This summary highlights key takeaways from a partnership between the Institute for Research on Poverty at the University of Wisconsin-Madison and theWisconsin Department of Children and Families, Division of Early Care and Education, funded by a grant awarded in 2019 by the US Department of Health and Human Services, Administration of Children and Families. Explore takeaways from other Child Care Policy Research Partnership Grant teams here.

Child care is critical to a sustainable workforce and healthy economy, but high costs and insufficient supply have limited access to care for many families. Particularly for people who have infants and toddlers, have low incomes, or who live in rural areas, the recent decline of licensed family child care (FCC) providers in Wisconsin presents additional barriers to access.

In this study, the research team examined how early care and education policies, such as licensing, quality ratings, and subsidies, may have contributed to the decline in FCC supply. Understanding how policy influences the supply and cost of child care is a critical step in addressing the high cost and insufficient supply of child care across the US.

KEY TAKEAWAYS

In Wisconsin, the capacity of licensed FCC providers declined by more than half (51 percent) between 2005 and 2019. Though child care capacity in the state has shifted toward center-based care, in some areas, center-based care has not compensated for this decline.

In the team’s analyses of factors contributing to the decline in FCC supply, they found the following:

• Counties with more growth in public pre-K enrollment had larger declines in licensed FCC supply. In contrast, there was no association between public pre-K enrollment and licensed center-based supply.
• Licensed FCC providers with higher ratings on the state’s quality rating and improvement system (QRIS) remained open for longer compared with providers with lower quality ratings. Regardless of their ratings, licensed FCC providers who participated in the QRIS remained open for longer than those not participating in the QRIS at all.
• Licensed FCC providers receiving more child care subsidy funds remained open for longer compared with providers receiving fewer child care subsidy funds. However, child care subsidy use declined substantially (35 percent) from 2008 to 2018, with greater declines in use for infants and toddlers (56 percent) than children of preschool age (24 percent decline).
• In interviews, formerly licensed FCC providers were more likely to report that their decisions to end their licenses were due to issues with licensing than with QRIS or subsidy policies. They also reported low revenue and the administrative burdens of staying open.

POLICY AND PROGRAM IMPLICATIONS

Supporting FCC providers is important for maintaining a robust child care supply with equitable access for all families, particularly those who have infants and toddlers, have low incomes, or who live in rural areas.

To help increase the supply of FCC providers, policymakers could consider the following:

• Invest in FCC providers when expanding public pre-K. Public pre-K expansions may benefit children of preschool age and center-based providers. But such expansions could unintentionally reduce the supply of FCC and limit the options available for infant and toddler care.
• Increase funding for and access to child care subsidies. Declines in subsidy use threaten the sustainability of FCC businesses and limit child care access for working families with low incomes.

Reduce administrative burdens associated with regulatory, QRIS, and subsidy policies to help attract and retain FCC providers.

METHODOLOGY

To identify factors that may have contributed to the decline in FCC in Wisconsin, the research team examined state licensing data on child care capacity by county from 2008 to 2019. The team merged these data with child care subsidy administrative records, public pre-K enrollment data, and publicly available demographic information over the same period.

They then estimated associations between pre-K enrollment and child care capacity by county, adjusting for county-level demographic characteristics like median income. These findings do not establish causality.

The team also analyzed how licensed FCC providers’ quality ratings, capacity, and subsidy reimbursement amounts related to their risk of closure. They conducted semistructured interviews with 30 formerly licensed FCC providers to understand their reasons for closing.