A dramatic change in the generosity of one state’s child care subsidy policy provides an opportunity to study the relationship between subsidy policy generosity and program outcomes.  Child care subsidy programs receive support from the Child Care and Development Fund (CCDF).  Sent to the states as block grants, CCDF functions as a partnership of states and the Federal Government. Although shaped by federal legislation and rule, states control policy levers that largely define the program.  These policies determine who is eligible, the amount providers will be paid, how often parents must recertify eligibility, and the amount parents must pay (their copayment).   Thus state policy plays a major role in determining the impact of CCDF. 

In 2007 a major investment in the subsidy program by the Oregon legislature moved Oregon from being one of the least to one of the most generous subsidy programs in the nation.   Maximum payment rates were aligned with current market prices and increased substantially.  Eligibility was increased from 150% to 185% of the federal poverty level. Copayments were reduced from up to 68% to no more than 20% of income, and redetermination periods were moved from 3 to 6 months.

We used a pre-post research design to assess the association between subsidy generosity and two program outcomes of high interest to policy makers because of their effect on both parents and children: continuity in the subsidy program and type of care selected for children by their parents.  The study used linked administrative data from Oregon on families who participated in the subsidy program before and after the policy change. Given that employment was an eligibility requirement for CCDF, we also examined the extent to which employment was associated with these two program outcomes. In order to have confidence in the findings from this pre-post research design the study controlled for possible confounding factors including the recession and a change in the mix of families that entered the program under the different policies.  We compared types of care used before and after the policy change, taking into account age of the child and whether the family lived in a metro or nonmetro area.  We assessed the stability of employment of parents who entered both before and after the policy change.  We used a Cox regression to measure predictors of subsidy exit including entry into the program under the old or new policies, employment stability, and other factors that may have been associated with continuity in the subsidy program.

We find parents who enter under the more generous policies more likely to select center care. In addition we find positive effects of policy generosity on continuity.  We also find these outcomes affected by employment characteristics of participating parents.  Both policy generosity and stability of employment are associated with continuity.  Generosity of subsidy policy is positively related to achievement of CCDF goals of continuity and parental access to care that meets the developmental needs of their child.