Patterns of Subsidy Use and Stability over Time

From our analysis of child care payment records over an 18-month period, we find child care subsidy spells are relatively short in duration, with a median length of 11 months in New York and 9 months in Illinois, corresponding to the longer eligibility period in New York relative to Illinois.

Overall, about two-thirds of families in New York and almost three-quarters of families in Illinois exit the subsidy program within 18 months, and more than half (57 percent in New York; 67 percent in Illinois) exit within 12 months. In both states, among families who exit the program within 12 months, about one-third return quickly, within 3 months, and about 40 percent return within 6 months. Thus, the longitudinal analyses of 18 months of child care payment records in the four study sites illustrate a common pattern of churning in and out of the subsidy program.

Determinants of Subsidy Stability

To examine the determinants of subsidy stability, we first use longitudinal administrative program records to predict subsidy exits, length of subsidy receipt, and program churning, and then link administrative and survey data to identify factors that predict a subsidy exit among the sample of survey respondents by using a richer set of family, employment, and child care characteristics.

The findings reinforce the importance of the local eligibility period to subsidy stability. Even taking into account the rich set of survey covariates, New York respondents stay in the program longer than Illinois respondents, and exits from the program appear to be particularly clustered around the two distinct eligibility periods of 12 and 6 months, respectively.

Several family characteristics are strongly associated with subsidy stability. TANF recipients in New York, who have a 6-month recertification period, have significantly shorter spells (median spell is 6 months) than non-TANF income-eligible families in New York (median spell is 13 months). TANF recipients are also more likely to exit the program and to experience more churning (more spells) relative to non-TANF, income-eligible families in New York, but not in Illinois.

Families with preschool-aged children have shorter subsidy spells on average than families with infants and toddlers, are more likely to exit within 18 months, and are less likely to reenter the subsidy program after an exit. This finding is consistent with the expectation that older children move into other publicly subsidized preschool programs or enter school and require less child care. Living with a partner (compared to living alone) is associated with an increased risk of exiting the subsidy program; immigrant families show a lower risk of leaving the program as compared to nonimmigrant families.

Type of care at entry into the subsidy program is also associated with subsidy stability, particularly in Illinois, where entering the program with center-based care versus licensed family child care is associated with more churning in and out of the subsidy program. In contrast, in New York, informal care is associated with more churning than center-based care.

Parental employment circumstances and experiences with the subsidy program are also associated with subsidy stability. Job loss contributes to a heightened risk of exiting the subsidy program, as does employment in a job with unexpected hours, limited schedule control, and working fewer hours than average. This latter finding suggests that subsidy clients in low-hour jobs may not find the reduced value of the subsidy program sufficient to justify the difficulties of maintaining enrollment, or perhaps low-hour jobs complicate continuous program enrollment, especially in meeting minimum work-hour eligibility requirements. Families who report challenges with the subsidy program, such as difficulty completing application forms and delayed processing of the application, show an elevated risk of leaving the program during the 18-month observation period.

We expected certain child care measures, particularly provider flexibility and the availability of nonstandard care hours, to be associated with a lower risk of exiting the subsidy program, but we did not find this to be the case. However, provider safety, as perceived by parents, is related to a lower risk of subsidy exit.

Stability of Subsidized Child Care Arrangements

FINDINGS FROM ADMINISTRATIVE DATA ANALYSES
Using child care payment records, we examine three measures of stability in subsidized child care providers: (1) the total number of subsidized providers the focal child experiences over the 18-month observation period; (2) the number of changes in providers the focal child experiences during a continuous period of subsidy receipt (i.e., subsidy spell); and (3) among families who exit and reenter the program, whether the focal child returns to the program with the same or a different provider.

Most children experience only one subsidized child care provider during the 18-month observation period. A minority of children experience a change in providers during a period of continuous subsidy receipt: 14 percent in the two-site New York sample and 21 percent in the two-site Illinois sample. Most of these changes involve switching from one provider to another within the same type of care, whether center-based, licensed family child care, or informal care.

The type of child care families use with their subsidy is related to the stability of the subsidized child care arrangement. Children who first use the subsidy for informal or licensed family child care experience a slightly greater number of total providers within the 18-month observation period compared to children who use center-based care. In New York, these children are also more likely to experience a change in their provider during a continuous subsidy spell. Controlling for the number of months of subsidy receipt, children with a greater number of subsidy spells (i.e., children who cycle off and on) also experience a greater number of total providers and are more likely to experience a provider change within a continuous subsidy spell than children with fewer spells of subsidy receipt. This finding suggests that instability in subsidy receipt and instability in providers are closely linked.

Roughly one-third of children who exit and reenter the subsidy program use different providers before and after their subsidy gap. Having a longer subsidy gap is associated with higher odds of switching providers between the end of one subsidy spell and the beginning of the next spell. In Illinois, starting the subsidy program with licensed family child care or informal care versus starting with center-based care is associated with higher odds of changing providers between spells. Just over half of children in both Illinois and New York who experience a change in providers between spells switch to a provider of the same type (e.g., center to center). Changing from a less formal arrangement to center-based care is more common in Illinois, but in New York, a larger percentage of children move from a center to a less formal arrangement during a gap in assistance.

FINDINGS FROM SURVEY DATA LINKED TO CHILD CARE PAYMENT RECORDS
Although child care payment records are useful for examining the stability of subsidized care arrangements, they lack information about child care during periods when a family is not enrolled in the subsidy program. By linking these administrative records to survey data, we can examine the continuity of a subsidized child care arrangement after a family’s exit from the subsidy program. Using a multivariate Cox proportional hazards model, we estimate the relative risks of leaving the initial subsidized child care arrangement during the 18-month observation window, regardless of whether a family leaves the subsidy program.

Almost half the survey respondents who experienced a subsidy exit report they left their subsidized child care arrangement upon leaving the child care assistance program. When asked why they stopped using their subsidized child care provider, respondents report a range of reasons related to the subsidy program itself (including losing the subsidy), as well as factors related to their job, child care provider, and family circumstances (all of which can also compromise their enrollment in the subsidy program).

Still, over half the survey respondents report maintaining their subsidized child care arrangement upon leaving the subsidy program. In fact, in each of the four study sites, the median duration of a family’s initial subsidized child care arrangement spell is longer than its median subsidy program spell.

Multivariate analyses reveal that short subsidy spells (regardless of geographic site) put families at a significantly heightened risk for child care discontinuity. In the two New York counties, the median length of the first subsidized child care arrangement is longer than in the Illinois sites, perhaps because New York families do not need to recertify their subsidy eligibility as frequently as do Illinois families. In addition to subsidy loss, respondents who report having had difficulty with the subsidy application process and whose providers had experienced problems receiving payments from the subsidy program also show an increased risk of leaving their initial child care arrangement within 18 months of starting the subsidy.

The risk of leaving the initial subsidized child care arrangement is higher for preschool-aged children and for nonwhite respondents, but lower for immigrant respondents. Respondents who share a residence with non-partner adults face a lower risk of leaving this child care provider than respondents living alone with their children, suggesting that these household members can offer financial or instrumental support to help maintain the arrangement over time. Importantly, respondents living with a partner do not experience a lower risk of leaving a child care provider relative to single respondents.

Job loss increases the risk of child care discontinuity, similar to its risk for subsidy instability. Once job loss is taken into account, however, other measured job characteristics do not put respondents at a heightened risk of exiting the child care arrangement with which they started using the subsidy program.

Respondents who first used the subsidy for a licensed family child care provider as compared to a center face an increased risk of leaving that provider during the 18-month observation period. Somewhat unexpectedly, greater availability of backup providers is associated with an increased risk of provider discontinuity, suggesting that the availability of backup care is a proxy for a greater number of child care options, which may make switching providers easier when an arrangement is not working well. Other aspects related to the quality of the care arrangement predict greater continuity of care.

Having used the subsidized provider before enrolling in the subsidy program (i.e., having an existing relationship with the provider), using a provider for nonstandard-hour care when necessary (i.e., greater availability), and feeling the provider keeps one’s child safe and secure all contribute to a lower risk of leaving the provider within 18 months of first receiving a subsidy.

Together, these analyses suggest that the continuity of child care arrangements depends on a confluence of demographic, employment, provider, and subsidy program factors. Regarding the subsidy program in particular, policy parameters such as longer eligibility periods and simpler recertification processes not only contribute to the stability of subsidy receipt but also promote continuity of care.

Implications for Subsidy Program Policy

The Child Care and Development Block Grant Act of 2014 reaffirms the importance of child care assistance for low-income working families and recognizes the importance of high-quality, stable care arrangements for children and parents alike. Moreover, the newly reauthorized law underscores the need for lead agencies to provide greater transparency and a more family-friendly child care assistance program that more carefully considers the circumstances of low-income working families. The implications of the IL–NY CCRP findings are wholly consistent with the aims of the 2014 Child Care and Development Block Grant law and in some cases may provide guidance to administrators in their efforts to implement its various components in the coming years.

First, our findings suggest the following reforms would be consistent with the goal of promoting the stability of subsidy receipt and the lengthening of child care arrangement duration:

• Simplification and greater transparency of application and recertification requirements,
• Adoption of a 12-month continuous child care assistance eligibility period that does not require verification of continued eligibility throughout the 12-month period, and
• Improved timeliness of child care payments to providers.

Second, because our findings suggest that TANF families may face particular challenges maintaining their benefits, TANF families would be particularly well served by the following reforms:

• Simplification and greater transparency of eligibility and recertification requirements for TANF families, TANF caseworkers, and child care assistance caseworkers;
• Adoption of a 12-month eligibility period for TANF families; and
• Allowance for TANF families to maintain a subsidy after TANF work activities have been completed and provision of additional caseworker support to transitional TANF cases.

Third, because our findings demonstrate that job instability heightens the risk of subsidy instability and child care provider discontinuity, we suggest reforms specific to low-income families’ job circumstances, such as

• Adoption of job search allowances of at least three months to support subsidy continuity in the face of a job loss;
• Modification of eligibility requirements to account for variable, fluctuating, and unpredictable work hours and job schedules that affect the timing of care needs and family earnings;
• Implementation of graduated income caps to allow subsidized families to work toward increasing their earned income without become ineligible; and
• Raising awareness among subsidized families about rules regarding subsidy eligibility during periods of unemployment or employment changes.

Fourth, because our findings demonstrate that two-parent families are at heightened risk of subsidy exit, there may be merit in devoting policy attention to the unique child care challenges of two-parent families. The following reforms would be consistent with the goal of increasing the stability of subsidy receipt for two-parent families:

• Adoption of job search allowances to permit an unemployed parent in a two-parent family to search for work without risk of losing child care assistance, and
• Adjustment of the structure and level of income thresholds to better meet the needs of all families, including two-parent, low-income working families.

Fifth, our findings suggest there are complicated relationships between child care type, subsidy dynamics, and child care continuity that require ongoing attention by program administrators and researchers, including

• Understanding the causes of gaps in program receipt and when they reflect problematic administrative churning versus intentional program exits;
• Identifying strategies to keep children in care during gaps in subsidy coverage, whether the gap is a result of brief periods of ineligibility or administrative or budgetary disruptions in state payments to providers; and
• Identifying site-specific factors that may heighten risk of instability in child care arrangements in particular modes of care and craft responses appropriate to each type of care.