Federal subsidies not enough to cover child care costs in most states: report

Federal subsidies not enough to cover child care costs in most states: report
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Child care costs exceed federal subsidy payments for low-income parents in the majority of states, according to a report from the Department of Health and Human Services Office of Inspector General released Tuesday.

The report analyzes the Child Care Development Fund, an $8.2 billion block grant that goes toward offsetting the cost of care for 1.4 million children nationwide and is the primary federal funding source for child care assistance.


The federal recommendation is that states provide payment rates allowing eligible families to access 3 out of 4 child care providers without paying out of pocket, but the report found that level is infrequently reached.

States can set their own levels of income needed to qualify and expected family contribution.

Only seven states provided subsidies substantial enough to cover the costs of the recommended 75 percent of child care providers.

The report outlined several reasons why states would keep their levels low, including stretching limited resources to serve more families and taking into consideration the cost of higher-quality care.

The federal body dedicated to overseeing the fund, the Administration for Children and Families (ACF), relies on states to self-report that they are setting rates that ensure low-income families have equal access to care.

The report recommends that ACF should develop new methods for ensuring equal access for eligible families and encourage states to expand access to more families.

In addition, 33 states have been placed on a corrective action plan to ensure compliance.