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Child Care Grants Languish

Diane Weaver Dunne

June 01, 2009

The state Department of Social Services delayed processing six grant applications for early child care facilities across the state for more than a year, leaving at least $35 million in construction projects in limbo, state records indicate.

The failure to act has angered state lawmakers who approved the money to cover the debt service for the projects, which are targeted for New Haven, New Britain, Hartford, Bridgeport, and Stamford. The delay also resulted in the city of Hartford losing $1 million in corporate matching funds.

It remains unclear whether the money will ever reach its intended destination. On May 7, DSS suspended its review of the applications, citing the state’s budget uncertainty.

Should DSS reverse course, there are more than enough funds available in the state Treasury, said Jeffrey A. Asher, executive director of the Connecticut Health and Educational Facilities Authority (CHEFA), a quasi-public agency that provides the state’s nonprofits access to low-cost financing. Upon DSS approval, the financing for the early child care center projects would be authorized through CHEFA.

In recent months, several lawmakers began to pressure DSS to render a preliminary decision about the applications. Among the lawmakers, Rep. Beth Bye, D-West Hartford, said, “I don’t have an official explanation” about the holdup.

“I am very frustrated when money is appropriated but not released,” she said. “[Our legislation] is no good if the funds are not released.”

Expansion Supported

Expanding quality, early childhood education has been a goal of Gov. M. Jodi Rell, who established in 2005 the state’s first Early Childhood Education Cabinet. Rell’s cabinet garnered the support of the state’s largest business organization, the Connecticut Business & Industry Association, and together they supported the expansion of between 4,000 to 7,700 new preschool spaces by 2012 for 3- and 4-year olds, particularly for families at or below 185 percent of the federal poverty level.

Prior to the state’s more recent commitment to improve early childhood education, the state legislature had committed funds to the state Treasury to offset market interest rates for the construction and renovation of early child care centers since 1997, Asher said. The 2008 grant applications were vying for funds appropriated under that 1997 provision, which has created 1,735 new early child care spaces with nearly $94 million in construction costs.

The grant preparation and review process is extensive, and CHEFA officials generally work with child care center staff before the applications are submitted to DSS.

David Dearborn, DSS spokesman, confirmed that six applications were received by April 2008 and that the applications were discussed by DSS and CHEFA officials in August 2008. Charter schools were later determined to be eligible for the state’s low-cost financing under the early child care facilities program, which produced another three applications received in November.

“This group of nine applications would have comprised a stronger, combined bond offering, which was the direction DSS and CHEFA were going in at that point,” Dearborn said in an e-mail. He explained that as the state’s budget situation badly deteriorated, “the picture for the next two years was looking worse by the day.”

“Realistically, even if a bond offering had been wrapped up and packaged sooner, it’s hard to imagine that it would have been unscathed by the deteriorating fiscal situation this year, too,” he said.

Notably, the legislature transferred $13.15 million from CHEFA to the general fund this winter.

Money Available

According to Asher of CHEFA, lawmakers had set aside more than enough money to cover the $3 million in proposed debt service, and that DSS had enough information to offer a preliminary green light to the first six applicants by August 2008.

“We wanted DSS to make a preliminary commitment,” he said. “We were frustrated that we didn’t get a decision.”

Carmen Chaparro, acting supervisor for the city of Hartford’s Office of Young Children, echoed his frustration.

Hartford had applied for the loan grant to erect a new infant and toddler facility with two preschool classrooms to double its early child care capacity.

The city proposed constructing a $3.4 million, 12,335 square-foot early child care facility on the grounds of the Learning Corridor, adjacent to Trinity College on Washington Street.

As in the case of all grant applicants, Hartford needed 10 percent of the project cost in order to be eligible for the low-cost loan. Chaparro said a local corporate foundation — which requested anonymity — offered $1 million in matching funds to be contingent upon the state’s grant approval.

Without the preliminary approval from DSS, Hartford was unable to hang on to the donation, Chaparro explained. “As the fiscal year runs out, if you don’t have state money committed to the project, you lose it,” she said. “Agencies are losing matching funds. And that’s just not OK. Getting those matching funds is a task to begin with.”

Initially, she was told that the state would render a decision on Hartford’s grant application by July 15, 2008. But the months dragged on without a DSS decision or commitment.

“Historically it has been a slow process, but never to this extent,” she said. “CHEFA is truly the middle man. They are at the mercy of the state.”

Project On Hold

Barbara Garvin-Kester, executive director of the Child Care Learning Centers, a nonprofit that operates the city of Stamford’s child care centers, asked several legislators to contact DSS about its failure to act on its grant application.

“The thing that is most concerning to us is that we were on a schedule,” Garvin-Kester said. “We wanted to consolidate a large number of satellite sites, to create a lot of efficiencies, better programming, create better facilities and become more financially efficient. The more we delay, the more it costs us in those financial savings. And the longer it takes to get these kids in a state-of-art facility because all of that pays off for the children in the end.”

To date, the Stamford nonprofit spent $1.2 million on its first phase of the project. Its second phase, the subject of the grant proposal, would cost about $5 million, she said.

Like other nonprofits that submitted a grant, the effort is time consuming and can be costly. Hartford’s Chaparro estimates it cost the city about $10,000 to prepare the application, which requires extensive documentation that easily fills a three-ring binder.

There are often technical costs, such as the cost of preliminary architectural plans, in Hartford’s case.

Stamford’s child care program also hired consultants to help it prepare its grant application. “We did have to invest in an environmental study,” Garvin-Kester said. “We also had to get an architect to prepare some initial designs for us. We also had to do a feasibility study, which was an additional cost that went beyond what my three staffers could do. And you have to pay for that.”

Asher said he is hopeful that the loans are postponed, and not dead in the water. He is optimistic that when the state budget is adopted, DSS will issue preliminary approvals for the grants.

Bye, the West Hartford state representative, while hopeful, is concerned.

“When the state says, ‘OK, CHEFA has this money and it’s ready to roll money out,’ and then they don’t move the project forward, it sends a really bad message to the nonprofits that have invested all this time and money,” she said.

Early Child Care Facility Grant Applicants Nine child care centers applied for low-cost financing offered by the state in 2008. Although the applicants’ borrower strength and project strength were rated either strong or moderate by the Connecticut Health and Educational Facilities Authority, the state Department of Social Services did not render preliminary approvals. The applicants for low-cost state financing are: • New Haven Public Schools, $15.9 million to serve 316 children • Daughters of Mary, New Britain, $1 million to serve 55 children • Housatonic Community College, $846,390 to serve 69 children • City of Hartford, $3.4 million to serve 72 children • YMCA, Bridgeport, $4.4 million to serve 122 children • YMCA, New Haven, $2.5 million to serve 54 children • CREC, $855,000 to serve 100 children • Child Care Learning Centers, Stamford, $5.8 million to serve 316 children • YWCA, New Britain, $5.8 million to serve 302 children Source: Connecticut Health and Educational Facilities Authority