Child care assistance that defrays some of or all the costs of child care helps low‐income families find and maintain stable employment and helps their children prepare to succeed in school. Child care subsidies funded through the Child Care and Development Fund (CCDF) are the primary way that the federal and state governments help low‐income families pay for care. In 2005, the CCDF, plus related spending from Temporary Assistance for Needy Families (TANF), served over two million children at an estimated cost of nearly $12 billion (Matthews and Ewen 2006).

In recent years, policy experts and researchers have grown more interested in providers that serve low‐income families in the child care subsidy system because we know little about the providers upon which the subsidy system depends (see appendix A for a list of such studies).

One issue that is especially important for policymakers is better understanding how child care subsidy programs affect providers. Numerous policies and implementation practices can affect which providers accept subsidies and the quality of the care they are able to offer. This paper adds to the research base on child care subsidies by looking comprehensively at how child care providers experience the subsidy voucher system, what aspects of the system do or do not work for them, and the strategies and policies that might best meet their needs.

The research focuses on the child care voucher system, rather than on other mechanisms for subsidizing child care, because vouchers are the approach most commonly used in funding child care assistance for low‐income working families. Since voucher programs are clearly designed as assistance for parents, rather than as assistance for providers, there are diverse views on how much responsibility voucher programs have for ensuring they work effectively with child care providers. The premise of this research, however, is that to successfully support families and children, voucher programs must address the important role and the needs of providers in the voucher system.

This report is part of a larger Urban Institute study—Child Care Providers and the Child Care Voucher System (see appendix B)—which includes quantitative and qualitative data collected from five sites: Jefferson County, Alabama (Birmingham); San Diego County, California; Monterey County, California; Hudson County, New Jersey (Jersey City); and King County, Washington (Seattle). The quantitative data are from a survey of child care centers and licensed family child care homes in five sites. The qualitative data were collected in the same sites through focus groups and interviews with center directors and family child care providers, subsidy agency staff, and other key informants.