The blog of the Urban Institute
September 15, 2021

Steps Every State Can Take to Build a More Equitable Child Care Subsidy System

September 14, 2021

The pandemic underscored the critical role of child care in supporting parents’ ability to work and children’s healthy development. It also contributed to a growing national awareness of structural racism and its effects. These developments created an interest—including at the federal level—in designing public policies that meet the needs of families of color and immigrant families and address the inequities stemming from structural racism.

Inequities can shape the ability of parents to access child care in multiple ways. First, extensive evidence shows systemic racism has widened disparities in access to housing, employment, quality education, and wealth building. These factors result in Black, Latino, and immigrant families experiencing higher levels of poverty and lower incomes, lower levels of education, limited access to good jobs, and other adverse outcomes. These realities, in turn, can mean families of color face different challenges as they work to find and afford child care.

Second, these issues play out at the community level. Higher concentrations of poverty and limited resources shape local child care markets and affect child care providers’ ability to provide quality, accessible care. Finally, though we do not have data specifically on child care subsidies, research suggests families of color may face disparate treatment when accessing public benefits and services because of conscious and implicit bias, as well as challenges—such as language barriers—that further undermine access if not addressed.

Our national child care subsidy system, funded by the Child Care and Development Fund, helps pay for child care for almost 1.4 million children from working families with low incomes. As such, it is a key element in an equitable economic recovery from the pandemic.

But in a new equity assessment, we find key elements of the subsidy systems policy and practice may not effectively account for the barriers Black, Latino, and immigrant families face. And in some cases, these policies and practices may actively contribute to systemic inequities and barriers in accessing subsidies and child care. 

The good news is states can take several steps states within their current policy structures and parameters to address these issues.

What barriers do parents of color and immigrant parents face in the child care subsidy system?

Our study explores whether the subsidy system ensures families of color and immigrant families facing barriers rooted in structural racism can equitably access child care subsidies and whether they can use those subsidies to access child care of equal quality to that available to families ineligible for subsidies (one of the goals of the subsidy system). To conduct our analysis, we reviewed the relatively scant literature on subsidies and equity and spoke with 28 experts with a variety of perspectives on equity and the subsidy system.

We first examined the policies and practices that shape whether families can get and keep a subsidy. These include the families’ likelihood of knowing about the availability of and their eligibility for subsidies, the ease or difficulty of accessing the agency, the state’s policies as to which eligible families are prioritized to access limited funds, the ease or difficulty of applying for subsidies and proving eligibility, and the ways states authorize hours they will pay for child care.

We find many of these policies and practices may not recognize the systemic challenges and barriers faced by Black or Latino parents and parents in immigrant families. For example, state child care systems often make parents who want to apply for child care subsidies to support job search or education and training a lower priority than employed parents. Yet parents of color or immigrant families who face systemic barriers to education and employment are those most likely to need such supports. Further, application processes may be less accessible to families of color and immigrant families, who are disproportionately likely to face internet, transportation, and language barriers.

We then examined the policies that shape the subsidy system’s ability to address inequities in access to quality child care options that meet families’ needs. In addition to the fundamental challenge created by the system’s reliance on the private child care market that does not support a supply of quality care, state policies and practices shape which providers are eligible to receive subsidies, what providers must do to be approved for payment, how much providers are actually paid, and what role copayments and other fees can play.

Again, we find that policies may not account for the challenges families of color face because of systemic racism and discrimination. For example, parents working nontraditional hours are disproportionately parents of color. But the providers most likely to take care of children during these hours—home-based providers and relatives—are less likely to be approved by subsidy systems. What’s more, the amount many states will pay providers means families receiving subsidies may not be able to access significant proportions of providers in their communities whose rates are higher than the amount the state pays.

How can states address inequities within and perpetuated by the child care subsidy system?

Today, states have both the power to remedy these inequities by working within their current policy structures—and the funds to do so. Historically, the child care subsidy system has been underfunded, serving only one in six children eligible under federal law. But over the past year, states received pandemic-relief-related child care funds, so they have resources to address some of these issues. It’s unclear whether these resources will continue beyond the next few years, but states can use these funds to make their systems more accessible and help support a more equitable recovery.

Our full report includes in-depth discussion of policy steps states can take that don’t require federal action, including the following:

  • consult directly with families, providers, and communities of color to identify both problems and policy solutions
  • ensure subsidy application processes, eligibility rules, and eligibility determination requirements reflect the employment realities, constraints, and challenges faced by families of color and immigrant families
  • prioritize parents who need child care subsidies to support job search or education and training
  • ensure parents can use their subsidies to pay for care that meets their needs, including by supporting participation of home-based and relative child care providers for families who work nontraditional hours, do not have access to child care centers, or do not want to use centers
  • set provider payment rates at levels that cover the costs of providing quality care and remove the tie between market prices and state rates
  • ensure that resources to support quality improvement, whether through Quality Rating and Improvement Systems, quality initiatives, or through differential subsidy rates, are allocated based on inclusive definitions of quality and prioritize supports to providers in under-resourced communities

Our research illustrates steps states can take now to improve the equitability of their child care systems. Addressing these barriers could support a more equitable economic recovery that helps all families become more economically stable and helps their children succeed.


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