Association for Public Policy Analysis & Management

Background: The Child Care and Development Block Grant (CCDBG) Reauthorization Act of 2014 and the 2016 Child Care and Development Fund final rule updated states’ child care licensing requirements and quality standards for the first time since 1998. New requirements includes mandatory background checks, stronger inspection requirements, annual site monitoring, health and safety standards, and health and safety trainings. Meeting the new licensing requirements involves significant state-level resources and capacity to develop and implement the changes and requires providers to invest resources to comply with the changes. This could deter child care providers with little resources (e.g., family child care) to enter or remain in the child care market, which may disproportionally affect children receiving subsidies, infants and toddlers, or children living in rural areas. However, very little information, to date, offers any insights on how the CCDBG requirements affect child care supply overall (the composition and the quality of licensed providers) and providers participating in the subsidy system. Massachusetts implemented CCDBG licensing requirements and several quality standards before the new rules, starting 2014 through mid-2017. This study examines changes in the composition and the quality of child care providers before and after the rule changes in Massachusetts.

Methods: The study uses Massachusetts longitudinal administrative data (licensed child care providers matched with children receiving child care subsidies) from 2012 to 2018. We first describe the patterns of the changes in the number of licensed providers over the time period including: (1) compositional changes (e.g, center vs. family child care, providers serving infant/toddler, preschooler vs. school age); (2) geographical changes (e.g, urban vs. rural, poor vs. non-poor neighborhoods), and (3) changes in the number of quality care (e.g, accredited vs. not accredited). The impact of the changes on children receiving child care subsidies is measured by characteristics of children (e.g., age, race/ethnicity, location, eligibility category) whose providers went out of business or affected by new regulations (e.g., license suspended, under investigation). Finally, we estimate event history models to examine whether the CCDBG regulations are associated with provider exits from the child care market, controlling for provider characteristics (e.g., capacity, years in business).

Preliminary Results: In the 2012-2015 data, we found that the overall number of licensed provider decreased over time from 11,134 in 2012 to 9,666 in 2015. About 23% of all licensed providers that were in business anytime between 2012 and 2015 were closed at the end of 2015, and 83% of the providers that were closed was family child care. Results also showed that providers serving infant/toddler and located in rural areas experienced more fluctuation in the market entry and exit. This pre-CCDBG reauthorization results will be compared with post-CCDBG reauthorization results to examine whether the CCDBG reauthorization had a significant influence on the changes in the child care market.

Policy Implications: Findings provide evidence on how CCDBG reauthorization is shaping the child care market and can inform state technical assistance or policy strategies to incentivize participation in the subsidy system and discourage exits among high quality providers.