Child Care: Subsidy Eligibility and Use and State Waiver Requests Related to New Program Requirements
Fast Facts
The Child Care and Development Fund gives grants to states to subsidize child care for low-income families so parents can go to work, school, or job training.
This is our 5th report on who is eligible for the subsidies and who got them.
The number of children getting subsidies declined from 2 million in 2019 and 2020 to 1.8 million in 2021—about 15% of those eligible per federal rules
Health and Human Services attributed this to widespread parent job losses that left children ineligible
Many states are seeking waivers for more time to implement new rules that cap family co-payments at 7% of income, require states to pay in advance, and more
Highlights
What GAO Found
The Child Care and Development Fund (CCDF) is the primary source of federal funding to states for subsidies that help low-income families afford child care so parents can work, attend school, or participate in job training. According to U.S. Department of Health and Human Services (HHS) data, about 1.8 million children received child care subsidies in an average month in fiscal year 2021, roughly 15 percent of the 11.5 million children eligible under federal rules. Subsidies are not an entitlement and states have to prioritize which children receive them due to limited funds.
Child Care Subsidy Eligibility and Receipt, Fiscal Year 2021
The number of children eligible for subsidies declined between 2019 and 2020, which HHS attributes to job loss that left children ineligible for subsidies based on their parents’ work status. Eligibility began to rebound in 2021 but did not return to 2019 levels. The number of children receiving subsidies also declined from 2.0 million in 2019 and 2020 to 1.8 million in 2021.
A new CCDF final rule that became effective in April 2024 requires states to prohibit family child care co-payments above 7 percent of family income. It also requires states to pay providers before they provide care or at the beginning of the delivery of care rather than getting reimbursed after providing care, among other changes. Every state and the District of Columbia requested temporary waivers to delay implementation of certain provisions of the final rule for up to 2 years.
Why GAO Did This Study
In fiscal year 2021, federal and state government expenditures for child care subsidies totaled about $14.2 billion, according to HHS. Under CCDF, states have substantial flexibility to establish their own eligibility criteria that determine which low-income working families will be served. As a result, children eligible for subsidies under federal criteria may not be eligible under their state’s criteria.
The Child Care and Development Block Grant Act of 2014 includes a provision for GAO to report every 2 years on eligibility for and receipt of child care subsidies. This report examines 1) what the available data show about the number of children eligible for federal child care subsidies and the extent to which they receive and use them, and 2) what the available data show about states’ requested waivers related to implementation of the 2024 CCDF final rule
For more information, contact Kathryn A. Larin at (202) 512-7215 or larink@gao.gov.