Subsidized child care can be a saving grace for low-income families. The funding lets parents work, and it allows children to get quality care that will help nurture their development.

But there's a catch. Each family has to make an out-of-pocket co-pay to the child-care provider - a fee that's determined by a family's size and income level. And for some families, those co-pays consume so much of their income that they look to other options for child care. In some cases, the parent or parents stop working.

Children's advocates say it's not the idea of co-pays that's the problem. Instead, they say, it's the state policy that lets counties set the rates and allows too high of a ceiling for the rates, that is the root of the issue.

"We have had stories of parents begging not to have promotions or raises because then their co-pays would go up and they couldn't afford to work," says Lori VanAuken, deputy executive director of the Children's Institute, which administers the "Childcare DOLLAR$" subsidy program.

While not a county program, "Childcare DOLLAR$" follows county guidelines - including the co-pay formula - and decisions on its cases are made by the county.

The legal aid group Empire Justice Center has filed a class-action lawsuit against the state to change the co-pay system. The lawsuit seeks to invalidate the state's current policy and to force the state's Office of Child and Family Services to develop a new policy with a statewide rate. The new policy would preferably cap co-pays at 10 percent of a family's gross income, says Susan Antos, a senior attorney for the Empire Justice Center.

"What we really want the agency [OCFS] to do is to take a look at the system and say that they're going to establish a co-payment system that is based on the ability to pay, and does not make geographic distinctions unless there's some sort of economic indicators that would allow it," Antos says.

State Assembly member Susan John has submitted a bill that would establish a statewide rate cap of 10 percent of gross income, but the bill is stalled.

"This is an important issue because of the impact it has on families who are really struggling," John says. "This is the working poor, the working low-income families, and we want to continue to encourage them to do the right thing, which is to work, but we want their kids to be in a safe place while they're working."

The lead plaintiff in Empire JusticeCenter's case is Lakeisha Williams, who lives in Rochester with her son, Javon.

The organization selected Williams and two others because they live in counties where the co-pay rate is at the maximum. The state lets counties set the rate anywhere between 10 and 35 percent of the difference between a family's gross income and the poverty level. That leads to geographic inequities in what parents pay - what families similar in size and income pay out-of-pocket for child care varies by location. An example: the lawsuit says that Williams paid the 35-percent rate in Monroe County, but would pay only a 10-percent rate in Livingston County.

"It just doesn't make sense that a federal benefit is administered that way, especially if the [federal] law provides that it's supposed to be based on your ability to pay, and it also says that everyone should have equitable access to it," Antos says.

That argument is central to the Empire Justice Center's lawsuit.

New York is one of only three states that allow counties to set the co-pay rate. The rest have a statewide rate.

In Monroe County, the rate was set at 25 percent until last year. County officials raised the co-pay rate to 35 percent after the state reduced the county's child-care grant. The state has since increased in the grant, but county officials left the co-pay rate at 35 percent. The increase wasn't sufficient to support a decrease back to the 25 percent level, says Bob Franklin, the county's deputy commissioner of human services.

"By having a parent co-pay at 35 percent, we are able to stretch out the child care block-grant funding a little further," Franklin says.

"It's your classic lose-lose situation," says Jacque Cady, who served as chair of the Early Childhood Development Initiative for more than 12 years. "There's not enough money to go around, so while children's advocates would like parents to have a fair co-pay, something manageable, the county, not illogically, wants to cover as many children as they can. And so if the parent co-pay is higher, then the county is spending less money per child and they can cover more children."

The 35-percent rate has the most discouraging effect on families making more than 140 percent of the federal poverty level, say local child-care advocates. That's when families begin to pay more than 10 percent of their gross incomes.

That 10-percent figure is not arbitrary; that's what the federal government says is affordable and which insures that low-income families have equal access to child care.

The Childcare DOLLAR$ program provides subsidies for families whose incomes fall between 165 and 275 percent of poverty - the county program maxes out at 165 percent of poverty level. The co-pay amounts in the Childcare DOLLAR$ program actually surpass the cost of care around 210 to 215 percent of poverty level.

"You have a whole category of people on the higher end that technically are eligible to apply for this opportunity," the Children's Institute's VanAuken says. "This is designed to help working families, and there's no sense in them accessing it when they're going to pay more because their co-pays are higher."

But if the lawsuit succeeds and the co-pay system does change, another issue looms on the horizon. If the programs are more accessible, more families might seize the opportunity. That means the money could get used up quicker.

"It's one of these false dichotomies: Would you rather have a higher co-pay or less people in care?" says Dr. Jeff Kaczorowski, executive director and president of the Children's Agenda. "Both of them are really bad choices, and both of them really speak for the need on a state and federal level for there to be increased funding for child care."