Toward a New Child Care Policy

Brief #2 in the series "Perspectives on Low-Income Working Families"

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

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Child care policy in the United States has focused primarily on helping working families (or parents preparing to enter the workforce) afford child care. As box 1 illustrates, a large portion of mothers, including mothers of the youngest children, were in the labor force in 2003. Those children experienced a wide range of child care settings, of widely varying quality.

Support to help parents afford child care is delivered through two major programs: the Child Care and Development Fund (CCDF), a block grant to states primarily designed to provide child care subsidies to low-income working families, and the Dependent Care Tax Credit, designed to give tax breaks to middle-class families to help them afford child care. This brief focuses primarily on the child care subsidy program.

A significant portion of child care policymaking has become the responsibility of the state governments rather than the federal government. Federal block grants to states with federal guidelines, rules, and earmarks have delegated substantial authority and decisionmaking to the states. However, the federal government remains a key player in two ways: it provides the majority of overall funding and it sets the major policy parameters for child care funding.

Funding for child care subsidies has grown dramatically since welfare reform efforts in the late 1990s, with increases in CCDF funding boosted by state discretionary use of Temporary Assistance for Needy Families (TANF) funds for child care. Most states have operated their child care programs primarily within the policy and funding levels set for CCDF and TANF. Typically, states spend about 91 percent of state and federal funding on child care subsidies and about 9 percent on quality improvement, mainly because of federal priorities set in the block grants (U.S. Department of Health and Human Services [HHS] 2003). A large number of children—1.75 million a month—are served through the child care subsidy system. Table 1 summarizes major facts about the ages of children served and the settings in which they receive care.

At federal and state levels, child care has generally been treated separately from other early care and education programs, such as Head Start, pre-kindergarten programs, and intervention programs for children with disabilities, although innovative collaborative planning is emerging.

Note: This report is available in its entirety in the Portable Document Format (PDF).

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

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