The blog of the Urban Institute
November 9, 2021

Six Ways States Can Leverage Funding to Increase the Supply and Quality of Home-Based Child Care

The COVID-19 pandemic has dismantled the already fragile child care market, leaving many families without child care and many child care providers out of business or struggling to remain open. As discussions about how to support these families and providers continue on Capitol Hill, it’s worth remembering that child care comes in different forms, with home-based child care being the most prevalent form of child care, having served nearly 12.5 million children younger than 13 in 2019.

Home-based child care can offer many positive qualities (PDF), including care in small and mixed-age groups, continuity of care as children age, close-knit relationships with the caregiver, and logistical support and flexibility for parents, especially those working nontraditional hours. But home-based providers often work long hours by themselves and can experience feelings of isolation, lacking the connections and community partnerships typically found in child care centers. As a result, some home-based providers face challenges in providing high-quality, sustainable care.

How federal child care funding can support home-based child care quality

The federal Child Care and Development Fund (CCDF) gives states and territories a flexible resource to engage in a broad set of activities targeting child care quality. States must spend at least 9 percent of CCDF funds each year on approved quality activities, with child care resource and referral systems, child care consumer education, and health and safety training as some common uses of the funds. But states can look beyond these typical uses and consider ways to offer equitable support, especially to reach often-overlooked home-based providers.

CCDF quality set-aside funds can support home-based providers and help more providers get licensed by providing information, coaching, and financial incentives. Start-up grants can help new providers meet minimum health and safety requirements, and quality improvement grants can help providers make necessary program enhancements. Technology improvement grants can increase access to reliable computers for providers if the new equipment would improve provider preparedness and the quality of child care services.

Quality funds can also be used for professional development. States could provide coaches who can mentor and support new or prospective providers, offer targeted trainings in various formats designed for home-based providers, and offer support services, such as infant and early childhood mental health consultation and home visiting, that can support home-based providers’ wellness and care quality. Funds can also be used to translate training and licensing application materials into multiple languages to make access more equitable.

Covering the coordination costs of running staffed family child care networks or informal home-based provider networks is another allowable activity. These networks can support providers’ access to resources, provide peer connections and a social support system, serve as a liaison with state agencies and community partners, and help providers access additional resources through federal programs.

A top priority of the Biden administration is addressing the early care and education workforce shortage (PDF), so new federal spending on child care may offer more opportunities to direct funds toward increasing the supply and quality of home-based providers.

How states can be more inclusive of home-based providers

We suggest six key steps that states could take to better direct available funds toward home-based providers.

  1. Review investments to ensure they are appropriate for and accessible to the full range of home-based caregivers. Quality investments can often involve an unconscious bias toward centers that make them less useful for home-based providers. States could seek extensive input from home-based providers when conducting a review and make investments to support home-based child care in each quality investment area, including training, technical assistance, and quality rating and improvement systems (QRIS).
  2. Reevaluate licensing and QRIS standards. The current licensing system can be problematic for home-based child care, as its standards often fail to recognize the realities of home-based care. States can use available funds to revisit the licensing system to better support home-based child care, incorporate the perspectives of providers and parents from different communities, and improve fairness and equity.
  3. Support providers at each stage of their professional development. Several states currently use their quality set-aside funds to offer scholarship grant programs intended to increase the qualifications and retention of the early care and education workforce. But home-based child care providers often have different motivations for providing care, which may not involve a career path. Additionally, home-based child care providers generally work long hours—10 or more a day—and often have young children of their own. Professional development opportunities should be organized to best meet their needs without disrupting child care services.
  4. Offer business administration and financial management supports. Managing personal income and liabilities as a provider can be complicated. The tax liabilities are high, and in some cases, providers worry about losing eligibility for other benefits if they have too much documented income. Business administration supports, such as Shared Services Alliances, look different for home-based child care than for centers, but they can provide some initial stability for providers to handle participation in quality improvement activities.
  5. Build a greater understanding of home-based child care and its specific strengths and needs. Family child care is often seen as lesser than center care in terms of preparing children academically and sold to parents as more affordable, which may do a disservice to providers. States can ensure that websites, resources, and other education strategies inform parents of the value and benefits of different settings. Consumer education can highlight the many strengths of a home setting (PDF), such as serving siblings of different ages, providing continuity of care, and offering a small, comforting, home-like environment and more flexible schedules.
  6. Identify ways to increase quality in license-exempt settings. By extending home visiting, ensuring that professional development materials and approaches are appropriate for relatives and other license-exempt caregivers, and reaching out to license-exempt providers to understand their needs, states can better direct funding to increase quality.

With these investments, states can improve the supply and quality of home-based providers, increase parental choice, and support parents’ workforce participation. Enhancing home-based care quality not only can improve children’s early learning and school readiness but also support providers’ financial and emotional well-being, reduce provider turnover, and stabilize the child care market.


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