Child Care Subsidy – Improvements and Alternatives

October 18, 2019

Posted By
E3 Elevate Early Education

The Child Care Development Block Grant (CCDBG) is federal funding provided to the states aimed at expanding access to high quality child care for low income families.  In 2018 Congress increased discretionary funding for the CCDBG by over $2billion – the largest increase in years.  Child Trends provides an overview of how states are using the additional federal funds.

  • 43 states and DC used, or plan to use, additional CCDBG funds to increase payment rates to child care providers.
  • 37 states are using the additional dollars to implement the additional unfunded requirements that were added in the 2014 reauthorization of the program.
  • 29 states are increasing the number of children served by the program.
  • 14 states are using the funds to expand eligibility limits.

Virginia received $9.9m from the CCDBG.  The Virginia Department of Education and partners are using part of the funding to produce a statewide needs assessment and strategic plan.  Funds are also being used to align early learning standards and develop kindergarten readiness tools for teachers and families.  Nearly $4m is supporting early educators and initiatives in 10 communities that are working to unify child care, Head Start and the Virginia Preschool Initiative.  Teachers in these areas who participate in training to strengthen classroom standards and improve quality will receive financial incentives.  Click here  to read more about Virginia’s use of the additional federal funds.

According to an American University article entitled, For Families Who Need Them Most, Child Care Subsidies Haven’t Always Helped, prior to this funding increase, Virginia and other states have seen marked decreases in the numbers of low income families receiving subsidies for child care.  An increase in requirements in 2014 with no additional funding made it difficult for providers to continue accepting subsidies.  Other downsides for programs accepting government subsidy include:

  • Low and fluctuating reimbursement rates
  • Funding doesn’t keep pace with inflation
  • Reimbursement rates don’t cover the cost of quality
  • Administrative burden and red tape for providers

The 2018 increase in funding means higher reimbursement rates for providers.  Child care centers accepting subsidy received an average of  57% more between 2018 and 2019.  This amounts to hundreds of dollars per child – a meaningful increase for providers.

The increases are a step in the right direction; however, experts say that a more significant public investment is needed to help all families afford the high quality early education that leads to outcomes for children.  The challenge of meeting the standards for licensing and quality, low teacher-child ratios, and layers of facility and safety regulations make providing an affordable and high quality early education experience difficult.

A Forbes article entitled What To Do About Childcare discusses efforts to tackle the problem of affordable, high quality child care and subsidy issues outlining two alternative plans:

  • Expanding the Child and Dependant Care Tax Credit (CDCC) which provides a non-refundable income-based tax credit to parents who pay for child care.
  • Direct funding to government-sanctioned providers which imposes an “ultra-millionaire tax” to generate funding for early education allowing low-income families access without requiring them to pay full price for tuition.

There is no silver bullet solution for ensuring that all children have access to affordable, high quality early education.  Experts and policy makers disagree on the best ways to make it happen.  One thing on which we can all agree, however,  is that high quality early education improves outcomes for disadvantaged children and ALL children deserve the benefits of a quality early learning experience.  We applaud Virginia policy makers for working to increase access and improve quality in efficient and innovative ways.  This work is paying off for the children in our state.