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Chapter Six: Child Care Subsidy Application and Receipt

In this chapter we address the questions:

• What types of families ever apply for child care subsidies?

• What types of families receive subsidies at a particular time?

The analysis sample differs slightly from that in the previous chapter in that it is restricted to families that are eligible to receive child care subsidies in their state of residence. The families in this study lived in 17 states, each of which had different rules for eligibility. Only about 5 percent of families in the sample were ineligible, however.36

Likely predictors of subsidy application include the usual correlates of participation in income support programs such as ethnicity, family structure, and urban residence. In addition, a key factor would seem to be the copayment amount expected of the family. In states where copayments are low (such as California), many more families might be expected to apply than in states where copayments are high (such as Alabama). That said, this is not the case, as will be seen below.

In the sections that follow, we present descriptive analyses of subsidy application and receipt. Because the subsidy applies to the entire family, we use descriptors of the family rather than the focus child where possible—i.e., age of youngest child rather than age of focus child. Likewise, when examining modal choice, we use the primary arrangement for the focus child as a (rough) measure of the family’s full array of arrangements, since child care arrangements for the focus child’s siblings are unknown.

We use multivariate techniques to model the subsidy application decision, and rely on descriptive statistics to examine subsidy receipt. This is because subsidy application represents a decision made by a family, while subsidy receipt also incorporates decisions made by subsidy agencies.37

TANF receipt was given special treatment in the application model. In many states, current and recent TANF recipients are given priority for subsidies, and may be explicitly urged and assisted to apply by their caseworkers. While sample sizes did not permit estimation of separate models for TANF recipients, TANF receipt was interacted with mode of care to explore differences in this key dimension.

Determinants of Subsidy Application

Overall, 39 percent of income-eligible families had some contact with the child care subsidy system—they received a subsidy in the past, have applied but been denied, have been put on a waiting list, or were currently receiving benefits at the time of the interview.38 This rate varied markedly across groups of household (Exhibit 6.1).

Exhibit 6.1

Applications for Child Care Subsidies Among Income-Eligible Families That Use Non-Parental Care

		Ever Applied (percent)	Never Applied (percent)
All income-eligibly families		38.8	61.2
By age of youngest child	Infant	33.5	55.6
	Toddler	43.1	56.9
	Preschooler	45.9	54.1
	School-aged	35.0	55.0
By ethnicity	White	35.8	64.2
	Black	52.3	47.7
	Hispanic	28.1	71.9
By mother's education	Not a high school graduate	29.6	70.4
	High school graduate	39.4	60.6
	Some college	44.4	55.6
By mother's country of birth	United States	42.1	57.9
	Other	20.9	79.1
By number of children in household	1	36.1	63.9
	2	37.7	62.3
	3	45.6	54.4
	4 or more	42.9	57.1
By presence of mother's spouse/partner in household	Absent	48.0	52.0
	Present	24.4	75.6
By presence of other related adults in household	Absent	39.1	60.9
	Present	27.6	72.4
By presence of other unrelated adults in house	Absent	38.9	61.1
	Present	36.6	63.4
By mother’s work schedule	Working irregular hours	39.3	60.7
	Working regular hours	40.3	59.7
	In school or training	34.7	65.3
By household income	Under FPL	41.3	58.7
	100% FPL to 185% FPL	36.5	63.5
	Over 185% FPL	31.9	68.1
By recent TANF receipt	None	36.0	64.0
	Some	58.3	41.7
By mode of care for focus child	Center	53.9	46.1
	Relative, in child's home	28.1	71.9
	Relative, in caregiver's home	35.3	64.7
	Non-relative, in caregiver's home	40.3	59.7
	Non-relative, in child's home	25.5	74.5
By urban/rural	Urban	39.2	60.8
	Rural	38.3	61.7
By region	Northeast	36.2	63.8
	South	39.0	61.0
	Midwest	57.0	53.0
	West	34.5	65.5

By family demographics: Applications were more common among families whose youngest child was a toddler or preschooler (43 to 46 percent) than among families whose youngest child was an infant or school-aged (34 to 35 percent). Black families were much more likely to have applied (52 percent) than White or Hispanic families (28 to 36 percent). Mothers with more formal education were more likely to have applied than those with less education. Mothers born in this country were substantially more likely to have applied than mothers who immigrated here (42 versus 21 percent).

By household composition: Families with more children were more likely to have applied than those with fewer children. Single-parent families were substantially more likely to have applied than those headed by a couple. The absence of other related adults was also associated with a greater likelihood of having applied.

By employment and income: Mothers in school or training were less likely to have applied than those who are working. Lower income was mildly associated with a greater likelihood of applying, while recent TANF receipt was a strong predictor. In fact, 58 percent of TANF recipients had applied—a greater fraction than any other subgroup we examined.

By mode of care for focus child: As described above, we did not have information on care arrangements for all children in a family, so we relied on the mode used for the focus child to discriminate among households that use different types of care. Applications were more common among those with a child in center care (54 percent) and in non-relative family child care (40 percent) than those with a child in either relative care or non-relative in-home care (26 to 35 percent).

By geographic setting: Subsidy applications were more common in the Midwest and a little less common in the West than in the South and Northeast.

In summary, application for subsidies occurred relatively more frequently among Black families, single parents, and recent TANF recipients—groups that were often found to be more dependent on income support programs. Conversely, immigrants were much less likely to have applied. In addition, subgroups that had previously been shown to be more likely to use non-relative child care were more likely to have applied for subsidies, including families in which mothers had more formal education, families with toddlers and preschoolers, as well as families actually using center care or family child care.

The regression model (Exhibit 6.2 and Exhibit B.4) confirmed many of the results from these simple bivariate comparisons, and some of the estimated impacts were very large indeed. In particular,

• Families in which the youngest child is an infant or school-aged child are significantly less likely to have applied than families in which the youngest child was a preschooler (the reference category; –8 percentage points).

• Blacks are substantially more likely to have applied than the reference category of Whites (+14 percentage points).

• Women who have immigrated to the United States are much less likely to have applied (–16 percentage points).

• Households headed by a couple are significantly less likely to have applied (–21 percentage points).

Exhibit 6.2

Marginal Impacts of Determinants of Subsidy Application Among Eligible Low-Income Families

		Marginal impact (percentage points)
Age of youngest child (reference category: preschooler)	Infant	-8.0*
	Toddler	-1.4
	School-aged	-7.6**
Ethnicity (reference category: White)	Black	+13.9***
	Hispanic	+0.9
Mother’s education (reference category: high school graduate)	Not a high school graduate	-3.7
	Some college	+3.9
Mother born outside United States		-16.2***
Household includes mother's spouse/partner		-20.9***
Mode of care (reference category: non-relative family child care)	Relative, in child's home	-9.4**
	Relative, in caregiver's home	-0.0
	Non-relative, in child's home	-8.7
	Center	16.5***
Mother needs full-time care (works full-time, youngest child is under age 5)		+1.7
Household income as percent of FPL		+3.2
Copayment ($100/month)		-3.0
Current or recent TANF receipt by mode of care	Relative, in child's home	+20.2***
	Relative, in caregiver's home	+15.6**
	Non-relative, in child's home	+16.3
	Non-relative family child care	+43.9***
	Center	+21.1***
Parent’s considerations in choosing child care	Cost	+0.2
	Convenience	+7.6***
	Safety	+0.9
	Provider qualities	+6.2**
	Child's cognitive development	+5.5*
	Commonalities with provider	+2.2
Geographic setting (reference categories: urban, Northeast)	Rural	+4.7
	South	+5.0
	Midwest	+14.3***
	West	+5.8

Note: *** statistically significant at the 1 percent level.          **  statistically significant at the 5 percent level.           *   statistically significant at the 10 percent level.

• Families with a child in center care were significantly more likely to have applied than those with a child in non-relative family child care (the reference category; +17 percentage points). Families with a child in relative care in the child’s home were likewise less likely to have applied (–9 percentage points).

• Recent TANF recipients were much more likely than other families to have applied for a subsidy, by amounts that varied with chosen mode of care (+44 percentage points for those using non-relative family child care, +21 percentage points for those using center care, +16 to +20 points for those using relative care, and +16 points (not significant) for those using in-home non-relative care).

• Subsidy applications were more common in the Midwest than in the Northeast (the reference category; +14 percentage points).

Also worth noting are three variables that did not have significant impacts. First, household income relative to the FPL did not significantly affect the likelihood of having applied. (Recall that this sample was restricted to income-eligible families.) Furthermore, mother’s education, which seemed to be associated with a large difference in the subgroup comparisons, did not have a significant effect. The difference occurred because of the inclusion of mode of care variables: mothers with more formal education tended to choose non-relative care in general and center care in particular. Thus, lack of formal education per se did not appear to be a barrier to subsidy application. Finally, and most surprisingly, the copayment amount did not significantly affect application behavior. It would certainly have been expected that families would be more likely to apply if the copayment were lower. These results suggest that a higher copayment is not a barrier to application.39

Determinants of Subsidy Receipt

Among income-eligible families, 16 percent were currently receiving a child care subsidy (Exhibit 6.3). Variations were seen across subgroups largely parallel to the variations in applications. It should be emphasized that many of those who applied but who were not receiving subsidies at the time of the interview had received them in the past. The difference between application and receipt thus reflects both actions by the agency (e.g., waitlisting or denying benefits) and by families (e.g., declining to reapply). Even with a subsidy, non-relative care may be more expensive than relative care—the difference between a copayment and no payment at all. Hence, families for whom cost is a major consideration may not reapply.

Exhibit 6.3

Receipt of Child Care Subsidies among Income-Eligible Families that Used Non-Parental Care

		Ever Applied (percent)	Never Applied (percent)
All income-eligible families		16.1	83.9
By age of youngest child	Infant	18.0	82.0
	Toddler	24.3	75.7
	Preschooler	18.2	81.8
	School-aged	9.4	90.6
By ethnicity	White	12.3	87.7
	Black	24.4	75.6
	Hispanic	11.8	88.2
By mother’s education	Not a high school graduate	11.2	88.8
	High school graduate	16.0	84.0
	Some college	19.9	80.1
By mother’s country of birth	United States	17.8	82.2
	Other	7.4	92.6
By number of children in household	1	11.9	88.1
	2	16.7	83.3
	3	22.7	77.3
	4 or more	21.4	78.6
By presence of mother’s spouse/partner in household	Absent	21.7	78.3
	Present	7.5	92.5
By presence of other related adults in household	Absent	16.1	83.9
	Present	16.2	83.8
By presence of unrelated adults in household	Absent	16.1	83.9
	Present	16.3	83.8
By mother’s work schedule	Working irregular hours	15.5	84.5
	Working regular hours	19.0	81.0
	In school or training	14.6	85.4
By household income	Under FPL	20.6	79.4
	100% FPL to 185% FPL	12.0	88.0
	Over 185% FPL	5.6	94.4
By recent TANF receipt	Some	13.4	86.6
	None	35.8	64.2
By mode of care for focus child	Center	30.0	70.0
	Relative, in child's home	8.5	91.5
	Relative, in caregiver's home	9.2	90.8
	Non-relative, in caregiver's home	17.2	82.8
	Non-relative, in child's home	16.8	83.2
By urban/rural	Urban	17.8	82.2
	Rural	14.1	85.9
By region	Northeast	16.2	83.8
	South	15.1	84.9
	Midwest	24.7	75.3
	West	12.9	87.1

By family demographics: Receipt of subsidy was most common among families in which the youngest child is a toddler. Black families were much more likely to be receiving subsidies currently than White or Hispanic families (24.4 percent versus 12 percent). Mothers with more formal education and those born in the U.S. were more likely to receive subsidies.

By household composition: Families with more children were more likely to be receiving subsidies. Single-parent families were substantially more likely to receive a subsidy than those with spouses or partners; the presence of other adults did not make a difference.

By employment and income: Mothers who worked regular hours were more likely to be receiving a subsidy. Lower income was associated with a greater likelihood of receipt, and recent TANF receipt is also a strong predictor. The proportion of recent TANF recipients receiving a subsidy was 36 percent, greater than for any other subgroup examined. Thus, while receipt of TANF did not ensure receipt of a child care subsidy, the correlation was substantial.

By mode of care for focus child: Receipt of subsidy was much more common among those with a child in center care (30 percent) than those with a child in relative care (9 percent). The other two non-relative modes fell in between (17 percent).

By region: Like subsidy applications, subsidy receipt was more common in the Midwest and a little less common in the West than in the South and Northeast.

These tabulation shows that subsidy receipt, like application, was relatively concentrated among Blacks, single mothers, and recent TANF recipients. Immigrants were much less likely to receive subsidies. In addition, several subgroups that were more likely to use non-relative child care were also more likely to be receiving subsidies, including families in which mothers had more formal education and families without infants. The multivariate analyses (Exhibit B.5) generally supported these findings.

Discussion

At the heart of the Community Survey are a set of related questions:

• What types of non-parental child care arrangements do low-income families choose for their children?

• What are the reasons for their choices? and

• How do child care subsidies affect their choices?

While a number of other large-scale surveys have provided information to answer the first question, there are few that have addressed the second and third questions. Underlying the questions are a set of concerns about the extent to which financial resources determine child care decisions and about whether help, in the form of a subsidy for the child care arrangement changes those decisions. If low-income families choose relative care for their children because the arrangement costs little or nothing, do they switch to regulated care once they receive a subsidy?

The responses to the survey questions, and the results of the multivariate analyses, suggest that there are a number of influences on those decisions, in addition to cost. Parents’ decisions to use relative care are strongly influenced by the age of the child, the number of children for whom they need care, their desire to have someone who shares their values care for the child, and the hours for which they need care.

Parents are more likely to choose relative care for infants and toddlers because regulated care for children of this age is more expensive and scarcer than for older children, but also because they are more anxious about this first care arrangement and feel more comfortable with a relative. As children reach preschool age, and parents focus more on readiness for school, these preferences change in favor of non-relative care, and the use of non-relative care for preschoolers changes parents’ decisions about where to place their other children. For school-age children, parents who have relatives nearby may choose this form of care because care is needed for only a few hours a day, and is not as burdensome as care for younger children.

Regardless of the age of the child, relative care (or care by a friend) may be the only choice available in many cases if parents need child care for a short period each day, either because their child is in school or because they work a small number of hours, or if they have an irregular work schedule. Regulated providers are licensed to serve a specific number of children, making it economically disadvantageous to serve a child who needs care for a few hours a day or for one or two days a week.

Once parents have made the decision to place the child in care outside the family circle, they face the choice of family child care versus center-based care. Household income does not appear to determine this decision, but parents for whom the cost of care, the safety of the child and their comfort with the caregiver were the most important considerations were more likely to choose family child care. Parents for whom support for the child’s development and school readiness was an important factor were more likely to choose center-based care. Center-based care was most likely to be chosen for preschoolers, by parents with more formal education and by those who had regular work hours and schedules.

While parents using center care were more likely both to apply for and to receive a child care subsidy, the results of the multivariate analyses show that subsidy receipt did not significantly affect parents’ choice of child care arrangement. Rather, it seems likely that families who select a more formal mode of care, such as center-based care, for some of the reasons discussed above, apply for subsidies as a consequence of that decision. Center staff may be more knowledgeable about the subsidy system and, without help from the provider, parents may be unaware of the range of child care arrangements that would be eligible for subsidies. States and communities may limit the extent to which they advertise subsidies, to avoid building large waiting lists, so that parents are dependent on providers (or friends who also receive subsidies) for information about them.

To say that subsidies did not determine parents’ choice of arrangement is not to suggest that they had no effect. It is important to note that the study was not designed to investigate other possible effects of subsidies, for example on employment or on the stability of the child care arrangement. In addition, subsidies did have an effect on the financial situation of low-income families who received them. Those parents with incomes below the Federal poverty level who paid for child care spent, on average, 22 percent of their monthly income on it. Often they needed assistance from a relative or friend to pay for child care. While the majority of parents who received a subsidy were required to make an additional payment to the provider, subsidy receipt greatly reduced the financial burden on families and allowed the poorest working parents to keep more of the income they had earned.

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