The blog of the Urban Institute
April 3, 2019

How federal child care subsidy policies can help low-income families maintain consistent care

April 3, 2019

Accessing consistent, high-quality, and affordable child care is difficult for many families, and low-income families often have the additional burden of unpredictable work schedules and fluctuating incomes, which can make maintaining regular child care arrangements challenging.

The Child Care and Development Fund (CCDF) provides child care subsidies to low-income families to make child care more affordable and to promote quality and consistency of care. Families receiving subsidies through CCDF must meet certain eligibility criteria, such as participating in an approved activity and meeting income requirements.

The CCDF program was reauthorized under the 2014 Child Care and Development Block Grant Act (CCDBG). The subsequent regulations, finalized in 2016, focused on continuity of care (PDF) for children and families. Because CCDF is a federal block grant, states have the flexibility to set their own policies for their programs, as long as they fit into broad federal guidelines.

Under the reauthorized program, states and territories are now generally required to implement policies that allow children to stay in their current child care setting for the duration of their period of eligibility, typically a full year, even if their parents temporarily stop participating in a qualifying activity or if the family’s income increases above eligible income limits set by their state. But there are still variations in states’ policies that affect the likelihood that a family can keep their child care subsidy after a change in eligibility.

Through the CCDF Policies Database, we track these policy variations for each of the 50 states, the District of Columbia, and US territories and outlying areas.

When can families continue to receive subsidies during periods of unemployment?

Seasonal work, shift work, and other causes of unpredictable work schedules can lead to periods of unemployment for parents. Most states allow families to receive child care subsidies for up to three months during a gap in activities if the parent is searching for a new job.

As of October 1, 2017, job search was an allowable activity in 49 states and territories (PDF). Of these, 30 allowed job search only for families already receiving subsidies. This means that if a parent eligible based on employment loses his or her job and needs to find a new job, or if a parent receiving a subsidy based on being in school graduates and starts looking for work, the family can continue to receive their subsidy and their children can stay in the same child care arrangements.

Nineteen states and territories also allowed job search for initial eligibility, meaning that families could begin receiving child care subsidies if parents were looking for a job. Only seven states and territories did not allow job search for any eligibility.

job search data

If a family’s income changes, are they still eligible to receive a subsidy?

In addition to meeting activity eligibility requirements, families must also qualify based on their income. In determining the CCDF eligibility of families who are newly applying for a subsidy, states and territories can set their income eligibility limits at or below the federal limit of 85 percent of the state median income (SMI). But once families receive CCDF, they may be able to keep receiving subsidies, even if their income goes above those initial limits.

A key aspect of CCDBG reauthorization was to ensure that even if a state or territory set their initial income eligibility thresholds below the federal maximum (85 percent of SMI), families would continue receiving a subsidy during their eligibility period (usually set at 12 months), as long as their income remained below 85 percent of SMI and they did not experience a change in employment lasting more than three months. This helps children remain in care at their current provider for the duration of their eligibility period, even if their families experience small income increases.

Under the new regulations, states and territories can now have up to three sets of income eligibility thresholds: one at initial application, one during the eligibility period (“continuing threshold” in the figure below), and one at the end of the eligibility period when evaluating if the family will continue to be eligible (“at redetermination” in the figure below).

As of October 1, 2017, 20 states and territories had one threshold. Twenty-seven states and territories had two income eligibility thresholds. And nine states and territories had three thresholds.

CCDF

Allowing families to continue receiving subsidies during periods of unemployment and raising income eligibility thresholds during a family’s eligibility period are two CCDF policies that promote continuity of child care for low-income families. As we seek a better understanding of how these and other CCDF policies meet the needs of families and children, the CCDF Policies Database provides a resource for analyzing current and future policies and assessing how states and territories respond to evolving policy priorities.

Photo by Phatthanun.R via Shutterstock.

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