License-exempt home-based child care (LEHBCC) providers serve millions of children and families across the country but are often not part of the state child care subsidy systems that help families pay for care. This means that these families are unable to receive child care assistance that helps them work and allows their children to be in care that meets the family’s needs. These providers are disproportionately used by families with children who are in priority groups for public investments, such as infants and toddlers, immigrant families, and families who need nontraditional hour care. Despite their importance, relatively little is understood about these providers and their involvement with the child care subsidy system.

This brief begins to explore what we can learn about LEHBCC providers in the Child Care and Development Fund (CCDF), the primary source of child care assistance for families needing help paying for care in the United States. We use two publicly available data sources, administrative data from the federal Office of Child Care (OCC) CCDF Final Data Tables, and data on state CCDF policies from the CCDF Policies Database to answer the following questions:

• What do we know about the extent to which children receiving CCDF were enrolled in LEHBCC providers, nationally and in different states?
• What do we know about the extent to which providers in the CCDF program were LEHBCC providers, nationally and in different states?
• What can we learn about whether state CCDF policies around health and safety requirements for LEHBCC providers help us understand the different levels of LEHBCC involvement that we see across states?

We used data from 2019 to answer these questions because, at the time of writing, the most recent data available from these sources were from years with COVID-19 pandemic disruptions.

Our key findings include the following:

• Looking at the extent to which children in CCDF were cared for by any LEHBCC provider, we found that only 6 percent of the children whose care is paid for by CCDF in the average month of 2019 were in LEHBCC nationwide.
  • However, the proportion varied across the country, with 20 states having less than 1 percent of the children they subsidized through CCDF being cared for in LEHBCC. Some states had a significantly higher share of CCDF subsidized children in LEHBCC, reaching as high as 66 percent in Hawaii, and between 18 and 24 percent in California, Connecticut, Illinois, Michigan, New York, and Oregon.
• The proportion of CCDF-participating providers that were LEHBCC providers was higher than the proportion of children enrolled in LEHBCC—specifically 39 percent of all providers paid by CCDF in 2019 were LEHBCC providers. This is likely due at least in part to the reality that LEHBCC providers serve fewer children per provider compared with licensed home-based providers.
  • Similar to the pattern noted with children, the proportion of providers who were LEHBCC also varied across states. In 13 states, less than 5 percent of providers were LEHBCC, but as many as 83 percent of providers in Hawaii and between 55 and 71 percent of providers in California, Connecticut, Illinois, Nevada, New York, and Washington were LEHBCC providers.

We also looked to see whether there seemed to be any relationship between the published state policies on health and safety requirements that govern the participation of LEHBCC providers in CCDF and the extent to which these providers and the children they serve were seen in state caseloads, with the hypothesis that the level of requirements might be associated with levels of participation. However, from this cursory look, we did not see any such pattern, suggesting that it will be important to explore other factors that could shape LEHBCC provider participation as well, such as state efforts to recruit and support LEHBCC providers or how they design and implement their health and safety requirements. Further investigation into actions states take to encourage LEHBCC provider participation could help inform state efforts to include these providers and the children they serve in their CCDF systems.

This brief shows that even though relatively few children in the CCDF program were cared for in LEHBCC settings nationwide, significant variation exists across the country. Some states have recognized the important role that these caregivers play in the lives of families and have taken steps to actively include these providers as a significant part of their efforts to help families access the care they need. Understanding more about the actions these states have taken to include LEHBCC providers in their systems, and the lessons they have learned as to how to best support them, could be useful for other states who are interested in improving their ability to serve the priority populations that LEHBCC providers serve. Such efforts are likely to be a critical step in achieving CCDF goals to improve access to assistance for underserved populations, such as families working nontraditional hours, immigrant families, and low-income families who have trouble affording care, and thus could be a priority for policymakers working to help these families access the child care they need to work and to help their children thrive.