CHILD CARE

Access to Subsidies 

and Strategies to 

Manage Demand Vary 

Across States 

Report to Congressional Committees

December 2016

GAO-17-60

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-17-60, a report to 

congressional committees

December 2016

CHILD CARE

Access to Subsidies and Strategies to Manage 

Demand Vary Across States

What GAO Found

According to GAO’s analysis of nationwide data for an average month in 2011-

2012 approximately 8.6 million children under age 13 were estimated to be 

eligible for subsidies under the Child Care and Development Fund (CCDF)

program based on policies in their states, and about 1.5 million received them. 

When compared with all eligible children, those receiving subsidies tended to be 

younger (under age 5) and poorer (in families below federal poverty guidelines). 

(See figure.) Some state-by-state variations existed in these and in other 

characteristics GAO analyzed, such as race, when comparing children eligible 

for and receiving subsidies. 

Children Eligible for and Receiving Subsidies Based on State Policies 

Notes: Percentages may not sum to 100 percent due to rounding. In the poverty graph, margins of 

error (MOE) are less than +/- 2 percentage points. In the age graph, eligible children have MOEs less 

than +/- 2 percentage points and data on subsidy recipients are population totals. Figures represent 

eligibility and receipt in an average month. TRIM3 data were calendar year and HHS data fiscal year.

According to various officials and stakeholders, the number of families receiving 

subsidies does not equate to the population of eligible families who are 

interested in pursuing them or who may need them. They also said that it is 

difficult to accurately predict the extent to which eligible families are likely to 

apply for and receive subsidies. For example, some eligible families may not 

pursue subsidies because they may not know about them or find applying 

burdensome.

Child care officials GAO interviewed said that they use wait lists and other 

strategies to manage caseloads when more families want subsidies than their 

states can serve. Wait lists can be challenging to manage, according to child 

care officials from 23 of the 32 states that GAO interviewed. Challenges included

keeping lists current and accurate. Forty states also prioritize certain families for 

subsidies, such as recipients of the Temporary Assistance for Needy Families 

program and children in protective services. States also stop taking applications 

from all or some types of eligible families and modify eligibility policies to manage 

caseloads. Child care officials also noted that they leverage other programs and 

funds to meet the child care needs of low-income working families.

View GAO-17-60. For more information, 

contact Cindy Brown Barnes at (202) 512-

7215 or brownbarnesc@gao.gov.

Why GAO Did This Study

Child care subsidies help low-income 

families pay for care, allowing parents 

to work or attend school or training. 

Through the CCDF, the federal 

government provides states funding to 

assist these families. Federal law sets

broad subsidy eligibility requirements

and allows states to establish more 

restrictive policies. Due to limited 

funds, some eligible families may not 

be able to get subsidies and may be 

placed on wait lists. 

Congress included a provision in 

statute for GAO to review participation 

in the CCDF program across states. 

GAO examined: (1) what is known 

about the number and types of families 

eligible for child care subsidies and the 

extent to which they receive them; and 

(2) how states determine which eligible 

families receive subsidies when 

subsidy need exceeds supply. GAO 

used Urban Institute data from 2010-

2012 to estimate eligible children (most 

recent at time of analysis) and U.S. 

Department of Health and Human 

Services (HHS) data on subsidy 

receipt (same years as Urban’s data). 

GAO also held interviews with child 

care officials from 32 states with wait 

list policies about subsidy need and 

management. GAO also interviewed 

HHS officials and child care 

stakeholders (selected by reviewing 

studies and websites, and obtaining

suggestions); reviewed federal laws

and regulations; and examined state 

policies in the CCDF Policies Database 

Book of Tables, an HHS funded project 

that compiles policies for the 50 states 

and District of Columbia.

GAO makes no recommendations in 

this report. HHS noted that the report 

provides valuable information about 

access to CCDF subsidies.
Page i GAO-17-60 Child Care

Letter 1

Background 4

The Estimated Number and Characteristics of Children Eligible for 

and Receiving Child Care Subsidies Varies Across States 8

States Use Wait Lists and Other Methods to Help Determine 

Which Eligible Families Receive Subsidies 35

Agency Comments and Our Evaluation 42

Appendix I Objectives, Scope, and Methodology 44

Appendix II Comments from the Department of Health and Human Services 52

Appendix III GAO Contact and Staff Acknowledgments 55

Tables

Table 1: Reported Child Care and Development Fund (CCDF) 

Expenditures and Reported Number of Children Served, 

Fiscal Years 2012-2014 6

Table 2: Child Care and Development Fund (CCDF) Reported 

Income Limits, by State, as a Percentage of 2014 Federal 

Poverty Guidelines 12

Table 3: Reported State Child Care and Development Fund 

(CCDF) Eligibility Policies for Minimum Number of Hours 

Worked, 2014 14

Table 4: Status of States’ Use of Wait Lists and Discussion Group 

Participation 50

Figures

Figure 1: Percentage of Children Meeting Federal Child Care and 

Development Fund Requirements Who Met Eligibility 

Policies in Each State and Percentage Who Received 

Subsidies 10

Figure 2: Eligible Children and Subsidy Recipients Nationwide, by 

Income to the Federal Poverty Guidelines, 2011-2012 17

Contents
Page ii GAO-17-60 Child Care

Figure 3: Eligible Children and Subsidy Recipients with Family 

Income Less Than 100 Percent of the Federal Poverty 

Guidelines, 2011-2012 19

Figure 4: Percentage of Eligible Children and Subsidy Recipients 

Nationwide by Age, 2010-2012 21

Figure 5: Eligible Children and Subsidy Recipients Age 2 to 4 

Years Old, 2010-2012 22

Figure 6: Eligible Children and Subsidy Recipients Nationwide by 

Head of Household, 2011-2012 23

Figure 7: Eligible Children and Subsidy Recipients in SingleParent Families, 2011-2012 25

Figure 8: Eligible Children and Subsidy Recipients by Race and 

Ethnicity, 2010-2012 26

Figure 9: Eligible Children and Subsidy Recipients Who Are Black, 

2010-2012 27

Figure 10: Eligible Children and Subsidy Recipients Who Are 

Hispanic, 2010-2012 29

Figure 11: Eligible Children and Subsidy Recipients Who Are 

White, 2010-2012 31

Abbreviations 

ASPE Office of the Assistant Secretary for Planning and 

Evaluation

CCDBG Child Care and Development Block Grant

CCDF Child Care and Development Fund

CPS Current Population Survey

HHS U.S. Department of Health and Human Services

MOE margin of error

NWLC National Women’s Law Center

OCC Office of Child Care

SMI state median income

SSBG Social Services Block Grant

TANF Temporary Assistance for Needy Families

TRIM3 Transfer Income Model, version 3

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Page 1 GAO-17-60 Child Care

441 G St. N.W.

Washington, DC 20548

December 15, 2016

The Honorable Lamar Alexander

Chairman

The Honorable Patty Murray

Ranking Member

Committee on Health, Education, Labor, and Pensions

United States Senate

The Honorable John Kline

Chairman

The Honorable Robert C. “Bobby” Scott

Ranking Member

Committee on Education and the Workforce

House of Representatives

Many families struggle to afford child care, particularly those who are lowincome. According to Census data, poor families who pay for child care 

spend about 30 percent of their monthly income on care, which is well 

above the U.S. Department of Health and Human Services (HHS) defined 

level of affordable care—10 percent or less of family income.1,2 Child care 

subsidies help low-income families afford child care so parents can work 

or attend school or job training. The federal government provides funding 

for subsidies to states through the Child Care and Development Fund 

(CCDF) for improving the affordability, availability, and quality of child 

care. In fiscal year 2014, federal government expenditures totaled about 

$6.3 billion for CCDF subsidies and related services.

Under CCDF, states have substantial flexibility to establish their own 

eligibility criteria that determine which low-income working families will be 

served. However, limited funds can prevent some states from serving all 

applicants who are eligible and, as such, some low-income working 

families who could benefit from and want child care subsidies may not be 

able to get them. Some families may not qualify for subsidies based on 

eligibility policies in their state. Others may not know about the subsidies, 

 1

U.S. Census Bureau, Who’s Minding the Kids? Child Care Arrangements: Spring 2011 

(April 2013), p.17. Data represent families with mothers present and children under15 

years of age.

2

Council of Economic Advisers, The Economics of Early Childhood Investments, 

(December 2014), pp.13-14.

Letter
Page 2 GAO-17-60 Child Care

may find it difficult to apply for them, or may be wait listed because their 

state cannot afford to subsidize all eligible applicants. The Child Care and 

Development Block Grant Act of 2014 (CCDBG Act of 2014) included a 

provision for GAO to review the extent of participation in the CCDF 

program across states.3 We examined:

1. What is known about the number and types of families eligible for 

child care subsidies and the extent to which they receive them; and

2. How states determine which eligible families receive subsidies when 

subsidy need exceeds supply.

To determine what is known about families eligible for subsidies and the 

extent that they receive them, we estimated the number of children 

nationwide and state-by-state that: (1) met federal requirements for CCDF 

eligibility and (2) were eligible to receive CCDF subsidies based on state 

policies.4 We also compared the characteristics of children eligible for 

subsidies to children receiving subsidies. We used data from Urban 

Institute’s Transfer Income Model, version 3 (TRIM3) to estimate the 

number of children meeting federal requirements and state eligibility 

polices.5 We used HHS’s CCDF summary data tables from administrative 

records, as well as HHS’s public use sample data on CCDF recipients, to 

 3

Pub. L. No. 113-186, § 12, 128 Stat. 1971, 2001. The CCDBG Act of 2014 authorized 

funding through fiscal year 2020 for the discretionary funding portion of CCDF. The Child 

Care and Development Fund (CCDF), a term that is not found in statute, is comprised of 

two funding sources: mandatory and matching funding authorized under section 418 of the 

Social Security Act, and discretionary funding in the form of block grants authorized under 

the Child Care and Development Block Grant Act of 1990, as amended. In addition, states 

may transfer up to 30 percent of their allotment under the Temporary Assistance for 

Needy Families block grant to the CCDF. To access matching funds, a state must provide 

a share of the matching funds based on the federal Medicaid matching rate, and meet its 

required maintenance of effort.

4

Federal law provides general requirements regarding eligibility for CCDF benefits, 

including requirements concerning family income and the age of children. 42 U.S.C. § 

9858n(4). States then have discretion within these broad federal parameters to set more 

restrictive eligibility policies. 

5

TRIM3 is a comprehensive microsimulation model that uses Census’ Current Population 

Survey (CPS) data to simulate potential eligibility in a variety of government programs, 

including CCDF. To improve the reliability of our estimates, we used multiple years of 

TRIM3 data to generate subsidy eligibility estimates for an average month. For nationwide 

federal and state eligibility estimates, as well as for most state-level estimates, we used 

data from calendar years 2011-2012, the most recent available at the time of our analysis. 

However, for state-level estimates of the age and race and ethnicity of eligible children we 

used data from calendar years 2010-2012 because the additional year increased the 

reliability of estimates for subgroups within states.
Page 3 GAO-17-60 Child Care

gather information on children receiving subsidies.6 We determined the 

statistical significance of comparisons between children eligible for 

subsidies and children receiving subsidies at a 95 percent confidence 

level. We assessed the reliability of all sources by (1) performing 

electronic testing of required data elements, (2) reviewing existing 

information about the data and systems that produced them, and (3) 

interviewing agency and other officials knowledgeable about the data. We 

determined that the data were sufficiently reliable for the purposes of this 

report.7

To examine how states determine which eligible families receive 

subsidies when need exceeds availability, we held interviews with child 

care administrators or their designees from 32 states that had wait list 

policies about how they assess need for subsidies in their states, 

prioritize who they serve, and manage wait lists.8 Of these 32 states, 19 

used wait lists as of early 2015. The remaining 13 states served all 

applicants they determined eligible for the program, thus did not use wait 

lists. To answer both objectives, we reviewed applicable federal laws and 

regulations, and interviewed HHS officials, and contractors who provide 

technical assistance on child care subsidy eligibility and access issues. 

We also interviewed stakeholders from research and advocacy 

organizations, as well as academia. We identified interviewees through 

reviewing policy papers and applicable websites, attending webinars, and 

asking HHS officials and other interviewees to suggest additional 

knowledgeable individuals to contact. We selected a total of seven 

stakeholders and government officials to participate in a group discussion 

 6

HHS’s public use sample data on CCDF recipients is a sample of families and children 

drawn from the CCDF administrative records. Throughout this report, we refer to HHS’s 

CCDF summary data tables from administrative records as the “HHS administrative data”, 

and we refer to HHS’s public use sample data on CCDF recipients as “HHS sample data”. 

Although we used the same years of data when analyzing HHS and TRIM3 data, HHS 

data are fiscal year and TRIM3 data are calendar year. 

7

Throughout this report, we do not report estimates that we determined to be unreliable.

For TRIM3 estimated percentages, and for HHS sample data estimated percentages, we 

considered unreliable any estimates where the margin of error exceeded 15 percentage 

points. For TRIM3 and HHS sample data count estimates, we considered unreliable any 

estimates where the relative margin of error exceeded 15 percent. In addition, we 

considered counts and percentages from the HHS summary data tables to be unreliable if 

15 percent or more of records have missing data for the characteristic being analyzed.

8

The results from these interviews are not generalizable to all states. In the report, we 

refer to group interview participants as state child care officials or simply state officials. An 

additional state also had a wait list policy, but declined to participate in our groups.
Page 4 GAO-17-60 Child Care

about good wait list practices, which we used to inform our questions for 

the group interviews we held with state child care officials described 

above.

We also identified and reviewed applicable studies that discussed 

eligibility and access issues associated with child care subsidies. We 

identified studies through reviewing key online research repositories and 

consulting with interviewees. Finally, we primarily used Urban Institute’s 

2014 CCDF Policies Database Book of Tables to review state policies.9

We conducted our work from May 2015 to December 2016 in accordance 

with generally accepted government auditing standards. Those standards 

require that we plan and perform the audit to obtain sufficient, appropriate 

evidence to provide a reasonable basis for our findings and conclusions 

based on our audit objectives. We believe that the evidence obtained 

provides a reasonable basis for our findings and conclusions based on 

our audit objectives. Details on our objectives, scope, and methodology 

can be found in appendix I.

The CCDF is a key federal funding source to states for providing child 

care subsidies to low-income parents so they can work, look for jobs, or 

participate in education and training activities. States also use CCDF 

funds to improve the quality and availability of child care for all families 

through activities such as providing training to providers or targeting funds 

to increase the supply of limited types of care, such as for infants. HHS’s 

Office of Child Care (OCC) administers the CCDF at the federal level and 

 9

HHS funds the CCDF Policies Database project and the Urban Institute maintains it. This 

project includes an Excel database of CCDF policies from the 50 states and District of 

Columbia (DC) (which is counted as a state). Information about policies is primarily from 

reviews of detailed policy documents that caseworkers use to administer the program in 

each state. Urban Institute publishes selected policies for all states annually in its Book of 

Tables (see Sarah Minton, Kathryn Stevens, Lorraine Blatt, and Christin Durham (2015). 

The most recent available at the time of our analysis was, The CCDF Policies Database 

Book of Tables: Key Cross-State Variations in CCDF Policies as of October 1, 2014, 

OPRE Report 2015-95 (Washington, DC: Office of Planning, Research and Evaluation, 

Administration for Children and Families, U.S. Department of Health and Human 

Services). The tables created from the database were reviewed by almost all state 

administrators and verified for accuracy, with two states not providing verification. As 

noted in various places in this report, in a few states child care policies vary across subareas within a state and in those cases the Urban Institute’s tables show information for 

the most populous area. Although some caseworker manuals may include policies derived 

from state legal requirements, GAO did not examine state statutes and regulations nor did 

we independently verify the information in the Urban Institute’s tables.

Background
Page 5 GAO-17-60 Child Care

provides guidance and technical assistance to states on how to operate 

their subsidy programs. Federal law includes some broad eligibility 

requirements, such as children must generally be under the age of 13 and 

reside with families whose income must be at or below 85 percent of state 

median income (SMI).10

Within these broad federal requirements, states have substantial flexibility 

in establishing more restrictive eligibility criteria and other child care 

subsidy policies and these policies affect how resources for child care 

subsidies are allocated in a state. For example, the CCDBG Act requires

states to give priority to very low-income families and children with special 

needs for subsidy receipt, but states may define “very low-income” and 

“special needs child” and determine how to prioritize these groups.11

Some states may establish priority groups to serve such families before 

other types of families and other states may use different methods, such 

as making it easier for these families to access care by waiving copayments or paying higher reimbursements to providers for serving such 

families. States also may set any maximum family income eligibility limit 

at or below 85 percent of SMI for families of the same size. Other policies 

that may affect access to child care subsidies include whether income 

from all members in a household are counted toward the income limit 

states set for CCDF and the amount families have to pay for a portion of 

their child care as a condition of receiving a subsidy.

Federal law and regulations establish state reporting requirements for 

administering CCDF funds. Under these requirements, states must report 

their CCDF expenditures (e.g., direct and non-direct services, quality 

improvement activities, administrative expenses). States must also report 

data on the number of children served via CCDF subsidies, submitting it 

to HHS monthly (or quarterly) as well as annually. HHS uses these data 

to estimate the average monthly number of children served via CCDF 

subsidies nationally and state-by-state (see table 1).

 1042 U.S.C. § 9858n(4). 

1142 U.S.C. § 9858c(c)(3)(B)(i), 45 C.F.R. §§ 98.16(g), 98.46. The CCDBG Act of 2014 

also includes provisions related to improving access to high quality child care for children 

experiencing homelessness.
Page 6 GAO-17-60 Child Care

Table 1: Reported Child Care and Development Fund (CCDF) Expenditures and 

Reported Number of Children Served, Fiscal Years 2012-2014 

Fiscal 

year

Federal CCDF 

expendituresa

(In billions)

State CCDF 

expendituresb

(In billions)

Total CCDF 

expendituresc

(In billions)

Average 

monthly 

number of 

children served

(in millions)

2012 $6.3 $2.3 $8.6 1.50

2013 $6.4 $2.2 $8.6 1.45

2014 $6.3 $2.1 $8.4 1.44

Source: U.S. Department of Health and Human Services data | GAO-17-60

a

Federal expenditures are from the three federal funding streams—discretionary, mandatory, and 

matching—and include funds appropriated in prior fiscal years.

b

State expenditures include matching funds and Maintenance of Effort requirements.

c

Reported expenditures include funds transferred from the Temporary Assistance for Needy Families 

(TANF) program to CCDF. States are allowed to transfer up to 30 percent of their TANF funds to 

CCDF and such funds are subject to the requirements of the Child Care and Development Block 

Grant Act, as amended.

CCDF is not an entitlement program, which means that states are not 

required to serve all eligible families who apply for CCDF subsidies; thus 

some eligible families who do apply for subsidies may not receive them. 

This can occur when a state does not have sufficient funds to serve all 

eligible applicants. Such states may wait list applicants or place limits on 

when families can apply for the program or which families receive 

subsidies. In early 2015, 30 states reported that they served all eligible 

applicants who applied for CCDF subsidies and 21 reported that they wait 

listed applicants or stopped taking applications when they could no longer 

serve new clients.12 Families who qualify for, but do not receive, CCDF 

subsidies could still receive public assistance with their child care through 

other federal or state programs such as Temporary Assistance for Needy 

Families (TANF) (accessed directly through the TANF program), Head 

Start, the Social Services Block Grant (SSBG), or a state’s prekindergarten program.13

 12National Women’s Law Center, Building Blocks: State Child Care Assistance Policies 

2015, p. 9. The District of Columbia is included in the 30 states.

13Head Start provides preschool children of low-income families with a comprehensive 

program to meet their emotional, social, health, nutritional, and psychological needs. Early 

Head Start provides similar services to infants and toddlers under age 3. 
Page 7 GAO-17-60 Child Care

In November 2014, Congress passed the Child Care and Development 

Block Grant Act of 2014.14 This Act included several new provisions for 

the program, including: (1) permitting children to remain in the program 

for at least 12 months as long as their family’s income does not exceed 

85 percent of SMI;15 (2) at a state’s option, terminating assistance when a 

parent experiences a non-temporary job loss (or cessation of education or 

training), but only after continuing assistance for at least 3 months in 

order for parents to look for work;

16 and (3) requiring states to implement 

a graduated phase-out of assistance if, at re-determination, the family’s 

income exceeds state eligibility limits, but is still under 85 percent of 

SMI.17

 14Pub. L. No. 113-186, 128 Stat. 1971.

15Pub. L. No. 113-186, § 5(b)(2)(C), 128 Stat. 1971, 1978 (adding 42 U.S.C. § 

9858c(c)(2)(N)(i)(I)). 

16Pub. L. No. 113-186, § 5(b)(2)(C), 128 Stat. 1971, 1978 (adding 42 U.S.C. § 

9858c(c)(2)(N)(iii)). 

17Pub. L. No. 113-186, § 5(b)(2)(C), 128 Stat. 1971, 1978 (adding 42 U.S.C. § 

9858c(c)(2)(N)(iv)). 
Page 8 GAO-17-60 Child Care

The estimated population eligible for and receiving child care subsidies 

varied among states. According to GAO’s analysis, out of the estimated 

14.2 million children under age 13 nationwide who met federal work and 

income requirements for subsidies in an average month in 2011 and 

2012, an estimated 8.6 million were eligible according to the eligibility 

policies in their states, and about 1.5 million received them.18 Children 

who received child care subsidies differed across a variety of

characteristics when compared to the eligible population in their state.19 In 

particular, subsidy-recipient children were more often age 2 to 4, in very 

low-income families, Black, and in single-headed households than the 

overall population of eligible children in their state.20 The number of 

children in families receiving subsidies does not equate to the population 

of eligible children in families who are interested in pursuing subsidies or 

who need them, which can be difficult to predict.

 18Throughout this section, we analyzed TRIM3 microsimulation data to estimate the 

number of eligible children. The estimated number of children who met federal CCDF 

eligibility requirements had a margin of error equal to +/- 2 percent of the estimate itself. 

The estimated number of children who met state eligibility policies had a margin of error 

equal to +/- 3 percent of the estimate itself. The number of children receiving subsidies is 

from HHS administrative data.

19We calculated our estimates of children eligible for subsidies and children receiving 

subsidies from three different sources. The data we present on children eligible for 

subsidies are estimates from TRIM3, a microsimulation model that predicts eligibility 

based on family characteristics and modeling state eligibility policies in each state. The 

data we present on children receiving subsidies—for all characteristics except age—are 

estimates created from HHS’s public use sample data. This sample is drawn from the 

administrative data HHS collects from the states on the number and characteristics of 

children that receive CCDF subsidies. We obtained the data we present on subsidy 

recipients by age from HHS’s full administrative file. 

20By Black children, we mean non-Hispanic Black children. We include Hispanic black 

children in our Hispanic ethnic group. 

The Estimated 

Number and 

Characteristics of 

Children Eligible for 

and Receiving Child 

Care Subsidies Varies 

Across States
Page 9 GAO-17-60 Child Care

States have the flexibility to establish specific eligibility policies within 

broad federal eligibility requirements, and generally fewer families qualify 

for subsidies after state policies are applied and even fewer receive 

them.21 According to our analysis, an estimated 14.2 million children were 

in families who met federal CCDF eligibility requirements for child care 

subsidies in an average month over calendar years 2011 and 2012.22

When state eligibility policies were applied to this population, an 

estimated 8.6 million (about 61 percent of the population meeting federal 

requirements) were eligible.23,24 Moreover, of the 14.2 million children 

meeting federal requirements, 1.5 million (11 percent) received them (see 

fig. 1).25

 21Other factors, such as demographics, may also influence the size of the eligible 

population. For example, California and Texas were each estimated to have over a million 

eligible children in 2011 and 2012 based on their states’ eligibility policies. On the other 

end of the spectrum, smaller states, such as Montana, North Dakota, and Vermont each 

had fewer than an estimated 20,000 eligible children.

22The estimated number of children who met federal CCDF eligibility requirements had a 

margin of error equal to +/- 2 percent of the estimate itself. 

23The estimated number of children who met state eligibility policies had a margin of error 

equal to +/- 3 percent of the estimate itself. The estimated percentage of children meeting 

federal requirements who met their state’s eligibility policies had a margin of error less 

than +/- 1.5 percentage points.

24To compare the relative size of the eligible population of children across states, we used 

children meeting federal eligibility requirements (as identified in the TRIM3 

microsimulation model) as our comparison group. We combined average monthly data 

across two years, 2011 and 2012, to create these estimates. For more information on this 

methodology, see appendix I.

25The estimated percentage of children meeting federal requirements who received 

subsidies had a margin of error less than +/- 1 percentage point.

State Policies Influence 

the Size of the Estimated 

Population Eligible for 

Subsidies and Who 

Receives Them
Page 10 GAO-17-60 Child Care

Figure 1: Percentage of Children Meeting Federal Child Care and Development Fund Requirements Who Met Eligibility 

Policies in Each State and Percentage Who Received Subsidies

Notes: Figure represents eligibility and subsidy receipt in an average month over 2011-2012.

The percentages of children meeting federal requirements who met their state’s eligibility policies are 

calculated by dividing, for each state, the estimated number of children eligible according to their 

state policies by the estimated number of children that meet federal requirements. The margins of 

error (MOE) for most estimates are less than +/- 10 percentage points. The following states had 

MOEs between 10 and 14 percentage points: AL, LA, MS, TN.

The percentages of children meeting federal requirements who receive subsidies are calculated by 

dividing, for each state, the number of children receiving subsidies in their state by the estimated 

number of children that meet federal eligibility requirements. The MOEs for 37 states are less than +/-

5 percentage points and the MOEs for the remaining states are at or below +/- 10 percentage points.

The nationwide percentages (61% and 11%) had MOEs less than +/- 1.5 percentage points.
Page 11 GAO-17-60 Child Care

The extent to which children meeting federal requirements also met the 

eligibility policies specific to their states varied widely by state. Figure 1 

shows, for example, that in three states (Iowa, Nebraska, and Maryland) 

under 40 percent of children meeting federal requirements were 

estimated to be eligible based on their state’s policies; and in three others 

(Maine, New Mexico, and the District of Columbia), all or nearly all such 

children were estimated to be eligible. States such as Kansas, New 

Hampshire, and Pennsylvania were closer to the national percentage, 

with about 60 percent of children who met federal requirements meeting 

their state eligibility policies26. The dark portions of the state bars in figure 

1 also show that fewer than 25 percent of the estimated children meeting 

federal eligibility requirements received subsidies in an average month in 

any state.27 Subsidy receipt ranged from a high of approximately 21 

percent of estimated children meeting federal eligibility requirements in 

New Mexico to a low of approximately 5 percent in Nevada.28

States’ policies include a range of eligibility criteria related to income, 

employment, and educational activities, among other criteria, which can 

influence the size of the eligible population in each state.29 It is the 

 26For Iowa, Nebraska and Maryland, the percent of children meeting federal requirements 

that met state eligibility policies was 34 percent, 37 percent, and 38 percent, respectively. 

These estimated percentages each had margins of error of +/- 5 percentage points or 

less. For Kansas, New Hampshire and Pennsylvania, the percent of children meeting 

federal requirements that met state eligibility policies was 61 percent, 60 percent, and 58 

percent, respectively. These estimated percentages had margins of error of +/- 5 

percentage points, +/- 3 percentage points, and +/- 6 percentage points, respectively. In 

Maine the percent of children meeting federal requirements that met state eligibility 

policies was 95 percent, with a margin of error of +/- 2 percentage points. In New Mexico 

and D.C., the percent of children meeting federal requirements that met state eligibility 

policies was close to 100 percent, with margins of error of less than +/- 1 percentage 

point. See Appendix I for an explanation of how we calculated the margins of error for 

New Mexico and D.C.

27While many children who are eligible for CCDF subsidies do not receive them, some get 

assistance via other federal funds, such as directly from TANF or SSBG funds. 

28New Mexico’s estimated percentage had a margin of error of +/- 7.2 percentage points 

and Nevada’s estimated percentage had a margin of error of +/- 1.9 percentage points. 

29The CCDF Policies Database Book of Tables: Key Cross-State Variations in CCDF 

Policies as of October 1, 2014, OPRE Report 2015-95. There are other types of subsidy 

policies related to determining eligibility that vary across states, such as age requirements 

for different groups of children or who is considered part of a family unit. We focus on 

income, employment, and education as CCDF is dedicated to helping low-income families 

who are working or engaged in education or training.
Page 12 GAO-17-60 Child Care

interplay of these various policies that influences the size of the eligible 

population in a given state.

Income: Each state sets income limits requiring families to have income 

below a certain threshold in order to be eligible for child care subsidies.30

Across states, the initial eligibility threshold for a three-person family 

ranged from 121 percent of the 2014 federal poverty guidelines to 298 

percent of this level. Table 2 shows where states fall within that range. 

Table 2: Child Care and Development Fund (CCDF) Reported Income Limits, by 

State, as a Percentage of 2014 Federal Poverty Guidelines

Income cannot exceed...

150% of 2014 Federal 

Poverty Guidelines

151%-200% of 2014 

Federal Poverty 

Guidelines

201%-300% of 2014 Federal 

Poverty Guidelines

Alabama Arizona Alaska

Arkansas Delaware California

Florida Illinois Colorado (Denver)a

Georgia Kansas Connecticut

Idaho Louisiana DC

Indiana Maryland Hawaii

Iowa Minnesota Maine

Kentucky Mississippi Massachusetts

Michigan New Jersey Nevada

Missouri New Mexico New Hampshire

Montana New York North Dakota

Nebraska North Carolina

Ohio Oklahoma

South Carolina Oregon

West Virginia Pennsylvania

Rhode Island

South Dakota

Tennessee

Texas (Gulf Coast)b

 30State income limits are subject to the maximum limits allowed by federal CCDF 

requirements, which is 85 percent of SMI. States tend to have income limits lower than 

this maximum limit. In order to compare income limits across states, we use figures that 

have been converted to a percentage of federal poverty guidelines, as defined by HHS.
Page 13 GAO-17-60 Child Care

Income cannot exceed...

150% of 2014 Federal 

Poverty Guidelines

151%-200% of 2014 

Federal Poverty 

Guidelines

201%-300% of 2014 Federal 

Poverty Guidelines

Utah

Vermont

Virginia (Selected 

counties)c

Washington

Wisconsin

Wyoming

15 states 25 states 11 states

Sources: GAO analysis of The CCDF Policies Database Book of Tables, October 2014 data and Department of Health and Human 

Services data. | GAO-17-60

Notes: The 2014 federal poverty guidelines for a three-person family was $19,790 annually for the 48 

contiguous states, $24,740 for Alaska, and $22,760 for Hawaii.

a

In Colorado, counties may establish income thresholds between 130 and 225 percent of the federal 

poverty guidelines. The entry in the table represents Denver county.

b

In Texas, local boards have the authority to establish eligibility thresholds either as a percent of 

federal poverty guidelines or state median income (SMI), provided that it does not exceed 85 percent 

of SMI. The entry in the table represents the Gulf Coast region, which is the most populous area in 

the state.

c

In Virginia, eligibility thresholds range from 150 to 185 percent of the federal poverty guidelines. The 

entry in the table represents a group of counties where the limit is set at 185 percent. This group 

includes Arlington, Fairfax, and Loudoun counties, among others.

States that used wait lists to manage demand for subsidies tended to 

have higher income limits. Specifically, nearly two-thirds of states that 

used wait lists had income limits at or above 175 percent of the poverty

guidelines. For states with the lowest income limits, wait lists were less 

common. Specifically, all but one state that limited eligibility to families 

with incomes below 150 percent of the federal poverty guidelines served 

all eligible families instead of using wait lists as of early 2015.

Employment: Policies related to employment may include whether a 

state specifies a minimum number of hours worked or whether searching 

for a job is a qualifying activity. For example, based on our analysis of the 

CCDF Policies Database Book of Tables, 31 states did not consider 

searching for a job to be a qualifying activity for initial eligibility as of 

October 2014, while 9 states allowed it for up to a month, and 11 allowed 
Page 14 GAO-17-60 Child Care

it for more than a month.31 For those who qualify based on employment, 

some states specify that parents or guardians must work a minimum 

number of hours per week or per month. Among the states with such a 

requirement, some specified a minimum of 15 hours per week, and others 

specified up to 30 hours per week (see table 3).

Table 3: Reported State Child Care and Development Fund (CCDF) Eligibility 

Policies for Minimum Number of Hours Worked, 2014

No minimum hourly work

requirement

12-20 Hrs./Wk 21-30 Hrs/Wk

Alaska Alabama Arkansas

Arizona DC Georgia

California Florida Iowa

Colorado Kentucky Kansas

Connecticut Massachusetts Louisiana

Delaware Minnesota Mississippi

Hawaii Missouri New Jersey

Idaho Montana Tennessee

Illinois New York Texas

Indiana Pennsylvania

Maine Rhode Island

Maryland South Carolina

Michigan South Dakota

Nebraska Utah

Nevada

New Hampshire

New Mexico

North Carolina

North Dakota

Ohio

Oklahoma

Oregon

Vermont

Virginia

 31New York state allows districts to determine whether job search is an allowable activity, 

with a statewide cap of six months. New York districts may set shorter timeframes or 

choose not to allow job search activities. 
Page 15 GAO-17-60 Child Care

No minimum hourly work

requirement

12-20 Hrs./Wk 21-30 Hrs/Wk

Washington

West Virginia

Wisconsin

Wyoming

28 states 14 states 9 states

Source: GAO analysis of The CCDF Policies Database Book of Tables, October 2014 data. | GAO-17-60

Note: The minimum hours requirement for New York represents New York City, as the statewide 

requirement was not specified in the 2014 database.

Education: Based on our analysis of the CCDF Policies Database Book 

of Tables, most states allow secondary or postsecondary education as 

qualifying activities.32 However, states may have additional requirements, 

such as requiring parents to work while pursuing education in order to 

qualify for subsidies, placing limits on how long education can be used as 

a qualifying activity, or requiring that student-parents maintain a certain 

grade average. In some cases, states have established multiple policies 

regarding education as a qualifying activity. For example, in Kansas, 

postsecondary students must both maintain a GPA of 2.0 and work a 

minimum of 15 hours per week to remain eligible for child care 

assistance. In Illinois, high school students generally must maintain a C 

average and, beginning in the 25th month of participation in the child care 

subsidy program, must also work 20 hours or more per week.

 32 According to the 2014 CCDF Book of Tables, Oregon did not consider secondary or 

postsecondary education to be qualifying activities, and Connecticut, Delaware, Georgia, 

and Nevada did not consider postsecondary education to be a qualifying activity.
Page 16 GAO-17-60 Child Care

According to our analysis, of the 8.6 million children estimated to be 

eligible for subsidies in an average month in years 2011-2012, about 1.5 

million of them received subsidies.33,34 Our analysis of HHS and TRIM3 

data shows that children whose families receive child care subsidies have 

different levels of family income and other characteristics compared to the 

population of children whose families are potentially eligible for subsidies 

based on the policies in their states.35 These differences include lower 

levels of family income, younger ages of children, and differences in 

family structure and racial composition. According to state child care 

officials, a difference such as lower family income may in part reflect state 

policies that target limited subsidies to this priority population. According 

to stakeholders, a difference such as lower levels of subsidy receipt 

among Hispanics may reflect barriers to accessing the program.

Subsidy recipients are substantially poorer than the overall population of 

children eligible for subsidies, according to our analysis. Nationwide, 

children who lived in families with incomes below 100 percent of the 

federal poverty guidelines were over-represented among subsidy 

recipients by an estimate of nearly 15 percentage points when compared 

to eligible children who lived in families with incomes at this same level.36

In contrast, children in families with incomes between 100 percent and 

149 percent of the poverty guidelines were under-represented among 

subsidy recipients by an estimated 3.4 percentage points when compared 

 33While many children who are eligible for CCDF subsidies do not receive them, some get 

assistance via other federal funds, such as directly from TANF or SSBG funds.

34We calculated our estimates of children eligible for subsidies and children receiving 

subsidies from 3 different sources. The data we present on children eligible for subsidies 

are estimates from TRIM3, a microsimulation model that predicts eligibility based on family 

characteristics and modeling state eligibility policies in each state. The data we present on 

children receiving subsidies— for all characteristics except age—are estimates created 

from HHS’s public use sample data. This sample is drawn from the administrative data 

HHS collects from the states on the number and characteristics of children that receive 

CCDF subsidies. We obtained the data we present on subsidy recipients by age from 

HHS’s full administrative file. 

35We refer to children in families who receive subsidies as subsidy recipients and children 

in families eligible for subsidies as eligible children.

36Throughout this report, when differences are statistically significant, we state that groups 

of children are over-represented or under-represented in the subsidy population relative to 

the population of eligible children. In this case, children with family incomes below 100 

percent of the federal poverty guidelines are over-represented among subsidy recipients 

at the national level because the proportion of children at this income level is significantly 

higher among subsidy recipients than in the population of eligible children. 

Children Eligible for 

Subsidies and 

Those Receiving Them 

Differ in Terms of Family 

Income, Family Structure, 

and Minority Status
Page 17 GAO-17-60 Child Care

to eligible children of the same income level and children at 150 percent 

of the poverty guidelines or greater were under-represented among 

subsidy recipients by an estimated 7.7 percentage points (see fig. 2).

Figure 2: Eligible Children and Subsidy Recipients Nationwide, by Income to the 

Federal Poverty Guidelines, 2011-2012

Notes: Percentages may not sum to 100 percent due to rounding.

Figure represents eligibility and subsidy receipt in an average month.

All estimates in the figure have margins of error (MOE) less than +/- 2 percentage points.

Figure 3 shows state-by-state whether subsidy recipients with incomes 

below 100 percent of the federal poverty guidelines were over- or underrepresented when compared to children eligible for subsidies in their 
Page 18 GAO-17-60 Child Care

states. Statistically significant results were available for 38 out of 50 

states that had reliable data. 37 In 35 of these states, subsidy recipients 

were poorer when compared to eligible children and, in 3 states, subsidy 

recipients tended to have higher incomes than eligible children. The 

differences had a wide range. In one state, New Hampshire, an estimated 

38 percentage point difference exists because an estimated 55.8 percent 

of subsidy recipients were below the poverty guidelines, compared to an 

estimated 17.5 percent of eligible children. In another, Indiana, an 

estimated 57 percent of subsidy recipients were below the poverty 

guidelines, compared to an estimated 76 percent of eligible children, 

resulting in a negative estimated 19 percentage point difference.

 37Throughout this report, we consider HHS administrative data unreliable for a particular 

characteristic in a state when 15 percent or more of the values are missing. We also 

consider TRIM3 estimates and estimates from HHS sample data unreliable for a particular 

characteristic in a state when the MOE exceed 15 percentage points.
Page 19 GAO-17-60 Child Care

Figure 3: Eligible Children and Subsidy Recipients with Family Income Less Than 100 Percent of the Federal Poverty 

Guidelines, 2011-2012

Notes: Figure represents eligibility and subsidy receipt in an average month.

Displayed state estimates for percent subsidy recipients and eligible children have margins of error 

(MOE) less than +/- 15 percentage points. One state was excluded from this graph because its MOE 

exceeded this threshold.

These differences may reflect, in part, states targeting subsidies to the 

lowest income families when states are unable to serve all eligible 

families that apply. Several state officials participating in our group 

interviews, for example, told us that they target their programs to those 

most in need, including those with the lowest income. Moreover, in their 
Page 20 GAO-17-60 Child Care

Issue Brief on eligibility and receipt of CCDF subsidies, HHS suggests 

that states target subsidies to families with the lowest incomes.38

Subsidy recipients tended to be younger than the overall population of 

eligible children, according to our analysis. Nationwide, subsidy recipients 

age 2 to 4 years old were over-represented by an estimated 17 

percentage points when compared to eligible children of the same age. 

Subsidy recipients under age 2 were also over-represented, but by an 

estimate of less than 2 percentage points. In contrast, older children were 

under-represented among subsidy recipients by an estimated 18 

percentage points when compared to eligible children of the same age 

(see fig. 4).

 38See Department of Health and Human Services, Office of the Assistant Secretary for 

Planning and Evaluation (ASPE), ASPE Issue Brief: Estimates of Child Care Eligibility and 

Receipt for Fiscal Year 2012 (November 2015), pp.1 and 7. 
Page 21 GAO-17-60 Child Care

Figure 4: Percentage of Eligible Children and Subsidy Recipients Nationwide by 

Age, 2010-2012

Notes: Percentages may not sum to 100 percent due to rounding.

Figure represents eligibility and subsidy receipt in an average month.

Percentages for eligible children have margins of error (MOE) less than +/- 2 percentage points. The 

data on subsidy recipients are population totals from administrative records, not sample estimates,

Disabled children ages 13 to 18 were 0.3 percent of subsidized children and 1.0 percent of all eligible 

children; these children are not shown in the figure.

The national pattern of over-representation of children age 2 to 4 within 

subsidy recipients is consistent across all states with reliable data, 

according to our analysis. In all 48 states with reliable data, children age 2 

to 4 were over-represented in the subsidy population, and in 36 states by 

more than an estimated 15 percentage points (see fig. 5). This overrepresentation may reflect a greater need for non-parental care among 

families with children age 2 to 4 because they are not yet in elementary 

school, which provides many hours of care each week.
Page 22 GAO-17-60 Child Care

Figure 5: Eligible Children and Subsidy Recipients Age 2 to 4 Years Old, 2010-2012

Notes: Figure represents eligibility and subsidy receipt in an average month.

Displayed state estimates for percent eligible children have margins of error (MOE) less than +/- 15 

percentage points. The data on subsidy recipients are population totals from administrative records, 

not sample estimates.

Subsidy recipients tended to live in single-parent households to a greater 

extent than the overall population of eligible children, according to our 

analysis. Nationwide, subsidy recipients who lived in single-parent 

households were over-represented by an estimated 14 percentage points 

when compared to eligible children in similar households. In contrast, 

subsidy recipients who lived in two parent households were underrepresented by an estimated 14 percentage points when compared to 
Page 23 GAO-17-60 Child Care

eligible children in similar households. An estimate of nearly 4 percent of 

subsidy recipients and eligible children were child-only units39 (see fig. 6).

Figure 6: Eligible Children and Subsidy Recipients Nationwide by Head of 

Household, 2011-2012

Notes: Percentages may not sum to 100 percent due to rounding.

Figure represents eligibility and subsidy receipt in an average month.

All estimates in the figure have margins of error (MOE) less than +/- 1.5 percentage points.

The national pattern of over-representation of subsidy recipients in singleparent families is consistent across most states, according to our 

analysis. For example, in 33 of the 50 states with reliable data, children in 

 39Examples of child-only units may include units where a child lives with a non-parent 

caretaker, such as when a child lives in foster care.
Page 24 GAO-17-60 Child Care

single-parent families were over-represented among subsidy recipients 

when compared to the population of eligible children, in one state they 

were under-represented, and in the remaining 16 states the results were 

not statistically significant. The differences have a wide range, but exceed 

an estimated 20 percentage points in 14 states. At one end of the range, 

Wyoming, an estimated 43 percentage point difference exists because an 

estimated 99 percent of subsidy recipients lived in single- parent families, 

compared to an estimated 56 percent of eligible children (see fig. 7). One 

reason single-parent households may be over-represented is that our 

analysis showed that such households tended to have lower incomes 

than two parent households40 and, as told to us by some state child care 

officials and reported by HHS, states often try to target their subsidy 

programs toward families with the lowest incomes. 41

 40Our analysis showed that nationally, subsidized children in single-parent families were 

more likely to be in poverty than subsidized children in two-parent families.

41See Department of Health and Human Services, Office of the Assistant Secretary for 

Planning and Evaluation (ASPE), ASPE Issue Brief: Estimates of Child Care Eligibility and 

Receipt for Fiscal Year 2012 (November 2015), p.1.
Page 25 GAO-17-60 Child Care

Figure 7: Eligible Children and Subsidy Recipients in Single-Parent Families, 2011-2012

Notes: Figure represents eligibility and subsidy receipt in an average month.

Displayed state estimates for percent subsidy recipients and eligible children have margins of error 

(MOE) less than +/- 15 percentage points. One state is excluded from this graph because its MOE 

exceeded this threshold.

Nationwide, our analysis showed subsidy recipients were more frequently 

Black, and less frequently of other racial or ethnic groups, when 

compared to the population of children eligible for subsidies. Black 

children were over-represented among subsidy recipients by an 

estimated 17 percentage points when compared to eligible Black children. 

In contrast, Hispanic children were under-represented to a large degree 

among subsidy recipients (an estimated 15 percentage points when 

compared to eligible Hispanic children) and White children were slightly 
Page 26 GAO-17-60 Child Care

under-represented (an estimated 2 percentage points when compared to 

eligible White children)42 (see fig. 8).

Figure 8: Eligible Children and Subsidy Recipients by Race and Ethnicity, 2010-

2012

Notes: Percentages may not sum to 100 percent due to rounding.

Figure represents eligibility and subsidy receipt in an average month.

All estimates in the figure have margins of error (MOE) less than +/- 1.5 percentage points.

a

Asians were 3 percent of eligible children and 1 percent of subsidy recipients; American Indians were 

1 percent of eligible children and 1 percent of subsidy recipients; multi-racial children were 4 percent 

 42By White children, we mean non-Hispanic White children. We include Hispanic White 

children in our Hispanic ethnic group. 
Page 27 GAO-17-60 Child Care

of eligible children and 2 percent of subsidy recipients; and Hawaiian/Pacific Islanders were less than 

1 percent of eligible children and 1 percent of subsidy recipients. The MOE on all of these estimates 

are less than 1 percentage point.

The national pattern of Black children being over-represented among 

subsidy recipients was true for most states. Statistically significant results 

were available for 31 of the 44 states that had reliable data and in all of 

them the proportion of subsidy recipients that were Black was higher than 

the proportion of the overall population of eligible children that were 

Black. Moreover, in about half of these states (16 of the 31) a difference 

of an estimated 15 percentage points or more existed. For example, 

Tennessee had an estimated 71 percent of subsidized children who were 

Black, compared to an estimated 32 percent of all eligible children, a 

difference of an estimated 39 percentage points (see fig. 9).

Figure 9: Eligible Children and Subsidy Recipients Who Are Black, 2010-2012

Note: Figure represents eligibility and subsidy receipt in an average month.
Page 28 GAO-17-60 Child Care

Displayed state estimates for percent subsidy recipients and eligible children have margins of error 

(MOE) less than +/- 15 percentage points. Seven states are excluded from this graph because their 

MOEs exceeded this threshold.

Nationally, Black children that received subsidies more often lived in 

single-parent households and in families with very low income than White 

and Hispanic children, according to our analysis of HHS and TRIM3 

data. This may partially explain why Blacks are over-represented among 

subsidy recipients.

The national pattern of Hispanic children being under-represented among 

subsidy recipients was true in many states, according to our analysis. 

Statistically significant results were available for 23 out of 44 states that 

had reliable data and Hispanic children were under-represented among 

subsidy recipients in all but 1 of these 23 states. In 11 of them, the 

difference was about an estimated 10 percentage points or higher. In the 

1 state where Hispanic children were over-represented among subsidy 

recipients, New Mexico, Hispanic children made up an estimated 75 

percent of subsidy recipients and an estimated 63 percent of eligible 

children (see fig. 10).
Page 29 GAO-17-60 Child Care

Figure 10: Eligible Children and Subsidy Recipients Who Are Hispanic, 2010-2012

Notes: Figure represents eligibility and subsidy receipt in an average month.

Displayed state estimates for percent subsidy recipients and eligible children have margins of error 

(MOE) less than +/- 15 percentage points. Seven states are excluded from this graph because their 

MOEs exceeded this threshold.

The lower level of subsidy receipt among Hispanics in many states may 

reflect differing preferences for child care or barriers to accessing child 

care subsidies, or both. Some Hispanic families may be getting their child 

care needs met through other means, such as Head Start and universal 

pre-school programs. Stakeholders said that families without immigration 

documentation may have concerns if they encounter application forms 

that request Social Security Numbers or live in states that give priority to 

families receiving TANF because this program can require verification of 

immigration status. Finally, navigating the complexity of eligibility 

requirements may be particularly difficult for families with limited English 
Page 30 GAO-17-60 Child Care

proficiency, which we and others have also highlighted in previous 

reports.43

The national pattern of White children being under-represented among 

subsidy recipients was true in some, but not all states. In 26 of the 42 

states that had reliable data, Whites were neither over nor underrepresented—the differences were not statistically significant. Statistically 

significant results were available for 16 out of 42 states that had reliable 

data. In 10 of these 16 states, White children were under-represented, 

most commonly by more than an estimated 10 percentage points among 

subsidy recipients when compared to the eligible children in their states. 

In another 6 states, the reverse was true—with White children being overrepresented, by more than an estimated 10 percentage points (see fig 

11).44

 43See GAO, Means-Tested Programs: Information on Program Access Can Be an 

Important Management Tool, GAO-05-221 (Washington, D.C.: Mar. 11, 2005), and Gina 

Adams and Hannah Matthews, Confronting the Child Care Eligibility Maze: Simplifying 

and Aligning with Other Work Supports (The Urban Institute and, CLASP, December 

2013).

44We do not conduct state-level analysis on Asians, Native Americans, or 

Hawaiian/Pacific Islanders due to small sample sizes.
Page 31 GAO-17-60 Child Care

Figure 11: Eligible Children and Subsidy Recipients Who Are White, 2010-2012

Notes: Figure represents eligibility and subsidy receipt in an average month.

Displayed state estimates for percent subsidy recipients and eligible children have margins of error 

(MOE) less than +/- 15 percentage points. Seven states are excluded from this graph because their 

MOEs exceeded this threshold.

The number of children in families receiving subsidies does not equate to 

the population of eligible children in families who are interested in 

pursuing subsidies or who need them. Various officials and stakeholders 

told us it is difficult to accurately predict the extent to which families with 

eligible children are likely to apply for and receive subsidies. This is in 

part because several factors influence families’ child care decisions that 

can make it difficult or unappealing to pursue subsidies and also because 

available indicators of need are imprecise.

The Number of Families 

Receiving Subsidies Does 

Not Fully Reflect the 

Number of Eligible 

Families Who May Be 

Interested in Obtaining 

Them, Which Can Be 

Difficult to Predict
Page 32 GAO-17-60 Child Care

Factors affecting families’ decisions include information, program policies, 

and supply issues, according to stakeholders and officials we spoke with, 

in addition to some relevant studies we reviewed.

Information: Lack of awareness of the subsidies could prevent families 

from applying, in addition to misinformation about eligibility criteria and 

perceptions of limited availability of subsidies.45

Program policies and procedures: Some families may be unable or 

unwilling to manage the administrative burden associated with applying 

for the subsidy, which could include in-person meetings, dealing with 

multiple benefit systems such as TANF, and other bureaucratic 

procedures. Moreover, a family’s eligibility status may have changed after 

a potentially lengthy approval process. In addition, the amount of the copayment or the low amount of the subsidy may be a deterrent. HHS 

officials noted that these types of state policies can affect demand for 

child care subsidies because the more challenging it is to receive and 

maintain a subsidy, the less likely families are to want one.

Supply issues: The availability of appropriate care options is interrelated 

with subsidy demand in that some families may not apply if they know 

there are no viable child care options in their area that accept subsidies or 

that can care for children with special circumstances (e.g., behavioral or 

developmental needs, non-English speakers).46

In addition to the complex interplay of factors influencing families’ child 

care decisions, there are various indicators officials use to help estimate 

how many families are likely to receive subsidies. At a national level, HHS 

monitors need for child care subsidies in part by calculating coverage 

rates. Coverage rates estimate the extent to which children who may 

meet eligibility criteria actually receive subsidies. HHS estimated this rate 

at 15 percent of children meeting federal eligibility requirements in fiscal 

 45Heather Hahn, et al., “Supporting the Child Care and Workforce Development Needs of 

TANF Families” (Urban Institute, 2016); Julia Isaacs, et al., “Review of Child Care Needs 

of Eligible Families in Massachusetts” (Urban Institute, 2015); Hannah Matthews and 

Danielle Ewen, “Early Education Programs and Children of Immigrants: Learning Each 

Other’s Language” (Urban Institute, 2010). 

46Heather Hahn, et al., “Supporting the Child Care and Workforce Development Needs of 

TANF Families” (Urban Institute, 2016); Julia Isaacs, et al., “Review of Child Care Needs 

of Eligible Families in Massachusetts” (Urban Institute, 2015); Sharon Kagan, et al, 

“Young Children’s Early Experiences: Examining Differences on Long Island” (National 

Center for Children and Families, 2012).
Page 33 GAO-17-60 Child Care

year 2012 (the most current year available).47 While HHS’s analyses 

provide some information about the need for child care subsidies, they 

rely on eligibility estimates and the extent to which eligible families are 

actually interested in or would apply for subsidies is unknown.

State child care officials we spoke with said that various other indicators 

can demonstrate whether families need child care subsidies, such as 

waiting lists, Census data, and surveys. Many state officials—

representing 18 of 32 states in our group interviews—said they use their 

own program data to help assess need. This could include looking at 

funding allocations and the number of applicants, including those placed 

on wait lists. In addition, officials representing 10 states told us they used 

Census data, officials from 7 states said they conducted needs 

assessments, and 6 worked with other programs to determine the extent 

of program need. The latter might include sharing data with partner 

entities (like child care referral agencies and schools), either formally or 

informally.

Based on their assessments and experience, numerous stakeholders, 

federal officials, and state officials we spoke with believe unmet need 

exists. In particular, officials in 26 out of the 32 states that participated in 

our group interviews told us that there are likely more potentially eligible 

families than these states can serve. These included officials from 6 of 

the 12 states we spoke with where all applicants determined eligible 

received subsidies. This is consistent with the observation that there are 

an unknown number of potentially eligible families who never apply.

 47Coverage rates specifically measure children eligible based on federal CCDF 

requirements in comparison to those receiving or estimated to receive subsidies from the 

major federal funding sources that subsidize the cost of child care for low-income working 

families—CCDF, two sources of TANF funds spent directly on child care, and SSBG. 

According to HHS, CCDF funds the majority of child care subsidies—roughly two-thirds—

with the remaining third coming from other government funding streams, primarily related 

to TANF (see HHS, Office of the Assistant Secretary for Planning and Evaluation (ASPE), 

ASPE Issue Brief: Estimates of Child Care Eligibility and Receipt for Fiscal Year 2012

(November 2015). HHS officials told us that while the integrity of the coverage rate model 

is good, there are some limitations to their estimates. For example, they said there is 

some mismatch in how work activities are defined under TANF and SSBG, so the model 

may not pick up potentially eligible recipients who are involved in job searches or TANF 

work activities. Also, HHS officials said they only estimate coverage rates on a national 

level since state-by-state data on the number of children served with SSBG, TANF funds 

spent directly on child care, and TANF maintenance of effort is either not available or not 

reliable.
Page 34 GAO-17-60 Child Care

Several officials and stakeholders we spoke with cautioned that some of 

the methods used to estimate need are imperfect indicators. For example, 

representatives of one large state noted that Census figures and other 

demographic data can only provide rough estimates and do not reflect the 

full extent of need. Officials in two other states said these types of data do 

not include information about key eligibility characteristics or are out of 

date. Several state officials and stakeholders we spoke with also 

expressed concerns about using wait lists to measure need for child care 

subsidies. They noted wait lists can be inaccurate and out of date. 

Another drawback to using wait lists to assess demand is that they only 

reflect the population of potentially eligible beneficiaries who actually 

follow through with their applications, and therefore such lists could 

underestimate need. On the other hand, wait lists can artificially inflate 

estimates of need in cases where families’ eligibility status changes or 

they remain on the wait list even after they have found other child care 

arrangements.

While the nuances of family decisions and the lack of comprehensive 

indicators can make it difficult for program officials to more accurately 

predict subsidy need, the CCDBG Act of 2014 places requirements on 

states to do so. It requires states as part of their state plan to develop 

strategies to increase the supply of child care services for certain groups, 

such as children with disabilities, children in under-served areas, infants 

and toddlers, and children who receive care during nontraditional hours.48

In its 2015 guidance about how to do this, HHS encourages states to use 

data to assess need and identify supply shortages, for example by 

assessing where low-income families live and where high-quality child 

care providers are located.49 This would provide information about the 

gap between the existing supply of child care and the population that is 

likely to need access to this care. The guidance also suggests that states 

leverage existing data from market rate surveys, referral agencies, and 

other agencies that conduct needs assessments, such as the Maternal 

and Infant Early Childhood Home Visitation Program and Head Start. 

HHS advises states to consider the unmet needs that are most pressing 

in a particular area and, accordingly, create an appropriate strategy for 

building supply.

 48Pub. L. No. 113-186, § 5(b)(2)(C), 128 Stat. 1971, 1978 (adding 42 U.S.C. § 

9858c(c)(2)(M)).

49CCDF-ACF-IM-2015-02, Issuance Date November 6, 2015.
Page 35 GAO-17-60 Child Care

Wait lists are a common way that states manage their caseloads when 

more families qualify for subsidies than states can fund. Of the 33 states 

that had wait list policies at the end of 2014, 19 used wait lists at the start 

of 2015 and the others did not, according to the National Women’s Law 

Center (NWLC).50 The results of our group interviews showed that states 

manage wait lists in a variety of ways. For example:

Number of lists: Of the 19 states that used wait lists in 2015, 10 states 

had a single statewide wait list and the remaining 9 states had more than 

one list at a sub-state level, according to state child care officials who 

participated in our group interviews. With the exception of New York and 

California, all wait list states can report the number of children on their 

wait lists statewide.51 State child care officials from states with multiple 

wait lists also said that these states can have a mix of statewide and substate policies regarding how to develop and manage their lists.

 50For the 33 states with wait list policies, see CCDF Policies Database Book of Tables, 

(October 2014). For the 19 states that used wait lists, see Building Blocks: State Child 

Care Assistance Policies 2015. The National Women’s Law Center (NWLC) surveys state 

child care administrators annually on 5 key policy areas related to child care subsidies, 

including wait lists, and presents this information in annual reports. GAO reviewed the 

methodology section of the 2015 report and interviewed relevant NWLC staff about how 

they conduct their surveys. We determined that the information in this report is sufficiently 

reliable for our purposes. We did not independently verify the information in the NWLC 

report. State child care officials from all 19 wait list states participated in our group 

interviews. 

51The NWLC collects data annually on the number of children states place on waiting lists 

from all states except California and New York. Because of differences in how states 

develop and manage their wait lists, however, this data is not comparable state-to-state. In 

its 2015 report, the number of children on waits lists ranged from 45 in Colorado to 51 

thousand in Florida. Ten of the 19 wait list states had between 900 to just over 9000 

children on their wait list. See Building Blocks: State Child Care Assistance Policies 2015, 

table 2, p. 26. 

States Use Wait Lists 

and Other Methods to 

Help Determine 

Which Eligible 

Families Receive 

Subsidies

Although a Common 

Method for Managing 

Caseloads, States Find 

Wait Lists Challenging to 

Administer
Page 36 GAO-17-60 Child Care

Eligibility determination: Some states require full eligibility 

determinations prior to placing children on wait lists for subsidies and 

other states do not have such a requirement. Child care officials in 5 of 

the 19 states that used wait lists in 2015 told us, for example, that their 

states require full eligibility determinations prior to wait listing children, 

whereas officials in 11 other states said that they either rely solely on selfreported information or partial eligibility screenings prior to wait listing 

children.52

Periodic review: States also varied in whether and how often they 

require agencies to review their wait lists. Many states require reviews at 

set intervals to ensure that those on the list continue to be eligible for and 

want subsidies, and others do not require these reviews. According to 

state child care officials, reviews tend to consist of sending letters to 

families asking if they want to remain on the list. Of the 19 wait list states 

that participated in our group interviews, officials from 13 mentioned that 

their states require periodic reviews of wait lists and 6 others said that 

periodic reviews are either not required or left to the discretion of the local 

entities administering the subsidy programs in their states.

HHS officials and state child care officials knowledgeable about wait lists 

told us that wait lists can be a valuable tool for managing caseloads and 

expenditures. Child care officials from 14 states that participated in our 

group interviews mentioned, for example, that one benefit of wait lists is 

that they track children eligible or likely to be eligible for a subsidy and 

who is next in line to receive one. Such tracking is important because 

these policies can be complex and, according to HHS guidance and a 

child care subsidy stakeholder, states often prioritize the types of children 

eligible for subsidies to ensure that they serve those most in need. Two 

officials told us, for example, that their wait lists help manage caseloads 

by ensuring that families with higher priorities for service (such as those 

most in need) are served before families with lower priorities. Child care 

officials in 10 states also mentioned that these lists provide insight into 

where additional funds may be needed in their states. Two officials 

mentioned, for example, that their lists help them determine whether 

funds should be reallocated from one county to another.

 52Officials in the remaining 3 states did not address whether full eligibility determinations 

were required prior to wait listing children. They did say, however, that wait list policies 

tended to be left to the discretion of the local entities administering the subsidy programs 

in their states.
Page 37 GAO-17-60 Child Care

Few families on wait lists may end up receiving subsidies, according to 

state child care officials and other child care stakeholders knowledgeable 

about wait lists. This may occur when wait listed families experience 

changes in circumstances that cause them to either no longer want 

subsidies or make them ineligible. State officials from 15 wait list states 

who participated in our group interviews characterized the number of wait 

listed families that eventually received subsidies as small or they 

estimated that no more than 50 percent of wait listed families received 

subsidies. One official told us that historically about 17 to 20 percent of 

families on her state’s wait list apply for subsidies in response to 

notifications they receive that funds are available. At the other end of the 

range, one state official said that most wait listed families in her state 

eventually receive subsidies and she attributed this to her state 

adequately funding child care subsidies.

Wait lists can be challenging to administer. Because few families placed 

on wait lists may receive subsidies, it can be difficult to manage wait lists 

in a way that is not overly resource- and time-intensive for the agency 

administering the subsidy program nor overly burdensome for families 

who want to remain on the list to be able to do so. State child care 

officials from 23 of the 32 states that participated in our group interviews, 

for example, reported various challenges, such as being able to easily 

contact wait listed families and ensuring that they continued to want and 

qualify for subsidies. In its technical assistance on wait lists, HHS echoes 

similar views, saying that wait lists become inefficient when they take 

significant resources to establish and maintain. Specific challenges 

include:

Keeping wait lists current and accurate: Two challenges that HHS 

officials, stakeholders, and state officials participating in our group 

interviews mentioned were ensuring that families on the wait list: (1) could 

be easily contacted and (2) continued to qualify for and want child care 

subsidies. According to child care officials in 11 states, for example, 

without accurate information it is difficult to contact families to see if they 

want to remain on the list or want a subsidy should one become available. 

One state official estimated for example, that her state gets a roughly 50 

percent response rate to letters sent to wait listed families during periodic 

reviews, excluding letters that are returned as undeliverable. According to 

HHS officials knowledgeable about subsidies, maintaining accurate 

contact information for wait listed families can be difficult because lowincome families tend to frequently move. Child care officials in 13 states 

also told us that families often remain on the wait list despite no longer 

wanting subsidies or becoming ineligible for them. According to 6 state 
Page 38 GAO-17-60 Child Care

officials, families may no longer want subsidies because they made 

alternative child care arrangements once they were wait listed. Several 

state officials also said that families may become ineligible for subsidies 

while wait listed because their children become too old for subsidies; 

parents stop working; or the family’s income grows to exceed the state’s 

limit. One state child care official told us that it takes a lot of time and 

money to find a single family on his state’s wait list who will take a child 

care subsidy slot that opens up. He said that sometimes as many as 50 to 

100 letters have to go out to wait listed families to get a single, affirmative 

response.

Multiple wait lists in a state: HHS officials and stakeholders 

knowledgeable about wait lists told us that states with wait lists 

maintained at the sub-state level can face some unique challenges. For 

example, such individuals said if there are sub-state lists, families in these 

states can place their names on more than one list, and this duplication 

makes it difficult to efficiently manage the lists. Resources may be wasted 

when more than one agency in a state attempts to contact the same 

family to see if they want to remain on their lists. Also, when local lists are 

rolled up to the state level, it may be difficult to eliminate the duplicate 

entries and thereby get an accurate count of the number of families 

statewide that are waiting for subsidies. Some state child care officials 

echoed the view that decentralized wait lists pose unique challenges. One 

official said that it is difficult to ensure that all counties collect the same 

information on families who they place on their wait lists. Two other state 

officials mentioned that families may experience different wait times 

across counties and that their states try to counterbalance this by moving 

funds from one county to another.

Insufficient technology to manage wait lists: Officials from seven 

states mentioned that limited technology hindered their ability to efficiently 

manage wait lists. One state official whose state maintains sub-state lists 

said that in most cases these lists are on paper and that her state could 

benefit from more centralized lists. Another state official said that, 

although her state has a web-based wait list system, various wait list 

management tasks still must be done manually because this new system 

does not always integrate well with their older system used to determine 

eligibility. The CCDBG Act of 2014 and the CCDF regulations require 

both HHS and states to develop websites that, among other things, must 

contain localized lists of eligible child care providers such that parents can 

enter a ZIP code and obtain information on the availability of specific 

providers in their area. An HHS official suggested that, as states develop 
Page 39 GAO-17-60 Child Care

data for these websites, they may want to consider greater use of 

technology to help manage wait lists.

Although whether and how to use wait lists is at the discretion of state 

child care subsidy programs, HHS does provide states with technical 

assistance on how to develop and manage their lists, when requested. In 

an effort to promote efficiently-run lists, HHS’s written technical guidance 

encourages states to develop wait list management strategies that 

minimize the use of staffing resources. Strategies include conducting 

partial eligibility reviews for at least some families placed on the wait list 

as opposed to full eligibility determinations, periodically reviewing wait 

lists by contacting families to validate an ongoing need for subsidies, and 

requiring families to report address changes to maintain wait list eligibility. 

Officials from most of the 19 wait list states that participated in our group 

interviews said that they use at least one of these strategies.

The CCDBG Act of 2014 also might influence use of state wait lists over 

the next few years. Officials from 15 states that participated in our group 

interviews said, for example, that they might need to establish new wait 

lists, their existing wait lists may increase, or families may remain on the 

lists for longer periods of time. Several also mentioned that whether their 

use of wait lists was impacted depended upon how certain provisions in 

this law affect their state and whether subsidy funding increases. For 

example, some state officials told us new requirements, such as families 

receiving subsidies for a minimum of 12 months, may result in families 

being subsidized for longer time periods.53 If funding for subsidies 

remains flat, this may result in these states not being able to serve as 

many newly qualified applicants and therefore wait lists might expand. 

Other provisions that state officials cited as potentially increasing the use 

or size of wait lists included those pertaining to improving the quality of 

child care and gradual phase-out of subsidies for families once their 

income exceeds their state’s limits to receive subsidies.

 53The law provides that eligible children will receive assistance for a minimum of 12 

months, regardless of changes in income, as long as income does not exceed the federal 

threshold of 85 percent of SMI. 42 U.S.C. § 9858c(c)(2)(N)(i)(I).
Page 40 GAO-17-60 Child Care

According to HHS written technical assistance and state child care 

officials and child care stakeholders, other caseload management 

techniques include prioritizing serving some types of families over other 

types of families, limiting applications by freezing intake, or changing 

eligibility policies so that fewer families qualify for subsidies.

Prioritizing certain eligible families over others: Based on our analysis 

of the CCDF Policies Database Book of Tables, most states (40 out of 51) 

develop priority policies that specify which eligible families they will serve 

before other types of eligible families.54 Common priority groups included:

• Families receiving TANF (37 states, including 18 wait list states);55

• children in protective services (28 states, including 14 wait list states);

• children with special needs (26 states, including 12 wait list states); 

and

• children in families with very low incomes (23 states, including 10 wait 

list states).56

As long as states provide subsidies to all families who they determine to 

be eligible, priority groups do not result in some families going unserved. 

However, in the 19 wait list states, priority groups influence which families 

get subsidies in their states because not all families determined eligible 

get served. Priorities can take two forms—guaranteeing a subsidy to all 

eligible applicants that meet the criteria of the prioritized group or 

providing these families subsidies before other types of applicants only if 

funds are available. When children are guaranteed subsidies, they are 

exempt from wait lists. When children are prioritized over other children 

without a guarantee, they are placed higher up on wait lists than children 

with a lesser or no priority. Policies in wait list states tended to guarantee 

 54Priority policies can be statewide or, in states where CCDF is administered locally, can 

vary by locality. Information about which states had priority policies is from The CCDF 

Policies Database Book of Tables, table 25 (October 2015), pp.155-166. 

55The CCDF Polices Database Book of Tables reports information on one of three subsidy 

programs in California—Non-CalWORKS Alternative Payment Program, which does not 

have a priority for TANF recipients. Another of these three programs, however, does 

prioritize TANF recipients. 

56States define very low income in a number of ways. For example, in Arizona very lowincome families are defined as families with income at or below 100 percent of federal 

poverty guidelines. 

Other Caseload 

Management Techniques 

Include Priority Groups 

and Methods That Can 

Limit Applications
Page 41 GAO-17-60 Child Care

subsidies for TANF recipients and mostly prioritized other groups for 

subsidies without a guarantee.

Freezing intake: Freezing intake occurs when a state or locality stops 

taking applications for subsidies for either the entire program (a full 

program freeze) or for specific priority groups or income levels (a partial 

program freeze). In its annual reports on CCDF policies, the NWLC 

reported that three states froze intake in 2013, two in 2014, and three in 

2015.57 In all of these cases, the states instituted partial program freezes, 

funding subsidies for some families (for example, families in priority 

groups) and froze intake for other applicants. States or localities also may 

freeze intake in conjunction with wait lists, for example freezing intake for 

some priority groups and maintaining wait lists for others.

In its written technical assistance, HHS describes the pros and cons of 

managing programs by instituting partial program freezes, full program 

freezes, or managing the program according to wait listed priority groups. 

According to this technical assistance, partial freezes (which close the 

program to some priority groups) may be more effective than full freezes 

(which close the program to everyone), because it can be easier to 

manage the flow of cases and manage funds. This technical assistance 

also says it may be preferable to maintain wait lists when closing the 

program to certain priority groups as opposed to simply instituting a 

program freeze for these groups. This is because wait lists allow states to 

determine which priority groups to reopen and to make informed 

decisions about the number of families to select from the list. An official 

from one state who participated in our group interviews told us, however, 

that her state now freezes intake instead of using wait lists when funds 

run low because they found that wait lists were too burdensome to 

administer. She said that it was difficult to find families on the wait list to 

receive subsidies once funding became available because it was difficult 

to ensure an accurate list that consisted of families who continued to want 

or qualify for subsidies.

Modifying eligibility policies: According to child care stakeholders and 

state child care officials, states may modify their eligibility policies to 

manage the size of their subsidy caseloads. Modifications in eligibility 

policies can be statewide or at the sub-state level. Child care officials 

 57NWLC, Pivot Point: State Child Care Assistance Policies 2013, table 2, pp. 29-30. 

NWLC, Turning the Corner: State Child Care Assistance Policies 2014, table 2, pp. 26-27. 

NWLC, Building Blocks: State Child Care Assistance Policies 2015, table 2, pp. 30-31.
Page 42 GAO-17-60 Child Care

mentioned this case management strategy in states that used waiting lists 

(5 out of 19 states) and in states that served all eligible applicants (7 out 

of 12 states). Officials said that modifications can decrease caseloads, 

ensure that the program serves the neediest children, or increase 

caseloads. State officials reported modifying policies such as income 

limits, co-payment amounts that parents pay to providers, and 

requirements related to employment or education. Officials from a few 

states also told us their states typically do not modify eligibility policies to 

manage caseloads because these policies are based in statute and it is 

difficult to go through the legislative process to change them.

Child care officials from 22 states described ways in which their states 

leverage funds and other programs to meet the child care needs of lowincome working families. Programs and funds mentioned included Head 

Start, Early Head Start, state funded pre-kindergarten, TANF, Social 

Services Block Grant (SSBG), and various state or county run programs. 

Two officials, for example, said that that their states’ pre-kindergarten 

programs help meet the child care needs of 4-year-olds with low-income 

working parents. One of these officials specifically mentioned that fewer 

4-year-olds receive subsidies because of the pre-kindergarten program 

and the other official said that, in her state, parents of 4-year-olds that 

apply for subsidies are referred to the pre-kindergarten program. Another 

official, however, described his child care subsidy program as the last 

resort for low-income working families. This official explained that by the 

time families apply to his program, they have already been turned down 

or the other programs also have wait lists. Officials from 13 states 

mentioned additional programs their states or localities leverage to help 

meet the child care needs of low-income families. For example, one 

official mentioned that his state tries to reduce the number of families with 

school-aged children that receive child care subsidies by referring them to 

after school programs. Officials from 3 states mentioned that some of 

their counties have local funding for assistance with child care expenses 

and officials in 2 of these states specifically mentioned that these funds 

were county responses to CCDF waiting lists.

We provided a draft of this report to the Department of Health and Human 

Services (HHS). The agency noted that the report provides valuable 

information to states and federal officials about access to subsidies, and 

breaks new ground by analyzing state-by-state data on families eligible 

for and those that actually receive Child Care and Development Fund 

(CCDF) services. HHS also expressed concerns about the overall funding 

States Leverage Other 

Programs and Funds to 

Help Meet Subsidy Need

Agency Comments 

and Our Evaluation
Page 43 GAO-17-60 Child Care 

level for CCDF and its impact on state decisions as to which eligible 

families to serve as well as the amount of the subsidy to provide. The 

agency also provided technical comments, which we incorporated as 

appropriate.

We are sending copies of this report to appropriate congressional 

committees, the Secretary of Health and Human Services, and other 

interested parties. In addition, the report will be available at no charge on 

the GAO website at http://www.gao.gov. 

If you or your staff have any questions concerning this report, please 

contact me at (202) 512-7215 or brownbarnesc@gao.gov. Contact points 

for our Offices of Congressional Relations and Public Affairs may be 

found on the last page of this report. GAO staff who made key 

contributions to this report are listed in appendix III.

Cindy S. Brown Barnes, Director 

Education, Workforce, and Income Security Issues
Appendix I: Objectives, Scope, and 

Methodology

Page 44 GAO-17-60 Child Care

Our review focused on: (1) what is known about the number and types of 

families eligible for child care subsidies and the extent to which they 

receive them; and (2) how states determine which eligible families receive 

subsidies when subsidy need exceeds supply. We used a variety of 

methods to address these objectives, including analyzing data from 

Urban Institute’s Transfer Income Model, version 3 (TRIM3) on subsidy 

eligibility, the U.S. Department of Health and Human Services’ (HHS) 

summary tables of administrative data on subsidy receipt (HHS 

administrative data), and HHS public use sample data on Child Care and 

Development Fund (CCDF) recipients (HHS sample data). We 

interviewed HHS officials, researchers in the child care subsidy field, and 

other knowledgeable stakeholders, in addition to holding group interviews 

with child care officials from 32 states. We also identified and reviewed 

applicable studies as needed that discussed eligibility and access issues 

associated with child care subsidies. We identified these studies by 

consulting with interviewees and reviewing key online research websites 

and repositories. Finally, we reviewed relevant federal laws, such as the 

Child Care and Development Block Grant Act of 2014,1 and summaries of 

state CCDF policies.

We conducted our work from May 2015 to December 2016 in accordance 

with generally accepted government auditing standards. Those standards 

require that we plan and perform the audit to obtain sufficient, appropriate 

evidence to provide a reasonable basis for our findings and conclusions 

based on our audit objectives. We believe that the evidence obtained 

provides a reasonable basis for our findings and conclusions based on 

our audit objectives. Further details on our key methodologies are 

discussed below.

To determine what is known about families eligible for subsidies, we used 

data from TRIM3 to estimate the number of children nationwide and stateby-state that: (1) met federal requirements for CCDF eligibility and (2) 

were eligible to receive CCDF subsidies based on state policies. We then 

compared the characteristics of children eligible for subsidies to children 

receiving subsidies, using TRIM3 and HHS data (described below).

TRIM3 is developed and maintained by staff at the Urban Institute with 

funding primarily from HHS. The TRIM3 model simulates major 

 1

Pub. L. No. 113-186, 128 Stat. 1971.

Appendix I: Objectives, Scope, and 

Methodology

TRIM3 Microsimulation 

Model
Appendix I: Objectives, Scope, and 

Methodology

Page 45 GAO-17-60 Child Care

governmental tax, transfer, and health programs using federal data from 

the Current Population Survey containing detailed information on the 

demographic characteristics and economic circumstances of U.S. 

households. TRIM3 models eligibility for CCDF-funded subsidies on a 

monthly basis. In other words, each family is checked for eligibility in each 

month of the simulation year, and a family might be found eligible for 

CCDF-funded subsidies in some months of the year but not the entire 

year. The eligibility policies in the simulation reflect the variations in 

eligibility policies across states.

To identify the number of children estimated to be eligible for child care 

subsidies, we examined TRIM3 data on children who met federal 

requirements and who also met state eligibility policies. In addition, to 

understand more about the characteristics of children estimated to be 

eligible for subsidies according to their state policies, we analyzed the 

following variables: age; race; Hispanic ethnicity; whether the head of 

household is single, not single, or the child is in a child-only unit;2 and 

family income-to-poverty ratios. To improve the reliability of our estimates, 

we used multiple calendar years of TRIM3 data to generate subsidy 

eligibility estimates for an average month. For our estimates of the 

number of children meeting federal requirements and estimates of 

children eligible under state policies, we used data from calendar years 

2011 and 2012, which was the most recent at the time of our analysis. 

We obtained these data from the HHS publication, “ASPE Issue Brief: 

Estimates of Child Care Eligibility and Receipt for Fiscal Year 2012.”3 A 

relatively small number of children (216,000 out of 8.9 million in 2012) are 

defined as eligible under state policies in this brief, but are not considered 

eligible under federal parameters. This can occur because some children 

are considered child-only units under state policies, making them eligible, 

but are not considered child-only units under federal parameters, and 

because some states define the assistance unit differently than the 

federal requirements. In addition, estimates of children eligible under 

federal parameters do not consider state-allowable income disregards 

when determining whether a child’s family income is below 85 percent of 

state median income; in some states, income disregards can therefore 

 2

Examples of child-only units may include units where a child lives with a non-parent 

caretaker, such as when a child lives in foster care. 

3

This Brief used TRIM3 data to estimate CCDF eligibility. We used its estimates of both 

children meeting federal requirements and children eligible under state policies, instead of 

replicating them through our own analysis, because we found them sufficiently reliable for 

our purposes.
Appendix I: Objectives, Scope, and 

Methodology

Page 46 GAO-17-60 Child Care

lead to a slightly higher estimate of children eligible under state policies 

than children eligible under federal parameters. This was the case in the 

District of Columbia and New Mexico. For these two states, we subtracted 

a small number of children (170) from the estimated number of state 

eligible children so we could use the percentage formula to estimate the 

margin of error of the percentage of children meeting federal parameters 

that are eligible under state rules. For our state-by-state estimates of the 

age and race and ethnicity of children eligible under state policies, we 

used data from calendar years 2010 through 2012 because the additional 

year increased the reliability of estimates for subgroups within states. We 

obtained these data from the Urban Institute’s publicly available TRIM3 

baseline microdata files. Due to TRIM3 data limitations with 2010 data, 

however, we could only use 2011 and 2012 data for head of household 

and income-to-poverty ratios. For estimated percentages, we excluded 

from our analysis any estimates where the margin of error exceeded 15 

percentage points. For count estimates, we excluded from our analysis 

any estimates where the relative margin of error exceeded 15 percent. In 

addition, we assessed the reliability of TRIM3 by (1) performing electronic 

testing of required data elements, (2) reviewing publicly available 

information about the data and systems that produced them, (3) reviewing 

additional information about the Child Care Module provided by HHS and 

the Urban Institute, (4) interviewing staff at the Urban Institute who 

developed and maintain the TRIM3 microsimulation, and (5) interviewing 

HHS agency officials knowledgeable about the data. We determined that 

none of the data limitations or modeling assumptions affected or 

compromised the analysis for this report and the data are considered to 

be sufficiently reliable for our purposes.

We used HHS administrative data to gather information on children 

receiving subsidies. Data on subsidy recipients are derived from 

mandatory state reports that include case-level data (specifically, the 

ACF-801 that states submit monthly to HHS). State ACF-801 reports are 

based on information families provide to caseworkers, who then input the 

data into existing state information technology systems. Using the ACF801 reports, HHS provided us with summary tables of state-by-state data 

on the number and characteristics of children and families receiving 

subsidies in an average month (HHS administrative data). To conduct 

further analyses using different categories and combinations than the full 

administrative data offered, we also obtained sample case-level data 

through the Research Connections Public Use Sample Data Sets (HHS 

sample data). For states that submitted full population data in their ACF801 reports, a random sample of families is selected for each month and 

HHS Administrative Data
Appendix I: Objectives, Scope, and 

Methodology

Page 47 GAO-17-60 Child Care

only the children of those families are included in the child Public Use 

Sample Data Set. For the states that submitted sample data in their ACF801 reports, all families and all children were included in the Public Use 

Sample Data Sets.4

To analyze the HHS subsidy receipt data, we selected variables that 

characterized the subsidy population and could be readily compared to 

data from TRIM3 microsimulation: children’s age, children’s race and 

Hispanic ethnicity, whether the head of household is single, and the 

family income-to-poverty ratio. We used the HHS administrative data to 

analyze age, and we used the HHS sample to analyze the remainder of 

the characteristics. For age and race and ethnicity, we combined the 

totals from fiscal years 2010, 2011, and 2012 in order to be comparable 

with our TRIM3 analysis. Due to data limitations in TRIM3, we could only 

analyze 2011 and 2012 for the income-to-poverty ratio and head of 

household analyses, so we used HHS sample data from fiscal years 2011 

and 2012 for these characteristics as well. For each characteristic, we did 

not report state-level results for any states where the data on that 

characteristic were missing or invalid for 15 percent or more of the 

children. We also did not report any state-level estimates (from the HHS 

sample data) where the margin of error (for percentage estimates) 

exceeded 15 percentage points, or where the relative margin of error (for 

count estimates) exceeded 15 percent. Finally, we excluded territories 

from all HHS administrative data because TRIM3 only includes data on 

the 50 states and the District of Columbia. The territories removed from 

national analyses were: American Samoa, Guam, Northern Mariana 

Islands, Puerto Rico, and Virgin Islands. When reporting national totals, 

we included all states and the District of Columbia.

We also reported HHS’s estimates of the extent to which children who 

may meet eligibility criteria actually received subsidies for fiscal year 2012 

nationwide, known as a coverage rate. Coverage rates specifically 

measure children eligible based on federal CCDF requirements in 

comparison to those receiving or estimated to receive subsidies from the 

major federal funding sources that subsidize the cost of child care for lowincome working families—CCDF, two sources of Temporary Assistance 

for Needy Families (TANF) funds spent directly on child care, and Social 

Services Block Grant (SSBG). For this reason, HHS officials told us they 

 4

While most states submit full population data in their ACF-801 reports, a few elect to 

submit sample data that are proportional to the caseload for that month. 
Appendix I: Objectives, Scope, and 

Methodology

Page 48 GAO-17-60 Child Care

did not believe data on SSBG, TANF funds spent directly on child care, 

and TANF maintenance of effort to be reliable on a state-by-state level, 

and therefore they only estimate coverage rates on a national level.

HHS allows states to report the total number of children they subsidize 

using any funds on the ACF-801 because states may not have the ability 

to identify children served only by CCDF. In these cases, HHS must 

estimate the number served by CCDF using a state-reported pooling 

factor, which is the percentage of funds spent on child care subsidies 

from CCDF. HHS uses the pooling factor to weight the state-reported 

data to determine the number of children and families served solely by 

CCDF. The department multiplies a state’s pooling factor by the total 

number served to develop adjusted counts of those served by CCDF.

We assessed the reliability of HHS administrative data by (1) performing 

electronic testing of required data elements, (2) reviewing existing 

information about the data and systems that produced them, and (3) 

interviewing agency and other officials knowledgeable about the data. We 

determined that the administrative data used to estimate participation and 

coverage rates were sufficiently reliable for the purposes of this report.

For our analysis of race and ethnicity in both TRIM3 and HHS data, we 

constructed the following mutually exclusive categories: White, nonHispanic; Black, non-Hispanic; Other or multi-racial, non-Hispanic; and 

Hispanic. In our state-level analysis, we present information on nonHispanic White children, non-Hispanic Black children, and Hispanic 

children.

For our analysis of family income-to-poverty status, we constructed a 

variable in the HHS sample data that compared monthly family income to 

the HHS poverty guidelines for the appropriate year. For our estimates of 

income-to-poverty status among eligible children, we used a variable from 

the TRIM3 Child Care module with monthly family income as a 

percentage of poverty. We did not include children in child-only units5 in 

the analysis of family income-to-poverty status, because any family 

income associated with those children would not affect their eligibility, and 

we did not include children whose family income exceeded four times the 

 5 Examples of child-only units may include units where a child lives with a non-parent 

caretaker, such as when a child lives in foster care.

Variable Recodes and 

Restrictions
Appendix I: Objectives, Scope, and 

Methodology

Page 49 GAO-17-60 Child Care

poverty guideline as we determined that these values were likely to be 

errors. We determined statistical significance for all comparisons between 

subsidy recipients and eligible children at a 95 percent confidence level.

To review state CCDF policies and how they may vary across states, we 

used data from Urban Institute’s CCDF Policies Database, which is a 

cross-state, cross-time database of CCDF policy information funded by 

HHS. Urban Institute publishes selected policies for all states annually in 

its Book of Tables, and we primarily relied upon the 2014 Book of 

Tables.6 The information contained in this database was collected 

primarily from caseworker manuals, which are documents that 

caseworkers use as they work with families and providers. The tables 

created from the database were reviewed by almost all state 

administrators and verified for accuracy, with two states not providing 

verification. As noted in various places in this report, in a few states, child 

care policies vary across sub-areas within a state. In those cases, the 

Urban Institute’s tables show information for the most populous area. 

Although some caseworker manuals may include policies derived from 

state legal requirements, GAO did not examine state statutes and 

regulations nor did we independently verify the information in the Urban 

Institute’s tables.

To understand how states manage demand for child care subsidies, we 

held interviews with child care administrators or their designees 

(collectively referred to as state child care officials in the report) from 32 

states that had wait list policies in 2014 about how they assess need for 

subsidies in their states, prioritize who they serve, and manage wait lists 

(see table 4). Of these 32 states, 19 had active wait lists as of early 2015. 

The remaining 13 states served all applicants they determined eligible for 

the program. The results of these interviews are not generalizable to all 

states.

 6

See Sarah Minton, , Kathryn Stevens, Lorraine Blatt, and Christin Durham. The CCDF 

Policies Database Book of Tables: Key Cross-State Variations in CCDF Policies as of 

October 1, 2014, OPRE Report 2015-95 (Washington, DC: Office of Planning, Research 

and Evaluation, Administration for Children and Families, U.S. Department of Health and 

Human Services, 2015)

CCDF Policies Database

Group Interviews
Appendix I: Objectives, Scope, and 

Methodology

Page 50 GAO-17-60 Child Care

Table 4: Status of States’ Use of Wait Lists and Discussion Group Participation 

Category

# of 

states

# of states 

contacted

# of states 

participated

States that had a wait list policy and served all 

eligible applicants.

13 13 12a

States that had a wait list policy and had 

families/children on the wait list.

19 19 19

States that froze intake. 1 1 1

States without a wait list policy. 18 0 0

Total 51b 33 32

Source: GAO documentation and GAO analysis of 2015 National Women’s Law Center and CCDF Policies Database Book of Tables, 

October 2014 data | GAO-17-60

a

One state declined to participate in our interviews.

b

Includes the District of Columbia.

We used two sources to compile a list of states with a wait list policy and 

to identify whether a state had families on the wait list in the most recent 

year.

• To identify states with a wait list policy in place as of October 1, 2014, 

we used the CCDF Book of Tables. This table was released in 

October 2015 and was the most current data compilation available.

• To identify whether states had families on a wait list, we used the 

National Women’s Law Center survey results for 2015. The results of 

the survey were current as of February 2015. These data represent 

the most current available compilation of states’ wait lists at the time 

we began our outreach.

We held five group interviews—three with states that had families on the 

wait list and two with states that served all eligible applicants. Group 

interview participation ranged from three to seven states per session. 

Limiting the number of states per session helped ensure that all states 

would have a chance to share their experiences during the discussion. In 

addition, eight states were unable to participate during the scheduled 

group interview times. In order to obtain the most complete information 

possible, we held individual interviews with each of these states. Five 

were states that served all eligible applicants and three had an active wait 

list.

To gather information and perspectives on child care eligibility and access 

issues, we conducted interviews with a variety of stakeholders.

Other Interviews
Appendix I: Objectives, Scope, and 

Methodology

Page 51 GAO-17-60 Child Care

• We assembled a group of stakeholders knowledgeable about wait 

lists and access to child care. We selected seven stakeholders from 

research and advocacy organizations, as well as the government, 

based on referrals from the HHS entrance conference and other 

interviews, as well as a review of relevant literature. The selected 

stakeholders had authored reports on child care subsidies or had 

experience managing related programs. Our discussion with these 

individuals focused on good wait list practices, which we used to 

inform our questions for the group interviews we held with state child 

care officials.

• We conducted individual interviews with stakeholders from research 

and advocacy organizations, as well as academia, to discuss access 

issues and data sources. We identified these stakeholders through 

reviewing policy papers and applicable websites, attending webinars, 

and asking interviewees to suggest other knowledgeable stakeholders 

to contact.

• We met with federal officials who administer the CCDF and 

contractors who provide technical assistance on eligibility and access 

issues.
Appendix II: Comments from the Department 

of Health and Human Services

Page 52 GAO-17-60 Child Care

Appendix II: Comments from the Department 

of Health and Human Services
Appendix II: Comments from the Department 

of Health and Human Services

Page 53 GAO-17-60 Child Care
Appendix II: Comments from the Department 

of Health and Human Services

Page 54 GAO-17-60 Child Care
Appendix III: GAO Contact and Staff 

Acknowledgments

Page 55 GAO-17-60 Child Care

Cindy Brown Barnes, (202) 512-7215 or brownbarnesc@gao.gov.

In addition to the contact named above, Janet Mascia (Assistant 

Director), Nancy Cosentino (Analyst-in-Charge), Rhiannon Patterson, 

Amy Moran Lowe, Nyree Ryder Tee, and Eric Anderson made significant 

contributions to this report. Also contributing to this report were James 

Rebbe, Mimi Nguyen, Jean L. McSween, Karen O’Conor, Anna Maria 

Ortiz, Kate van Gelder, Jessica Orr, Rachael Chamberlin, Kelly Snow, 

and Chris Schmitt.

Appendix III: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(131366)
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