Association for Public Policy Analysis & Management

The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 devolved authority to states in designing their own Child Care and Development Fund (CCDF) child care subsidy program. Consequently, the child care subsidy program has become significantly diverse across the states. Each state has its own eligibility criteria, reimbursement and copayment rates, and funding levels. The Child Care and Development Block Grant of 2014, which reauthorized the CCDF for the first time since 1996, reiterates the principle of allowing states maximum flexibility in developing child care programs that best suit the needs of parents and children within the state.

Different policy regimes may have different influences on program outcomes. Although studies have examined the characteristics of those who receive subsidies and who do not, very little research has examined what specific child care subsidy rules are associated with subsidy receipt and the type of care arrangements parents use. Thus, no evidence exists on the relative importance of subsidy policy rules for shaping subsidy take-up and care arrangements. This study seeks to fill this knowledge gap by examining what state-level child care subsidy rules are correlated with the subsidy receipt and type of care arrangements (center-based care, family day care, informal care).

We use the Survey of Income and Program Participation (SIPP) Child Care Topical Module in the 2004 and 2008 panels for individual-level data, merged with the state-level data from the National Women’s Law Center (NWLC)’s annual reports on state child care subsidy policies. From the NWLC data, we select four subsidy program rules that are most likely to impact subsidy receipt and/or the type of care use by families: (a) income eligibility limit; (b) family copayment rates; (c) state reimbursement rates to providers; and (d) use of waiting lists to identify whether a state provide subsidies to all eligible families. In addition, we will extend this analysis by considering more comprehensive state-level policy measures using the CCDF Policies Database from the Urban Institute. Thus, a novel aspect of our paper is the specific measurement of state policies, which have been neglected in previous research. The analysis is conducted using the pooled cross-sectional sample of 2,391 children (unweighted) who are potentially eligible for child care subsidies. The subsidy eligibility is estimated based on parents’ employment status, the child’s age, and family income based on each state’s eligibility rules. We will use multilevel modeling to estimate associations between these state-level policy rules on subsidy receipt and care arrangement, controlling for individual-level factors.

Initial findings show that, the use of a wait list is significantly associated with lower take-up, while a lower family copayment policy is associated with higher take-up of subsidies. We also find that a higher state reimbursement rate and a lower family copayment rate is associated with use of center-based care.

This study provides the first empirical examination of the role of child care subsidy policy rules on subsidy receipt and care selection among low-income families, providing insight into program policies that can improve the child care subsidy program.