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May 4, 2016

Big changes coming in states’ child care subsidy policies

Major changes are under way in the federally funded program that provides child care subsidies to low-income families. In November 2014, Congress passed, and the president signed into law, the Child Care and Development Block Grant (CCDBG) Act, reauthorizing the block grant that gives federal money to states and territories to administer child care subsidy programs for low-income families.

Without subsidies, these families may not be able to afford child care, making it hard to work or find a job. This was the first reauthorization of CCDBG since 1996, and it includes some major changes that will affect both families and child care providers. Many of the new policies went into effect when the law was signed or will go into effect on a particular date specified in the law (most commonly, September 30, 2016). Here are three of the big changes required by the new law.

  1. Ongoing eligibility for subsidies: Before the change in the law, families could lose their child care subsidy if their income went above the state-defined income limit, which is set at or below 85 percent of state median income. As of October 1, 2014, about three-quarters of states and territories set their income limits between 46 and 75 percent of state median income. Almost all states and territories will have to raise their income limits for families who are already receiving subsidies to 85 percent of state median income.

     

    Under the new rules, most families will keep their subsidy for at least 12 months, as long as their incomes do not go over 85 percent of state median income. Prior to the new law, 31 states and territories already used a 12-month redetermination period, which is the period between when a family starts receiving child care subsidies and when the family’s eligibility is redetermined. The other 25 used a six- or eight-month redetermination period, so they will need to extend the length of a family’s eligibility to at least 12 months. These changes may affect how long families continue to receive subsidies and how long a child remains with the same child care provider.

  2. Job search policies: Before the law changed, it was up to each state and territory whether to provide subsidies for parents who are looking for work or who lose their job while receiving subsidies. Under the new requirements, state policies will need to allow a parent who loses his or her job to continue to receive child care subsidies for at least three months, or until the end of the redetermination period, to allow him or her to look for a new job.

     

    Before the new law, 40 states and territories allowed for some type of job search, though the amount of time varied. Most of these states and territories will need to extend that time to meet the new requirements. Additionally, the 16 states and territories that did not provide subsidies during job search will now need to for at least three months. This may help families keep their child care arrangements even if they are temporarily unemployed.

  3. Background checks for unregulated providers: Before the change in the law, it was up to each state and territory whether to conduct background checks on providers legally operating without regulation. Under the new law, all states and territories must conduct comprehensive background checks at least every five years for all providers and anyone who has unsupervised access to the children in care. This requirement will go into effect on September 30, 2017.

     

    Before the new law was passed, 40 states and territories required criminal history background checks for the unregulated provider and other staff with access to children in care, and 10 states and territories required these checks only for the provider. Five states did not require any criminal history background checks for unregulated providers. All the states and territories will have to add at least some new types of checks as a result of the new law.

While the new policies could result in significant changes in program caseloads and families’ choices of providers, it will depend on how states and territories put the new requirements into practice. States and territories will face decisions about how to implement and fund the changes, as the new law does not guarantee higher federal funding.

These three changes only cover a fraction of the requirements contained in the new federal law. For more information on how state child care subsidy policies will have to change, see the Implications of Child Care and Development Block Grant Reauthorization for State Policies briefs. The information in the briefs comes from the Child Care and Development Fund (CCDF) Policies Database, a resource the Urban Institute maintains for the Administration for Children and Families; the database will be tracking the actual state policy changes as they unfold.

Photo by Billy Hustace/Getty Images

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