The voices of Urban Institute's researchers and staff
April 17, 2018

How much do low-income families pay for subsidized child care?

April 17, 2018

High costs make it difficult for low-income working families to access child care. In 2016, the average cost of a year of full-time center-based care for a 4-year-old varied from $4,556 in Mississippi to $14,256 in Massachusetts.

The recent congressional budget deal will substantially increase funding for the Child Care and Development Fund (CCDF) and expand the availability of subsidized child care, helping low-income parents manage these costs. The increased funding will allow states to adjust their state policies to increase the number of families receiving subsidies or increase the amount of support families can receive. With that greater capacity, it’s useful to look at how each state subsidy system works.   

Because CCDF is a federal block grant, states control most administrative policies for their individual programs. Through the CCDF Policies Database, we track these policies for each of the 50 states, the District of Columbia, and US territories and outlying areas.

One key aspect of current subsidy policies is how much families have to pay out-of-pocket.  For many families who receive assistance through CCDF, the cost of care is subsidized, but it isn’t free. Families can be charged a copayment, depending on family income and other factors, and the state’s child care assistance program covers the remaining costs.

Copayments vary substantially across states and territories. States and territories also have the authority to set policies on whether certain families are exempt from paying a copayment.

Which families are exempt from copayments?

As of October 1, 2016, families with child protective services cases were exempt from copayments in 34 states and territories, and families with foster children were exempt in 28 states and territories.

State/Territory Copayment Exemption Policies (2016)

Ten states allowed families with income below 100 percent of the federal poverty guidelines to receive subsidies without paying a copayment. Six states and the District of Columbia did not require teen parents to pay a fee for subsidized child care, though in many of these states, parents were required to be in enrolled in middle or high school or a GED program to be exempt. Missouri allowed families with children with special needs to receive subsidized child care without being charged a copayment.

How much do families pay for subsidized child care, based on income level and family size?

For nonexempt families, copayment amounts are based on a sliding fee scale, determined by each state and dependent on income level and family size. Copayment amounts vary, partly because of differences in the price of child care between states and territories. Higher copayment amounts do not necessarily mean that a state pays a smaller proportion of the price of care.

To compare copayments across places, it’s necessary to pick a specific family composition and income level.  Here, we look at copayments for a single parent with a 2-year-old and a 4-year-old, when the parent earns $15,000 annually. As of October 1, 2016, 17 states and territories did not require a family with those characteristics to pay monthly copayments. Twenty-nine states and territories required monthly copayments between $1 and $100 for a family at that income level. Nine states and territories required copayments between $101 and $200, and Hawaii required a copayment of more than $300.

State territory policies fora  family of three earning 15,000 annually 2016

Monthly copayments for parents with higher incomes also vary. One state does not require families of three earning $30,000 annually to pay monthly copayments. Five states and territories required families at this income level to pay between $1 and $100, and 14 required a monthly copayment between $101 and $200.

Eleven states and territories required a monthly copayment between $201 and $300, and 11 states required a monthly copayment of more than $300. In 14 states and territories, families of three earning $30,000 or more were ineligible for subsidized child care.

State territory policies for a  family of three earning 30,000 annually 201

States and territories make choices about copayments and many other rules that govern their child care subsidy programs. The CCDF Policies Database provides consolidated and detailed information on these variations.

From left, Nana-Kwame Akoto-Koree, 4, Annalise Lamprey, 3, and Tina Gordon, 4, play a game at the Guild of St. Agnes in Worcester, MA on Apr. 25, 2017. The Guild of St. Agnes is an early education and care agency that relies on state subsidies for 95% of their students, according to director Gloria Johnson. TPhoto by Craig F. Walker/The Boston Globe via Getty Images.

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