Child Care Subsidy Challenges

Child Care Funding: A Broken Model

Child care is a necessity for working parents and developing children, yet the cost of high-quality care is often more than families can afford. The U.S. Department of Health and Human Services recommends that families pay no more than seven percent of their household income toward child care. However, for families making the median income, the current cost of infant care (around $12,000 per year for an infant) is closer to 20 percent of their income.

A new report from the U.S. Department of Human Services highlights how federal funding for child care assistance is falling short in alleviating this burden.  

The Child Care and Development Block Grant

The Child Care and Development Block Grant (CCDBG) awards states funding to provide working families with low incomes assistance paying for child care. 

As understanding of the true value of high-quality child care has grown, CCDBG funding has steadily increased. However, there is only financial backing to provide assistance to 15 percent of children eligible for support.

Subsidy Challenges for Families

Each state manages and prioritizes their Child Care Development Fund (CCDF) differently. However, the report found that in almost every state, “the majority of child care providers charge more for care than states’ payment (reimbursement) rates, which could limit access to care for CCDF families.” 

Even if a family qualifies for the largest reimbursement, they are often not receiving enough to cover the full cost of child care. Further, families at the higher end of the income qualification frequently face a share of the cost that is far more than they can afford. Parents are often forced to leave the workforce or choose a subpar child care arrangement — often unlicensed, unsafe and lacking the developmental supports young children need. 

Subsidy Challenges for Providers

The report also highlights challenges facing providers who accept state child care assistance. A quote shared in the report mirrors what we have heard from local providers, “I have received subsidy payments in the past, but they are more paperwork and don’t pay what I charge for private pay, so to me, it’s not worth the extra work for less pay.” 

When assistance still leaves an unmanageable burden on the parents, providers face the hard decision of offering their services at a rate that doesn’t cover the true cost they incur or turning away families with low incomes. 

In Kansas, 85 percent of center-based child care programs for infants charge more than the maximum state assistance. In Missouri, 54 percent of center-based programs for infants charge more than the maximum assistance rate. 

The Cost of Child Care Isn’t the Problem

The issue isn’t with the price tag, it’s with the funding model. In fact, an argument could be made that providing high-quality learning environments children need, exceeds current market rate. 

Why We All Win When Children Have Access to High-Quality Child Care

We all agree to share the cost K-12 school system, because we understand the larger societal benefits of an educated society. However, despite decades of research and scientific evidence exhibiting the profound impact of early education, many families struggle to access it. 

 

Find out how you can advocate for improved access to high-quality early education programs.