Estimates of Child Care Eligibility and Receipt for Fiscal Year 2006

By:
ASPE Staff

 

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Overview

This ASPE Issue Brief details estimates of federal child care assistance eligibility and receipt for 2006.  In fiscal year 2006, federal and state spending totaled roughly $12.2 billion to support child care services and activities to improve the affordability, availability, and quality of child care for low-income working families through the Child Care and Development Fund (CCDF) and related government funding streams.^[1]  Primarily, CCDF funds are used to subsidize child care services through vouchers.

Approximately one out of six (17 percent) federally-eligible children received subsidized care through CCDF or related government funding streams in an average month in fiscal year 2006 (see Table 1).  We define federally-eligible children to include all children who are potentially eligible to receive subsidized care based on the federal eligibility parameters of CCDF.  Federal statute permits states to provide child care subsidies to qualifying families with incomes below 85 percent of state median income.  Within federal eligibility parameters, states have flexibility in setting more restrictive rules for income eligibility.  This Issue Brief also explores estimates of child care assistance eligibility and receipt based on state-defined eligibility rules, as well as the age and poverty status of eligible children and those who receive assistance.

Child Care Estimates Based on Federal Eligibility Parameters

Seventeen percent of federally-eligible children received subsidized care through CCDF or related government funding streams in fiscal year 2006.  This number is based on estimates of the number of children eligible for child care under federal eligibility parameters and the number of children receiving subsidized care.

An estimated 14.57 million children were potentially eligible for child care assistance under the federal eligibility parameters of CCDF in an average month in 2006 (see Table 1).^[2] Federal eligibility parameters include:

• Children must be under age 13 (unless the child has special needs and is age 13-18);
• The income of the childs family must be less than 85 percent of the state median income (SMI) for a family of the same size;^[3] and
• The childs parents must be working or participating in education or training activities.^[4]

Figure 1 shows a breakdown of federally-eligible children by age and poverty status.

Figure 1:
Number of Children Potentially Eligible Under Federal Parameters,
by Age and Poverty Status (1,000s), Average Monthly, 2006

Figure 1: Number of Children Potentially Eligible Under Federal Parameters, by Age and Poverty Status (1,000s), Average Monthly, 2006

	Age 0	Ages 1-2	Ages 3-4	Age 5	Ages 6-9	Ages 10-12
<= 100% poverty	306	660	655	294	1144	747
101-150% poverty	210	469	463	268	940	751
> 150% poverty & < 85% SMI	498	1012	1142	597	2388	1912

An estimated 2.51 million children received child care services through CCDF or related government funding streams in an average month in fiscal year 2006 (see Table 1).^[5] While the majority of these children, 1.76 million, received assistance through CCDF, this estimate of receipt also includes roughly 748,000 children with subsidies funded directly through the Temporary Assistance for Needy Families (TANF) program or the Social Services Block Grant (SSBG), and state expenditures claimed as TANF maintenance of effort (MOE) funds.^[6]

Some children were more likely to receive services than others.  Eligible children from the lowest-income families were the most likely to receive child care assistance.  Roughly 39 percent of federally-eligible children from families with incomes below 100 percent of poverty and 23 percent of those from families with incomes between 101 percent and 150 percent of poverty were served (see Figure 2).^[7]  By comparison, 4 percent of federally-eligible children from families with incomes greater than 150 percent of poverty were served.  In the case of families with one adult and two children, eligible children from families with incomes greater than 150 percent of poverty would include those from families with an income greater than roughly $24,400 but less than 85 percent of their states SMI.

Figure 2:
Percentage of Children Potentially Eligibile Under Federal Parameters that Receive Child Care Subsidies,
by Poverty Status, Average monthly, 2006

Figures 3a and 3b show that federally-eligible children between ages 1 and 4 were much more likely to receive subsidized care than eligible children older than age 5.  In 2006, a quarter of federally-eligible preschool-aged children were served (including 14 percent of infants, 26 percent of children ages 1-2, and 28 percent of children ages 3-4).  By comparison, 15 percent of federally-eligible children ages 6-9 and 7 percent of federally-eligible children ages 10-12 received subsidized care.  Figures 3a and 3b also show differences in the proportion of federally-eligible children served by family income and by family income and age.

Figure 3:
Percentage of Children Potentially Eligible Under Federal Parameters that Receive Child Care Subsidies,
by Age and Poverty Status, Average Monthly, 2006

Figure 3a: Percentage of Children Potentially Eligible Under Federal Parameters that Receive Child Care Subsidies, by Age and Poverty Status, Average Monthly, 2006, Children Under Age 5

	All Children	Ages 0 to 4	Age 0	Ages 1-2	Ages 3-4
<= 100% Poverty	0.39	0.51	0.32	0.54	0.56
<=150% Poverty	0.32	0.43	0.25	0.45	0.50
All Eligible Children	0.17	0.25	0.14	0.26	0.28

Figure 3b: Percentage of Children Potentially Eligible Under Federal Parameters that Receive Child Care Subsidies, by Age and Poverty Status, Average Monthly, 2006, Children Age 5 and Older

	All Children	Age 5-12	Age 5	Ages 6-9	Ages 10-12
<= 100% Poverty	0.39	0.31	0.51	0.33	0.2
<=150% Poverty	0.32	0.25	0.41	0.28	0.15
All Eligible Children	0.17	0.13	0.22	0.15	0.07

Child Care Estimates Based on State Eligibility Rules

Within the federal eligibility parameters of CCDF, states have flexibility in setting income eligibility guidelines, parental co-payment fees, reimbursement rates to child care providers, target populations receiving priority for services, the number of work or education/training hours required, and the length of certification periods.^[8]  Based on state-defined eligibility rules for fiscal year 2006, the initial income eligibility limits for three person families ranged from about $18,200 to $46,200.^[9]  Some states allow counties and other localities to set income eligibility limits lower than the limit set by the state.  Some states also allow higher income eligibility limits for families already receiving child care subsidies. Federal regulations require states to submit CCDF Plans that outline state-defined eligibility rules for CCDF funds to the U.S. Department of Health and Human Services every two years.

An estimated 14.57 million children were federally-eligible for child care assistance in an average month in 2006.  Under state-defined eligibility rules, an estimated 8.01 million children were eligible for child care assistance in an average month in 2006 (see Figure 4).^[10]

Figure 4:
Number of Children Eligible and Number of Children Receiving Child Care Subsidies (1,000s),
Average Monthly, 2006

Figure 5 shows the extent to which children eligible for child care subsidies based on federal parameters were eligible under the rules defined by their state of residence.  Slightly more than half (55 percent) of federally-eligible children were eligible for subsidies under state-defined rules.  Almost all (95 percent) federally-eligible children from families with incomes less than 100 percent of poverty were eligible under state-defined eligibility rules.  By comparison, less than a quarter (22 percent) of federally-eligible children from families with incomes greater than 150 percent of poverty were eligible for services in their state.  This Figure shows only the percentage of children eligible for subsidies based on federal parameters that also were eligible under state rules and does not indicate rates of service.

Figure 5:
Percentage of Children Potentially Eligible Under Federal Parametres that are also Eligible Under CCDF-Defined Rules,
by Poverty Status, Average Monthly, 2006

Figure 5: Percentage of Children Potentially Eligible Under Federal Parametres that are also Eligible Under CCDF-Defined Rules,
by Poverty Status, Average Monthly, 2006

	All Children	<=100% poverty	101-150% poverty	<150% poverty & <85% SMI
Eligibile in Child's State of Residence	0.55	0.95	0.86	0.22
Not Eligible in Child's State of Residence	0.45	0.05	0.14	0.78

Approximately 31 percent of all children eligible under state-defined rules received subsidized care through CCDF or related government funding streams in fiscal year 2006 (see Figures 6a and 6b).  As was the case when considering federally-eligible children, children eligible for assistance under state-defined rules who were between the ages of 1 and 4 (46 percent of children ages 1-2 and 50 percent of children ages 3-4) or from families with incomes below poverty (41 percent of all eligible children from families with incomes below 100 percent of poverty) were the most likely to be served.

Figure 6:
Percentage of Chlidren Eligible Under CCDF State-Defined Rules that Receive Child Care Subsidies, by Age and Poverty Status, Average Monthly, 2006

Figure 6a: Percentage of Children Eligible Under CCDF State-Defined Rules that Receive Child Care Subsidies, by Age and Poverty Status, Average Monthly, 2006, Children Under Age 5

	All Ages	Ages 0 to 4	Age 0	Ages 1-2	Ages 3-4
<= 100% Poverty	0.41	0.53	0.34	0.57	0.58
<=150% Poverty	0.35	0.48	0.28	0.51	0.54
All Eligible Children	0.31	0.43	0.24	0.46	0.5

Figure 6b: Percentage of Children Eligible Under CCDF State-Defined Rules that Receive Child Care Subsidies, by Age and Poverty Status, Average Monthly, 2006, Children Age 5 and Older

	All Ages	Ages 5 to 12	Age 5	Ages 6-9	Ages 10-12
<= 100% Poverty	0.41	0.33	0.53	0.35	0.2
<=150% Poverty	0.35	0.27	0.45	0.3	0.16
All Eligible Children	0.31	0.24	0.39	0.27	0.14

Conclusion

Based on federal parameters that determine permissible eligibility, an estimated 14.57 million children were potentially eligible to receive child care subsidies in 2006. Roughly 2.51 million children, or one out of six (17 percent) federally-eligible children, received subsidized care through CCDF or related government funding streams in an average month of fiscal year 2006, with rates of coverage varying by age and poverty status.

Changes in Child Care Subsidy Eligibility and Receipt over Time

Improvements over Previous Estimates

ASPE has produced estimates of eligibility for and receipt of subsidized care through CCDF and related government funding streams for several years.  ASPE has sought to make continuous improvements to the estimation model and methodology over time, and, when possible, these improvements have been applied retroactively to previous years estimates.^[11]

As a result of improvements made to the Current Population Survey (CPS), the 2006 estimate is able to include all unmarried parents living with their children when determining the eligible population.  In previous estimates, only one of the unmarried parents could be considered in the eligibility determination process because of data limitations.  Had the improvements made to the CPS been unavailable for the 2006 estimate, the number of children estimated to be federally-eligible for subsidies would have been 516,000 children higher (an increase of about 4 percent), and the percent served would have been 0.6 percentage points lower (16.6 percent instead of 17.2 percent).  A similar increase in the number of children estimated to be eligible for subsidies based on state rules would occur if the estimation was done counting the income of unmarried partners as allowed under the improvements made to the CPS.

Trends in Eligibility and Receipt Without Improvements to the 2006 Current Population Survey

Appendix Figure 1 displays the number of children federally-eligible for subsidies and the number of children receiving subsidies during the period 1999-2006.^[12]  The number of children eligible under federal parameters in Appendix Figure 1 is calculated without using improvements in the CPS regarding unmarried parents that are only available for the 2006 estimate.  Any trends in eligibility and receipt over time should be interpreted with caution due to changes in estimation methods, measurement error, and demographic shifts affecting eligibility.

Appendix Figure 1:
Number of Children Federally-Eligible and Number of Children Receiving Child Care Subsidies
Considering Changes Added to the Current Population Survey for 2006,
Average Monthly, 1999-2006 (Millions)

Appendix Figure 1: Number of Children Federally-Eligible and Number of Children Receiving Child Care Subsidies Considering Changes Added to the Current Population Survey for 2006, Average Monthly, 1999-2006 (Millions)

	1999	2000	2001	2002	2003	2004	2005	2006 Without Improvements	2006 With Improved Methodology
# Eligible Under Federal Parameters	14.9	15.1	15.16	15.2	15.38	15.06	14.5	15.09	14.6
# Receiving Subsidies	2.1	2.4	2.5	2.4	2.36	2.3	2.4	2.5	NA

* Appendix Figure 1 was estimated without using recent improvements in the CPS for determining eligibility, which were unavailable prior to estimate year 2006.  With the improvements, the estimate of the number of federally-eligible children in 2006 is 14.6 million (see Table 1 on page 1).

Appendix Figure 2 shows the total number of children, regardless of child care eligibility, estimated to have been living in households with incomes below 100 percent and 150 percent of poverty thresholds from 1999 to 2006.  This figure has been included for reference.

Appendix Figure 2:
Number of Children Under Age 13 Living in Families with Annual Incomes Below 100% and 150% Poverty Thresholds,
1999-2006 (Millions)

Appendix Figure 2: Number of Children Under Age 13 Living in Families with Annual Incomes Below 100% and 150% Poverty Thresholds, 1999-2006 (Millions)

	1999	2000	2001	2002	2003	2004	2005	2006
<150% Poverty	15.35282712	14.52445571	14.94789377	15.28573179	15.56144962	15.43571224	15.24407244	15.68255071
<100% Poverty	9.21850838	8.84686926	8.92562017	9.24924217	9.71754654	9.82152454	9.64093382	9.63077497

Source: ASPE tabulations from the Current Population Survey, ASEC

Child Care Eligibility and Receipt - Tables

Notes on Appendix II Tables

Poverty Status: In Appendix Tables 1, 2, 3, and 5, poverty status is based on 2006 poverty thresholds published by the U.S. Census Bureau, Housing and Household Economic Statistics Division.  Since state-submitted Form-801 CCDF Administrative Records of subsidy reports recipients monthly income, the Census Bureau threshold is divided by twelve to create a comparable monthly threshold.  Due to the source and limitations of data, the family income used to estimate poverty status of children who receive subsidies is calculated differently than for children who are eligible for subsidies.  Recipient poverty status is based on family income used to determine child care subsidy eligibility, as reported by the state on Form-801 CCDF Administrative Records for fiscal year 2006.  Family income is reported after any relevant income disregards have been applied.  Poverty status of eligible children is determined based on full family income reported to the Current Population Survey for calendar year 2006 prior to application of any relevant income disregard.

Parent is Employed or Student Status: In Appendix Tables 1 and 2, parent is student status indicates that an eligible recipient lives in a household with a parent who is not employed because he or she is in school.  Eligible recipients living with an employed parent who is also in school would not be included in the parent is student category.  In the case of multiple parent households, children are categorized by the parent with the least amount of employment hours.  For example, if an eligible child has one parent working 40 hours per week and another parent working 18 hours per week, the child will be categorized as parent employed 1-19 hours.  Eligible recipients living with a parent who is employed and a parent who is not employed because he or she is in school would be included in the parent is student category.

State by State Estimates of Eligibility:  In Appendix Table 4, the estimate of potentially eligible children under federal parameters does not consider state-allowable income disregards when determining whether a childs family income is below 85 percent of SMI.  In some states, income disregards could lead to a higher estimate of children eligible under state-defined rules than under federal parameters.  In Appendix Table 5, some children from families below 150 percent of poverty are ineligible for subsidies because their family income exceeds 85 percent of SMI. In Appendix Tables 4 and 5, the two year average monthly estimates for years 2005 and 2006 use the state median incomes published in February 2005, the most recent data available to the states at the time they were preparing their FY 2006-2007 state plans.

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Endnotes

1.  The estimated $12.2 billion spent through CCDF and related government funding streams in fiscal year 2006 includes an estimated expenditure of $6.8 billion in federal CCDF funds (including the Child Care and Development Block Grant, the Child Care Entitlement to States, and transfers from the Temporary Assistance for Needy Families Block Grant (TANF) to CCDF), $2.5 billion in state matching and maintenance of effort (MOE) funds for CCDF, $1.2 billion in TANF funding spent directly on child care, $1.4 billion in excess TANF MOE (state child care expenditures claimed as TANF MOE to the extent such amounts are above the amounts already claimed as CCDF MOE), and $0.2 billion in Social Services Block Grant expenditures related to child care.

2.  The 2006 estimates of eligibility were produced using the Transfer Income Model (TRIM), a micro-simulation model maintained by the Urban Institute under contract with ASPE.  TRIM converts annual data from the Current Population Survey (CPS) into monthly data, compares these monthly data on family income and work status to CCDF rules, and generates monthly estimates of children and families eligible for CCDF child care subsidies.  Monthly estimates are averaged to produce an average monthly estimate for the year.  The 2006 estimate of eligibility relies upon data from CPS for calendar year 2006, federally-permitted eligibility rules under CCDF, and state-defined eligibility rules in the two-year CCDF plans that were effective as of October 1, 2005.   See Oliver, H., Phillips, Katherin R., Giannarelli, L, and Chen, An-Lon, June 2002, Eligibility for CCDF-funded child care subsidies under the October 1999 Program Rules: Results from the TRIM Microsimulation Model (http://aspe.hhs.gov/hsp/05/elig-ccsub/index.htm) for further methodological explanation of the TRIM estimates.  See Appendix I on page 7 for information on the number of children eligible for child care subsidies in previous years under federal parameters.

3.  States are given broad flexibility in deciding what is countable family income for purposes of determining a childs eligibility.  For example, states could disregard TANF payments in income eligibility determinations.  As a result, some states may serve children in families with unadjusted incomes greater than 85 percent of the state median income.  Under this federal income eligibility parameter, a family of three with an income greater than $45,000 would have been ineligible to receive child care subsidies in roughly half the states in 2006.  Though stated as annual amounts here, family income is calculated monthly and is based on the income of relevant adults.  State SMI is based on estimates published for fiscal year 2006 in the Federal Register: February 17, 2005 (Volume 70, Number 32).

4.  For this eligibility estimate HHS has defined working to include all work of one hour or more in a month.  The majority of federally-eligible children come from families where the parent or parents are employed an average of at least 20 hours per week.  An estimated 14 percent of federally-eligible children lived with a parent who was not employed an average of at least 20 hours per week in 2006.

5.  This estimate of receipt excludes about 12,400 children served in U.S. territories as well as children receiving services from only Head Start, state pre-kindergarten programs, or other early childhood programs without funding from CCDF or related government funding streams.  See Appendix I on page 7 for information on child care subsidy receipt in previous years.

6.  CCDF-funded children include children funded through federal CCDF funds, state CCDF funds, and transfers of TANF funds to the CCDF program. While some states include children other than CCDF-funded children in their child care data reports (generally because they combine funds from several funding streams into one child care program), these states also report the percentage of pooled funding coming from CCDF, and this percentage is used to estimate the CCDF-funded children.  The estimate assumes that children funded by TANF, TANF MOE, and SSBG have the same subsidy costs per child as CCDF-funded children, about $321 per month based on state-reported ACF-801 administrative data, and the same age and poverty distribution as CCDF-funded children.

7.  Poverty figures are based on 2006 poverty thresholds published by the U.S. Census Bureau, Housing and Household Economic Statistics Division.  The Census Bureau threshold is divided by twelve to create a monthly, rather than yearly, threshold.  For purposes of determining recipients poverty status for this estimate, recipient income is measured after any applicable state-determined income disregards are applied.  This estimation process likely overestimates to a small degree the number and percent of children from families below 100 percent of poverty who are served.

8.  Based on state CCDF plans submitted October 2005, recipient eligibility was redetermined every twelve months in nineteen states, every six months in twenty nine states, and monthly in two states.

9.  The range of income eligibility limits is based on state CCDF plans submitted October 2005.  Income eligibility limits reflect income adjusted for any income disregards provided in state plans (i.e., some states disregard TANF and SSI income).   Expressed in terms of state median income, state limits for initial income eligibility in CCDF plans for fiscal year 2006-2007 ranged from 34 percent to 88 percent of SMI.  This estimate of state median income for fiscal year 2006 is based on the U.S. Census Bureau calculations published in the Federal Register: February 17, 2005 (Volume 70, Number 32).  While the law restricts eligibility to children from families below 85 percent of SMI, the District of Columbia uses a method of calculating state median income that produces an estimated initial income eligibility limit of 88 percent of SMI when using the U.S. Census Bureau estimate.

10.  Some of ASPEs previous eligibility estimates excluded children age 4 and older that lived with at least one parent working between 1 and 19 hours per week.  The estimates shown in this Issue Brief include this population when it is otherwise eligible.  Had the previous methodology been used, the estimated number of children eligible under state-defined rules would have been about 3 percent lower (7,766,400 instead of 8,007,800) and the percentage of children served who were eligible under CCDF state rules would have been about 1 percentage point higher (32 percent instead of 31 percent).  This change was made to provide greater internal consistency with the numerator of the calculation, which includes all children receiving subsidies, including school-aged children living with parents working less than 20 hours per week. This change does not impact the estimated number of children potentially eligible under federal parameters.

11.  See Technical Appendix on Changes in Enrollment and Eligibility over Time from Child Care Eligibility and Enrollment Estimates for Fiscal Year 2005 (http://aspe.hhs.gov/hsp/08/cc-eligibility/ib.htm) for a description of previous changes in the estimation of eligibility and receipt.

12.  Where possible, improvements in the methodology and model for child care estimation have been applied to estimates of child care eligibility and receipt in previous years.  For this reason, prior year estimates in Appendix Figure 1 may not match estimates published in previous Issue Briefs.

How to Obtain a Printed Copy

To obtain a printed copy of this report, send the title and your mailing information to:

Human Services Policy, Room 404E
Assistant Secretary for Planning and Evaluation
U.S. Department of Health and Human Services
200 Independence Ave, SW
Washington, DC 20201

Fax:  (202) 690-6562
Email:  pic@hhs.gov