Association for Public Policy Analysis & Management

The Child Care and Development Fund (CCDF) is an important source of support for low-income working families and a key revenue source for hundreds of thousands of child care providers. The CCDBG Act of 2014 and revised regulations issued in September 2016 require states to make numerous changes to better ensure their CCDF programs effectively support low-income families in accessing high quality child care. To address that mandate, policymakers must understand the factors that shape providers’ willingness to participate in the voucher subsidy system and how the system affects providers’ ability to deliver high quality care. This paper draws on data from an earlier mixed-methods study to offer insights on these issues for state policymakers currently working to meet the new federal requirements.

Data from focus groups and a survey with a representative sample of center directors and family child care providers in four counties in five states answer the following research questions: 1) What share of providers served children with vouchers? 2) How did provider characteristics, including key indicators of structural quality, vary with their level of voucher involvement? 3) What reasons did providers give for serving children with vouchers? 4) What reasons did providers give for not serving children with vouchers? 5) How might voucher participation affect providers’ financial well-being? 5) How did providers mitigate challenges in working with the voucher system? 6) How might these issues affect program quality?

In addition to addressing those questions, the paper emphasizes the implications of the findings for policy and practice and includes concrete recommendations for state CCCF administrators. Overall, the findings yield three overarching observations. First, a complex set of factors shape provider participation in the voucher system including their personal motivations, the market in which they operate, and their experiences working with the subsidy system and low-income families. Second, subsidy policies and practices play an important role in shaping the willingness of providers to serve children using vouchers and can affect their financial stability and the quality of care they offer. These policies include both obvious factors (such as payment rate ceilings) and more subtle issues (such as payments for the full period of service, clear notification of authorization and termination, swift resolution of payment errors, or how easy or hard it is to work with the agency). Finally, although further investigation is needed, our data indicate the impact of state CCDF policies is not the same for every provider. Providers with access to private-paying parents or other funding sources can cushion the impact of voucher policies by adjusting their participation levels but providers lacking other options appear especially vulnerable to having voucher policies affect their financial well-being and the quality of care they offer. This suggests that policymakers who wish to support a strong supply of good quality providers willing and able to serve children receiving vouchers may need to pay special attention to the impact of subsidy policies on providers who face these constraints.