with regard to child-care subsidies, and it's going to get worse if welfare-reform proposals go through,'' says Linnea Klee, executive director of the city's Children's Council. ''There has to be more money going into subsidies if they expect some people now on welfare to move into low-income employment.''
Families coming off welfare, Dr. Klee explains, will be at the top of many priority lists for child care. ''At the bottom will be the working poor, who can't afford to pay for child care. You're punishing people who are showing some initiative and effort.''
Shaddox illustrates the challenge, saying, ''I can't afford day care at the full price. If that happened, I'd have to leave my job and go back on welfare.''
To guard against that, legislators in Wisconsin hope to triple child-care funding to $150 million.
''We want to assure that all low-income families who are working get child-care support,'' says David Edie, director of the state's Office of Child Care. He expects a fivefold increase in the number of children needing care. And in Michigan, Republican Gov. John Engler is proposing an additional $40 million for child care and transportation to get welfare recipients to jobs.
Still, child-care experts anticipate a variety of changes in regulations as states look for ways to accommodate more families on limited funds.
According to Ms. Blank, these include reducing existing rates, cutting back on eligibility, easing training requirements, and giving cash payments to parents so they can pay providers directly. Supporters of cash payments see benefits in letting parents choose their own child care. Opponents say it sidesteps state responsibility to ensure that public funds are used for legal child care.
Everywhere, lower rates threaten the existence of centers in urban neighborhoods, where a majority of children are subsidized. And everywhere, the need for infant and toddler care is acute.
Subsidized children face other problems. Researchers from the Urban Institute found cases in which a provider would accept a subsidized child, then ask that child to leave when one who could pay the full price arrived.
Some providers say some subsidized children may have problems that make them more difficult to care for. And Jim Mills, executive director of the Juvenile Welfare Board in St. Petersburg, Fla., says, ''Paying customers don't like those kids in with their kids. We have a long way to go with diversity.''
Other child-care advocates see an equally long way to go in finding solutions - and money. Sandra Scarr, chief executive officer of the KinderCare chain, where 12 percent of children receive subsidies, suggests a European-style system in which state or local governments provide child-care subsidies on a sliding income scale.
At home alone?
Gary Siegal, director of the Institute of Applied Research in St. Louis, warns that without adequate funding for subsidized care, more younger children may be left on their own.
''This essentially involves child neglect,'' he says, adding, ''We simply can't assume that everyone has a sister or mother or grandmother or neighbor or friend who's going to rescue them.''
In a study Mr. Siegal conducted of child care and welfare in Illinois, 20 percent of recipients who had been working had returned to public assistance during the past year because of child-care problems.
''You've got to have good, stable child care for people to become self-sufficient,'' says Gwen Morgan, director of the Center for Career Development in Early Care and Education at Wheelock College in Boston.
''If you have bad care or constantly shifting care, it just won't work. It's not a good investment to spend your tax dollars on poor care that is going to have negative effects on children. The cost of good care is just a little more.''
Wilson puts it this way: ''When you pay for a Yugo, you get a Yugo.''