DOD has provided subsidized child care to military members and civilian military employees for decades. Today, DOD-subsidized child care is widely considered to be a high-quality model for the nation. A recent DOD report said that the Military Child Care Act of 1989, which created DOD’s current child care structure and was enacted in response to concerns at the time about quality and availability of services, focused on assuring high-quality services and expanding access through subsidies. DOD- subsidized care assists military families in balancing the competing demands of family life, accomplishing the DOD mission, and improving the financial health of military families. However, DOD-subsidized child care is not guaranteed to all who need it, and the availability of such care depends on demand and the services’ budgetary resources. DOD’s goal is to meet 80 percent of the demand for child care. Table 1 shows the primary DOD-subsidized child care programs that are available to families in all four services, although a few other service-specific programs exist. Most military families who receive child care assistance do so by using CDCs or other forms of on-installation care. Several additional subsidized child care programs have been adopted DOD- wide, such as programs specifically for injured servicemembers’ families, and respiterather than regularly scheduled care. In addition, services offer several and hourly care—both of which are intended to offer sporadic, service-specific subsidized child care programs. For example, Army Child Care in Your Neighborhood, available only at specified installations, aims to increase the availability of eligible community-based child care providers and Air Force’s Extended Duty Care offers child care during nontraditional hours to support servicemembers working extended or additional shifts to support the military mission. The services acknowledge that some families may also use youth development programs—programs outside of School Age Care, such as recreation programs—as child care, although these are not required to meet the DOD’s standards for child care and they are not intended to be used as such. The Office of the Secretary of Defense (OSD) establishes eligibility criteria for subsidized child care and provides oversight and guidance to the services, which each administer their own child care programs. For example, OSD defines the following groups as eligible for military child care programs: active duty military personnel, DOD civilian personnel, reservists on active duty or during inactive duty personnel training, and DOD contractors. fiscal year 2010, there were approximately 1 million servicemembers with 1.8 million children ages 13 and under, according to our analysis of data from the Defense Manpower Data Center. According to DOD, its child care system is serving about 200,000 children from birth to age 12, and NACCRRA records indicate that in fiscal year 2010, about 25,000 of these children were served in subsidized off-installation care. OSD specifies that first priority be given to active duty military and DOD civilian personnel who are either single parents or whose spouse is employed on a full-time basis outside the home or is a military member on active duty. However, OSD officials told us that they are in the process of revising this policy. The revision under consideration broadens the range of those in first priority status, adding surviving spouses of servicemembers deceased while on active duty, among other groups. DOD Instruction 6060.2(4.3). Reservists include members of the Reserves and the National Guard. OSD also sets standards for provider eligibility for DOD’s off-installation child care subsidies. DOD requires that providers under Military Child Care in Your Neighborhood, intended for longer-term care periods, be nationally accredited, to help ensure they are comparable in quality to DOD’s Child Development Programs, such as CDCs. According to DOD officials, child care can be considered accredited under a number of different national accreditation and state child care quality programs, which help ensure that child care providers meet quality standards. Operation Military Child Care is intended for families of deployed servicemembers, and DOD requires that, at a minimum, providers be licensed and inspected annually. OSD sets allowable ranges for the fees that families pay for on-installation child care at CDCs, within which the services must set their fees. In contrast to private providers, who generally set fees based on a child’s age, OSD sets fee ranges based on total family income. OSD sets two fee ranges—one for standard-cost areas, and one for high-cost areas, or areas with high market rates for child care. Installations in high-cost areas must pay higher salaries to retain qualified child care staff, and are allowed to charge higher fees to help cover these additional personnel costs. The services have some flexibility in how they set their fees for on-installation child care within the ranges set by OSD. For on-installation care, a family’s cost is the fee that the service or installation sets minus any fee reductions, such as discounts for multiple children in care. Other factors affect family-level costs, such as family size and the number of hours that children are in care. The subsidies services offer providers for off-installation child care are intended to provide benefits comparable to those that families would receive for on-installation care. As with fees for on-installation care, however, the services have the ability to determine the extent to which they subsidize the cost of off-installation care. The services contract with NACCRRA to administer these subsidies, which NACCRRA pays directly to DOD-approved child care providers. A family’s cost for off-installation care is the portion of their provider’s fee not covered by the subsidy. As a result of services’ policies, the per-child monthly cost of on- installation care at a CDC for families within the same income category varied by as much as $230 in school year 2010, depending on their service and installation (see fig. 1). However, the per-child monthly costs for most families in the same income category varied within a smaller range. For example, the per-child monthly cost for on-installation care for a family with an annual income of $50,000 could have ranged from $335 to $518 in school year 2010; however, for families in this income category at most military installations with CDCs, the per-child monthly cost was within the OSD standard fee range of $335 and $413. The services have different policies for setting fees within the ranges set by OSD. In school year 2010, the Air Force, Army, and Marine Corps all allowed installation commanders to set fees for on-installation child care, based on factors such as local market rates for child care. Most installations set their fees within the OSD standard fee ranges. Installations in high-cost areas, however, could set their fees using the OSD high-cost fee range, or by increasing the standard fee by the percentage of their cost-of-living allowance, which sometimes resulted in fees that were above the OSD high-cost range. In contrast to the other services, the Navy set one fee per income category for all of their standard-cost installations and another fee per category for high-cost installations. In addition, the services have the discretion, within DOD- prescribed policy, to set their own policies regarding the fee reductions they offer to families, which generally apply only to on-installation care. For example, services may offer fee reductions for families with multiple children in care, families with a deployed servicemember, families with injured servicemembers, and families experiencing financial hardship. In school year 2010, families using off-installation care in the Air Force and Navy, which capped the monthly amount of subsidy a family could receive at $200 per child, had higher average monthly child care costs than did families in the Army and Marine Corps, which did not have fixed subsidy caps. Across all services, on average, military families paid about $556 per month for DOD-subsidized off-installation care (see table 2). However, the average monthly costs for Air Force and Navy families were $787 and $734, respectively, compared to $501 and $556, respectively, for Army and Marine Corps families. In addition to fixed subsidy caps, several other factors affected families’ costs for off- installation care, including fee rates charged by private providers. Air Force and Navy families had higher average costs by other measures as well. For instance, families in these services using off-installation care paid more, on average, than the estimated amount they would have paid for on-installation care (by 11 percent and 16 percent, respectively). In addition, on average, Navy families’ costs for off-installation care were 12 percent of their family income, while the average Army family’s costs were 8 percent of their family income. Air Force and Navy families also paid a higher percentage of their private providers’ fees (the fee before being reduced by the subsidy), on average, than Army or Marine Corps families. Families’ costs for off-installation care are affected not only by subsidy caps, but also by the fees services charge for on-installation care. Generally, the subsidy amount is the fee charged by the private provider minus the estimated amount that a family would have paid for on- installation care at a CDC. For example, if an off-installation provider charges $1,000 per month, and a family would have paid $600 per month on installation, the subsidy amount would be $400 (if there is no subsidy cap), and the family would pay the same amount they would have paid on installation: $600. However, in school year 2010, the Air Force and Navy set subsidy caps, or limits, on the per-child subsidy for off-installation care in order to offer benefits to more families. As a result, some families in these services paid more for off-installation care than they would have paid on installation. In the example above, if the family was in the Air Force or Navy, which both had fixed subsidy caps of $200 per month in school year 2010, the family would have paid $800 per month (the provider rate of $1,000 minus the subsidy of $200), which is $200 more than they would have paid on installation. The Army also used subsidy caps in school year 2010. However, in contrast with the Air Force and Navy, the Army’s intention was that a family’s subsidy would only be capped if they used private providers who charged rates above what the Army considered reasonable for high-quality care in their local market. The Army caps varied from $153 to $2,576, depending on a number of family factors, such as total family income. The vast majority of these caps were above $200, and over half were above $500. Thus, Army families were likely less affected by their service’s caps than were Navy and Air Force families, as suggested by the lower average costs of Army families in our sample. In addition to fixed caps, other factors also affect families’ costs for off- installation care, including minimum subsidies, family factors, and provider rates. Three of the four services offered minimum subsidies in school year 2010, which families received even if their off-installation providers charged less than they would have paid on installation (see table 3). Army officials said that they offered minimum subsidies to encourage families living off installation to participate in DOD-subsidized child care programs. Other factors that affect off-installation costs include family income, which is a factor in the services’ subsidy calculations, and other family factors such as the number and ages of children in care and the amount of time that they are in care, which may affect how much a family pays in fees to a given provider. The fee rates charged by private providers, which are influenced by child care supply and demand as well as the geographic location of the local community, affect costs for some, but not all families. In the absence of subsidy caps, provider rates do not affect costs, since the family’s subsidy covers the full difference between their provider rate and estimated on-base fee. For families in services with subsidy caps, however, the subsidy may not cover the full difference, in which case families with higher provider rates will have higher costs. Recent and planned changes to OSD and the Army’s fee policies will continue to reduce variation in the amount families in the same income category pay for on-installation care. In school year 2011, OSD revised the fee ranges for the first time since school year 2005 to account for inflation and increases in servicemembers’ incomes and to achieve a more equitable distribution of fees for military families. Specifically, OSD divided the top income category into four categories, increased the maximum income for each category, and increased both the minimum and maximum fees for all categories except Category I (see table 4). Under the new fee structure, OSD set a single fee per income category for high-cost installations, which all high-cost installations are now required to charge. The impact of these revisions on military families’ costs for on-installation care varied depending on families’ service, installation, and income. In general, however, the new OSD fee policy reduced the variation in the per-child monthly cost for families in the same income category using on- installation care among and within services. For example, while in school year 2010 the per-child monthly cost for on-installation care for a family with an annual income of $50,000 could have varied from $335 to $518 (see fig. 1), in school year 2011 the per-child monthly cost for families with the same income could have varied from $358 to $478 (see app. II, fig. 4 for the full range of fees charged by the services in school year 2011). Costs for families with this income at most installations were within the OSD standard fee range of $395 to $456 (see table 4). OSD officials said that they are working with the services to transition in the next 3 to 5 years toward a DOD-wide fee policy like the one currently used by the Navy, with one fee per income category for standard-cost installations, and another fee per category for high-cost installations. According to these officials, the new fee policy implemented in school year 2011 is the first step in this transition. OSD’s changes to its fee policy and additional changes the services have made to fee policies for off-installation care affect costs for some families using off-installation care, but the extent of these effects is largely unknown. The new OSD fee ranges affect costs for families using off- installation care, as well as on-installation care, since the on-installation fee rates are used to calculate subsidies for off-installation care. In addition, all of the services have recently made changes to their off- installation fee policies that make these policies more consistent in some, but not all, respects. See table 5 for a summary of these changes. Subsidy minimums are one area where the services’ subsidy policies for off-installation care are not consistent, since Navy and Air Force families receive a minimum of $10 per child per month, all Marine Corps families eligible for full-time care receive $250 per child per month, and Army families no longer receive a minimum subsidy. Given that the average costs for families in our sample in services with $200 subsidy caps were higher than those for other families, the average costs of Marine Corps families using off-installation care are likely to rise with the implementation of the Marine Corps’ $250 subsidy cap. Some Marine Corps families, however, will see a decrease in their costs if they previously received a subsidy of less than $250 per child per month. In general, the effects of these subsidy policy changes will vary by family. In particular, the effects will vary for families in services with subsidy caps, because costs for these families are driven partly by private provider fees, which vary considerably regardless of the services’ policies. Although DOD provides information about subsidized child care programs through a number of sources, DOD officials and military parents cited limited awareness of these programs as a key barrier to their use. DOD uses many outreach methods, such as deployment briefings and other events, brochures and ads, e-mails to servicemembers, staff assigned to provide child care information, and Internet avenues, including websites and social media. Figure 2 shows common sources of DOD child care information. DOD officials stated that while military families living on or near an installation likely know about child care available through CDCs and Family Child Care, they may not know about other on-installation child care programs, such as respite care. Furthermore, both those living on or near an installation and those living far from an installation may not know about off-installation programs. For example, many servicemembers we spoke with did not know about DOD-subsidized off-installation child care. In addition, those who knew about the DOD-subsidized off-installation programs had not always learned about them when they needed child care. For example, two servicemembers we spoke with said that they had learned about off-installation programs, but only through the community- based provider they were using without benefit of DOD subsidies. One of these servicemembers said that he had used a community-based provider for a number of months before the provider told him about the DOD subsidy program, and this was only when he notified the provider that he no longer planned to use its services because he could not afford the child care fees charged. Also, families that learn about DOD- subsidized off-installation child care programs may not be aware of the eligibility requirements of the programs. For example, officials at the National Military Families Association told us that many military families that heard about DOD off-installation subsidized child care believed that the programs are needs-based, and thus assumed that they were not eligible for them because their income was too high, even though the programs are not limited to low-income families. Similarly, two military spouses we spoke with incorrectly assumed that only those with low incomes were eligible for such subsidies. DOD faces a number of challenges to educating military families about DOD-subsidized child care, particularly off-installation care. These challenges include the large quantity of information servicemembers receive during briefings, the timing of information provided, fewer opportunities off installation to educate servicemembers about DOD- subsidized programs for those geographically isolated from an installation, and fragmented child care application procedures. DOD and the services have taken a number of steps to address these challenges. Quantity of information received. DOD officials and an organization representing military families told us that information on DOD- subsidized child care programs is frequently provided at pre- deployment or other briefings, but because these briefings are often lengthy and cover multiple topics, servicemembers often do not retain information about child care. In 2007, we reported that DOD had a similar concern regarding briefings provided at mobilization sites and demobilization sites, which DOD considers to be primary educational tools. DOD officials said then that these briefings are often so full of critical information that it is difficult for reservists to absorb all of the details of its health care insurance program. In fact, several servicemembers we met with noted that they tune out or become overwhelmed by long briefings and therefore do not retain much of the information, such as on child care. DOD officials recognize this concern and said that they try to ensure that military families learn about DOD-subsidized child care by providing them with many opportunities, beyond briefings, to learn about these programs. For example, because DOD considers command unit leadership to be key to ensuring readiness, including supporting spouses and families, DOD has taken steps to help units provide child care information to their servicemembers and families through unit contacts. Officials from all four services told us that they provide information on these programs to these contacts, including the unit commander and other unit staff designated to provide this type of information to families. Two services—the Army and Marine Corps—created professional positions within military units that are responsible for supporting family readiness by providing assistance to families, such as child care information. These positions also support formal volunteer organizations tasked with communicating information and providing education and support to military families. Although the Air Force and Navy have not designated such professionals within units, they have family services professionals outside of units who are assigned to serve servicemembers in units. For example, the Air Force has community readiness consultants and family child care coordinators assigned to serve specific units and provide the same type of support to families as do Army and Marine Corps unit-based professionals. Both Air Force and Navy also support similar volunteer organizations and efforts, such as Navy’s Family Ombudsman Program. Many servicemembers we spoke with stated that these family readiness professionals and volunteer organizations are helpful in learning about DOD-subsidized child care programs, while others noted that the level of assistance varies. Each of the four services has taken additional steps to increase outreach for these programs. For example, the Marine Corps prepared a fact sheet on DOD-subsidized off-installation child care programs, which includes answers to frequently asked questions including updated information on program policy changes. The Navy hired an outreach coordinator for installation and community-based child care programs. Also, the Army and Marine Corps provided resource and referral staff a “script” to ensure that staff members provide consistent, specific information on DOD-subsidized off- installation child care programs. The Air Force developed a marketing strategy including materials such as pamphlets and an implementation guide for program staff, intended to provide information on family child care programs to servicemembers. Timing of information provided. Officials from DOD and groups representing military families told us that information on DOD- subsidized child care is more likely to be absorbed if it is provided when military families need it. Some servicemembers we spoke with mentioned that they ignored information on DOD-subsidized child care programs when they did not need child care, but were interested in such information when they later needed this service, such as when they became parents and had to return to work. One servicemember said briefings targeted to parents-to-be or those with children of similar ages would help overcome the problem of not getting information at the right time. For example, without targeted briefings about child care, not all parents-to-be learn about the need for getting on waiting lists for on-installation care. On one installation we visited, not all of the military mothers we spoke with had been advised that they needed to get on the CDC waiting list, which was about 9 months, as soon as they learned they were pregnant. Those who were not alerted said that they had to take leave to care for their infants until they could find child care. Services recognize the need for targeted information on child care and have implemented education programs, such as those for expectant and new military parents, and mandatory physical training for postpartum servicemembers, both of which offer the opportunity to educate participants about the need to get on CDC wait lists. Services target child care information to military families in other ways, as well. For example, the Air Force offers a sponsorship program aimed at facilitating permanent change of station moves. Under this program, Air Force servicemembers trained as sponsors welcome and assist colleagues and their families who are new to an installation by providing information on local services, which can include information on DOD-subsidized child care options. One Air Force servicemember we spoke with had a sponsor that had helped her find housing and child care when she moved to a new installation. Other examples include the Navy and Air Force’s new programs to market DOD- subsidized child care programs to military families, such as to reservists who have children and have recently deployed. Fewer opportunities off installation to educate servicemembers. DOD estimates that two-thirds of those stationed in the United States do not live on an installation and many of these families live long distances from an installation. However, because DOD child care programs have traditionally been focused on installations, more information about DOD-subsidized child care, including daily exposure to sources of child care information, is available to those living on or near an installation. For example, installation outreach can include a walk-in information and referral center and ongoing child care publicity, such as on marquees on the installation promoting child care programs. Also, military families that are geographically isolated from installations are likely isolated from military peers that DOD officials and several parents we spoke with cited as a source of child care information. As a result, families of servicemembers who do not live or work on an installation, such as recruiters and Guard and Reserve members, may be less aware of DOD-subsidized child care programs, including those that become available when they deploy. For example, results from a 2010 Army Guard survey showed that many Army Guard members were unaware of DOD-subsidized child care, while most military families living on or near an installation are likely knowledgeable about the availability of on-installation care. Limited exposure to on-installation information about DOD-subsidized child care may affect Guard and Reserve families to a greater extent than active duty families that live remote from an installation. These military families may often identify with the civilian, rather than the military world, and thus may be less likely to look to the military as a source of support. One reservist told us that reservists generally assume that if they do not live near a military installation, military services will not be available. Thus, many reservists might not even think to ask about DOD-subsidized child care when they are activated. DOD and NACCRRA have both taken steps to address the need to provide more opportunities to educate servicemembers about DOD- subsidized off-installation child care. DOD implemented the Joint Family Support Assistance Program to supplement and coordinate family services provided by the services, including child care, target military families geographically dispersed from a military installation, and collaborate with community organizations to enhance the availability of high-quality family services. The services have also taken such steps. For example, the Air Force implemented an Air Force Reserve web page on the Family Members programs, which includes information on child care available to reservists. Marine Corps officials stated that in light of the subsidy cap they implemented in school year 2011 that will make subsidies available to more Marine Corps families, they have taken additional steps to contact reservists to educate them about off-installation program information, including program changes and how to obtain access to programs. In addition to hiring an outreach coordinator for installation and community-based child care programs, the Navy is developing marketing and communication strategies and webinar training specific to the Navy Reserves in order to better educate reservists about DOD-subsidized child care programs. The Army makes phone calls to families of deployed reservists to ask what services they need, including child care, and provides information and contacts for DOD-offered services. Also, because Reserve and Guard members may turn to civilian sources of assistance, NACCRRA officials stated that they asked their members to inform those who identify themselves as military families about DOD off-installation child care subsidy programs. In addition to learning about DOD-subsidized child care, obtaining information about applying for this care has also been a challenge families face, because servicemembers must apply for on-installation child care at different places than for off-installation child care. Also, for off-installation programs there are a number of eligibility requirements for the military family and standards for the community-based provider that differ depending upon the program. Generally, in order to apply for on- installation child care, including CDCs and Family Child Care, parents must contact the on-installation child care resource and referral office. However, if on-installation care programs have waiting lists and the family needs child care immediately, they must contact another entity, generally NACCRRA, if they choose to pursue DOD-subsidized off-installation care. For the most part, this process is separate from the installation’s resource and referral office and the installation generally does not follow up on each family’s success in finding off-installation care. Although NACCRRA assists families in finding an eligible community-based provider, if available, and applying for DOD-subsidized care, some servicemembers’ spouses and Guard officials found applying for the programs difficult. For example, several servicemembers’ spouses stated that the website did not provide clear steps on how to apply for DOD-subsidized child care. Further, several regional Guard officials stated that applying for off- installation DOD-subsidized child care is complex because requirements vary among programs, making it difficult to determine the programs for which a military family may be eligible. Also, they noted that providers that meet DOD’s requirements, which vary by program, are often not available, especially for programs with more stringent standards and in areas far from military installations. Additionally, several military parents we spoke with said that because there is no one place to find child care options available to them, particularly for off-installation child care, they had to research these options themselves in order to find alternatives to on-installation care. DOD is developing a central system intended to enable eligible military families worldwide, regardless of their service branch, to request military Child and Youth Program services that meet individual child and family needs. DOD officials told us that the system is aimed at helping educate military families about DOD-subsidized child care by identifying programs the family is eligible for based on information they enter into the system. Such a system may help alleviate the problem of unclear information on how to apply for programs and difficulties determining eligibility. DOD intends to market the system DOD-wide to servicemembers once it is fully implemented. The agency is in the process of contracting for the development of a marketing plan which will include assessing marketing needs and a strategy to market the system to users, in coordination with the services, among other things. DOD plans to pilot the system in the spring of 2012, and to begin full implementation of the system in the late summer or fall of 2012. In response to limited availability of on-installation child care and eligible off-installation providers, DOD and the services are increasing capacity at on-installation facilities and in the community as part of their commitment to family readiness. According to DOD officials, the increased demand, due to high deployments and increased operational tempo, puts pressure on the services, the Army and Marine Corps in particular. DOD officials stated that CDC waiting lists are common and DOD officials told us that Family Child Care home capacity is not increasing. As a result, many military families may not be able to obtain on-installation care when they need it. This is particularly an issue for families with children under the age of 3, especially infants. To meet this demand, DOD is increasing on- installation child care capacity by constructing new CDCs that it expects will result in meeting 80 percent of the estimated demand for military child care by 2012. DOD anticipates that construction projects approved in fiscal years 2008 through 2010 will add over 21,000 additional child care spaces. Military families that cannot obtain on-installation care due to wait lists and those that are geographically isolated from an installation may be eligible for DOD-subsidized off-installation care, but community-based providers who meet DOD’s quality standards are in short supply. Figure 3 shows the circumstances under which servicemembers may be eligible for DOD-subsidized off-installation care. Providers under Operation Military Child Care must be, at a minimum, licensed and annually inspected by their states, but according to NACCRRA not all states have requirements to regularly inspect licensed child care providers. Standards for providers under Military Child Care in Your Neighborhood are even more stringent. Under this program DOD requires eligible providers to be nationally accredited, but relatively few child care providers in the United States are accredited. According to a NACCRRA review,and 1 percent of family child care homes in the United States were nationally accredited. Additionally, the percent of child care centers with national accreditation varied from 2 to 47 percent among states. in 2008 only about 10 percent of child care centers DOD is taking steps to increase the number of community-based providers eligible for DOD subsidies. In the near term, Army Child Care in Your Neighborhood and Army School-Age Programs in Your Neighborhood subsidize nonaccredited providers who are participating in an Army quality improvement program. To help increase providers participating in these and other off-installation programs the Army established a full-time position to coordinate and manage community- based child care at selected installations, such as Joint Base Lewis- McChord in Washington. In addition, DOD is making more community- based providers available to military families who qualify for Military Child Care in Your Neighborhood by allowing the services to waive the accreditation requirement if it is determined that no accredited provider is available to the applicant. Further, according to NACCRRA it obtained agreements from all but three states to inspect licensed providers annually on a case-by-case basis so that military parents using these providers can receive subsidized care. Even with these efforts, DOD officials told us that some military families potentially eligible for DOD- subsidized child care assistance, including many who pay for child care, do not use subsidized care because they are not willing to switch to an eligible provider, or because they have no providers nearby who meet DOD’s standards. In the long term, DOD is piloting a 13-state initiative working with other federal agencies and state officials to increase the quality of child care programs by improving state-level child care oversight and licensing practices. The pilot’s intended purpose is to increase the number of providers who meet DOD quality standards. DOD selected these states, in part, because they have large military populations. The flexibility DOD has given the services to set their own child care fee policies, including subsidy caps for off-installation care, allows the services to adjust fees and subsidy amounts to meet their budgetary needs and respond to local cost-of-living variations. However, this flexibility has also contributed to differences in the out-of-pocket costs paid by families with similar incomes, both among and within services. DOD’s efforts to reduce its on-installation fee ranges for families with similar incomes and its plan to require all services to charge one fee per income category in a few years may help provide increased financial consistency for families moving among installations. It is difficult to determine the degree to which policy changes, such as those related to subsidy caps, will affect costs for off-installation care for individual families, because these costs are driven to some extent by private provider fees, which vary considerably regardless of the services’ policies. However, it is likely that families in the three services with subsidy caps will, on average, have higher costs than families in the Army, which does not. Thus, DOD and the services face a policy trade-off in determining the extent to which they will shoulder child care costs for military families who cannot obtain on-installation care. For instance, differences among the services in families’ costs for off-installation care could be minimized if all services offered subsidies that made up the full difference between a family’s private provider rate and what they would have paid for on-installation care, with no subsidy caps. However, such a policy change would require increased spending on child care for most of the services, likely requiring them to divert budgetary resources from other family programs to provide these higher subsidy amounts. In addition, eliminating the caps could require greater oversight from the services to ensure that providers did not raise their fee rates in response to subsidy increases. On the other hand, some services use subsidy caps to avoid having to limit the number of families who can benefit from subsidies for off-installation care, so that all eligible families can have at least some of their child care costs covered. As DOD and the services move forward with their new fee policies, balancing these competing priorities will be critical to supporting military families as they serve their country, while also using resources carefully in an austere fiscal environment. DOD has taken some important steps to make military families aware of DOD-subsidized child care programs, particularly off-installation subsidies, and to make eligible child care available. Additional steps that DOD is taking, such as waiving accreditation requirements and piloting a 13-state initiative designed to help states increase the quality of private providers are important in helping families living off installation obtain safe, reliable child care. As DOD increases the number of eligible child care providers for off-installation programs and moves toward centralizing access to DOD-subsidized child care programs through its planned agencywide system for requesting both on- and off-installation care, outreach will need to keep pace, with particular attention to families who live off installation. DOD anticipates that its proposed marketing plan will help better ensure that servicemembers are aware of this system once it is fully implemented. Such a plan also provides an opportunity for services to identify and share communication strategies with the most potential. How well DOD executes both its marketing plan and communication strategies will be crucial to ensuring that all families learn about DOD-subsidized child care, including families that are geographically isolated from installations and have few opportunities to benefit from ongoing contact with installation resources, such as walk-in information centers, on-installation child care publicity, and contact with other military families who could tell them about military child care options. Otherwise, the barriers families face in learning about and accessing DOD-subsidized child care programs will likely persist. We provided a copy of this draft report to DOD for comment and review. DOD provided written comments, which are reproduced in appendix IV of this report, and technical comments, which we incorporated as appropriate. In its comments, DOD said that, in general, the report correctly addresses the issues of providing fee assistance to military members and assisting with access to child care. DOD also provided clarification about the following issues: variations in on-installation child care costs, fee caps, changes in policies to reduce out-of pocket costs, and family support assistance. DOD also suggested caution in drawing conclusions based on our random sample. Regarding variations in per-child, on-installation child care costs, DOD stated that in practice the fee variations are smaller than those we reported due to the limited number of programs utilizing the high-cost fee option. We believe that the report is very specific about not only the actual fee ranges but also the percentage of installations that are charging these fees. As stated in the report, we found that 64 percent of military installations with CDCs charged fees within OSD’s standard fee range in school year 2010, which means that over a third of the installations charged fees within OSD’s high-cost range. The high-cost exceptions to this were a few installations—a total of six and, again, specifically noted in the report—that had very high cost-of-living allowances and charged fees that were above OSD’s high-cost range. We recognize that in school year 2011 the number of military installations with CDCs that charged fees within OSD’s high-cost range declined to about 11 percent and we noted this in our final report in response to DOD’s comment. DOD commented that eliminating the caps that three of the services have placed on off-installation care fee assistance may not require increased spending on child care for those services. DOD provided an Army analysis that concludes that the average amount of child care fee assistance the Army paid per child in recent fiscal years was less than the capped rate currently paid by the other services. However, the Army’s analysis does not take into consideration the effect of removing subsidy caps for those services that have such caps. Based on our analysis, over 60 percent of Air Force and Navy families receiving subsidies for off- installation care were affected by these services’ subsidy caps in school year 2010. Thus, if the Air Force and Navy were to eliminate their subsidy caps, they would incur paying higher subsidy amounts to over 60 percent of families using this type of care, which would increase their total spending on child care. DOD stated that in addition to the recent and planned changes to DOD and the Army’s fee policies that will likely reduce the differences among the services, the Air Force also implemented fee policy changes reducing out-of-pocket expenses for families. The Air Force change eliminates additional fees if a child is in care more than 10 hours per day. However, our analysis of the child care fees charged by the services did not include any additional fees they may have charged beyond the base fees for regularly scheduled care, such as fees for care beyond 10 hours per day. Thus, eliminating those additional fees would not change the fee differences among the services that we include in this report. DOD also commented that in regard to the family support assistance provided by professional positions, it believes that the Air Force and Navy provide the same level of service as the Army and Marine Corps, but in a different manner. We did not assess the level of family support assistance provided by each service. Instead, we reported the various ways these services provide such assistance through professionals within and outside the units and through the services’ support of volunteer organizations. That said, we recognize the importance of the Navy’s Family Ombudsman Program and have added it as an example of a volunteer effort in the report. In addition to these clarifications, DOD also commented that the GAO random probability sample of 338 families relative to the total number of families accessing the system of care indicates the need for caution in drawing conclusions about accessibility of information and child care options. We agree that this sample does not represent the total number of families accessing DOD’s child care system. The sample’s analysis, which is outlined in appendix I, provides findings related to families’ off- installation child care costs at the family and child level, in conjunction with other variables such as family income, private provider fees, and the estimated fee the family would have paid for on-installation care. We are sending copies of this report to the Secretary of Defense, appropriate congressional committees, and other interested parties. The report also is available at no charge on the GAO website at http://www.gao.gov. If you or your staff members have any questions about this report, please contact me at (202) 512-7215 or brownke@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 members who made key contributions to this report are listed in appendix V. Our review focused on the following questions: (1) What are the out-of- pocket child care costs paid by military families who use Department of Defense (DOD) subsidized child care? (2) What are the barriers, if any, to obtaining DOD-subsidized care, and what has DOD done in response? To determine the out-of-pocket costs for families using DOD-subsidized off-installation care, we analyzed these costs for a random probability sample of 338 families from all four services in school year 2010. Specifically, we collected and analyzed data from family files maintained by the contractor that administers DOD’s off-installation child care subsidies, the National Association of Child Care Resource and Referral Agencies (NACCRRA). Our sample included families that participated in regularly scheduled child care through Operation Military Child Care and Military Child Care in Your Neighborhood, the two DOD-wide subsidy programs for off-installation care, as well as smaller service-specific programs: Army Child Care in Your Neighborhood, Army School-Age Program in Your Neighborhood, the Army’s Warriors in Transition program, and the Marine Corps’ San Diego Quality Improvement Program. This analysis allowed us to generalize our findings to all families receiving DOD subsidies for off-installation child care in school year 2010. NACCRRA maintains an electronic database with information that allowed us to identify all the military families it served in school year 2010. We used this database to generate our sampling frame of families. However, since this database does not include the information needed to calculate families’ out-of-pocket costs, we collected our data variables from the information contained in paper files NACCRRA maintains for each family. To create our sampling frame, NACCRRA used the database to generate a list of all families and children who received DOD subsidies for off-installation care in school year 2010. In selecting our sample, we stratified families by service (Air Force, Army, Marine Corps, and Navy) and either Active Duty or National Guard and Reserves (combined group) component. No prior data existed on the out-of-pocket child care costs of military families receiving subsidies that would allow us to calculate the variance in these costs, which we needed to determine our sample size. Thus, we collected a presample of 157 files (at least 36 from each service), calculated the out-of-pocket costs for those families, and then calculated the variance in costs for each service. We used the variance to determine the number of family files we would need to collect for the final sample in order to calculate the margin of error for each stratum to be no more than plus or minus $90. To obtain the family files for both the presample and the final sample, we provided NACCRRA with the family identification numbers for the files we had randomly selected. When NACCRRA staff had pulled the paper files for these families, we went to their offices in person to verify the files they had pulled. NACCRRA staff then scanned the documentation we needed and sent it to us in PDF form. We requested only documentation pertaining to school year 2010 (October 1, 2009 through September 30, 2010). We requested and received the following documentation from each file: Each child’s schedule of care, all provider rate sheets, all fee calculator(s) used to calculate the subsidy rate, and servicemember’s deployment orders, if applicable. Using this documentation, we input data for each family and child in Excel spreadsheets. We ensured the reliability of these hand-entered data by having two analysts enter all data, then reconciling any discrepancies between the two data spreadsheets. For the first objective, to determine the out-of-pocket costs for families using on-installation care, we obtained data from DOD and the services on the range of fees charged per child at installations in school years 2010 and 2011. Family-level cost data for on-installation care were not available. Our analysis on families’ out-of-pocket costs is limited to their weekly or monthly child care fees, although families may pay additional costs, such as fees for special events and activities. In addition, our analysis of these fee data focused on school year 2010, so that we could present data on costs for on-installation care that covered the same time period as our data on off-installation care costs. We also analyzed changes to the on-installation fee ranges in school year 2011. DOD and three of the four services provided data on weekly fees, while the fourth service (Army) provided monthly fees. We converted DOD and the other services’ weekly fees to monthly fees using the same calculation used by the Army to obtain monthly fees. Specifically, we multiplied the weekly fees by 365/7 (the number of weeks in a year) to get the yearly fee amount, and then divided by 12 to obtain the monthly fee amount. This calculation assumes a 365-day year, as well as an equal number of days in each month. Since months vary slightly in length, the monthly amount paid by families in services that charge fees on a weekly basis will also vary slightly. In addition, all Army installations allow families 2 weeks of vacation per year, during which they do not pay child care fees if their children are not in care. Army families’ monthly fees are calculated such that families pay more during the other 50 weeks of the year to make up for the 2 weeks of vacation. We recalculated Army fees without this vacation credit to make them comparable to other services’ fees, which are generally not reported in this form. To determine families’ costs for off-installation care, we collected data from a sample of 338 NACCRRA family files, as described above. We analyzed these data to determine families’ off-installation child care costs at the family and child level, in conjunction with other variables such as family income, private provider fees, and the estimated fee the family would have paid for on-installation care. We compared the averages of these variables across services. In this analysis, we weighted family and child data based on the family’s probability of being selected for the sample, which varied due to differences in the population size of each stratum (e.g., families of active duty Army servicemembers). Because we followed a probability procedure based on random selections, our sample was only one of a large number of samples that we might have drawn. Since each sample could have provided different estimates, we express our confidence in the precision of our particular sample’s results as a 95 percent confidence interval (e.g., plus or minus $100). This is the interval that would contain the actual population value for 95 percent of the samples we could have drawn. For this objective, we also reviewed the child care fee policies set by DOD and the services for school years 2010 and 2011, including the fees charged to families for on-installation care, any discounts offered to families, and how subsidies are calculated for off-installation care. Some aspects of the services’ fee policies, such as their methods of calculating subsidies for off-installation care, were not contained in written policies. We obtained this information through interviews with DOD and service officials. We also interviewed these officials regarding the implementation of these policies. Because external data were significant to our research objectives, we assessed the reliability of the data obtained from DOD and NACCRRA. To assess the reliability of the data on the range of fees charged by each service in school years 2010 and 2011, we interviewed officials from each service on their annual process for collecting and reviewing data on the fees charged by their installations. To assess the reliability of the NACCRRA data that we used as the sampling frame for our sample of families using off-installation care, we interviewed NACCRRA officials about their database and how they maintain it. To assess the reliability of the Defense Manpower Data Center data that we used to determine the number of servicemembers and their children who were eligible for DOD child care assistance in fiscal year 2011, we interviewed Defense Manpower Data Center officials about the reliability of the relevant data fields and also conducted electronic testing of the data. We found the data we assessed to be sufficiently reliable for the purposes of reporting the range of on-installation fees per child by service in school years 2010 and 2011, and out-of-pocket costs for families using DOD-subsidized off- installation child care in school year 2010. We found that the Defense Manpower Data Center data may not capture 100 percent of the children of servicemembers who are eligible for child care, because Guard and Reserve members are not required to report their children in the data system that populates the Defense Manpower Data Center data fields on servicemembers’ children. In addition, we found that, because the Defense Manpower Data Center data we received included members of all reserve categories, these data included some servicemembers and children who were not eligible for child care. We determined that these limitations were minor enough to allow us to report the approximate number of servicemembers eligible for DOD child care in the background of the report. To address the second objective, we reviewed relevant federal laws, policies and guidance, studies and surveys of military parents, and interviewed child and youth program officials with DOD and each of the four services, including officials at service headquarters and installations. We also interviewed representatives of NACCRRA, nonprofit organizations that support military families, and researchers knowledgeable about DOD child care programs. In addition, we visited two large military installations (Joint Base Lewis-McChord, Wash.— Army/Air Force), and Marine Corps Base Camp Lejeune, N.C.) and conducted phone interviews with officials at two additional large military installations (Naval Station Norfolk, Va., and Nellis Air Force Base, Nev.) to learn how each implements child care programs and discuss barriers faced by families in obtaining access to these programs. To obtain examples of child care programs and barriers faced by military parents at installations with no on-installation child care facilities, we also conducted telephone interviews with officials at two small installations affiliated with two services (Army’s Yakima Training Center, Wash., and Creech Air Force Base, Nev.), for a total of four phone interviews with installations. For our site visits, we selected large installations that had a Guard and/or Reserve presence and had significant deployment activity. Visiting two large installations—one each representing the Army and Marines–– provided examples of a large and a small service’s approaches to child care programs. We also selected one installation that is a joint base— having two military services on base—the Army, the lead service, and the Air Force. During our site visits we also conducted six semi-structured discussion groups with military parents at Joint Base Lewis-McChord, and five at Marine Corps Base Camp Lejeune, including parents who did and who did not have their children enrolled in DOD-subsidized child care. We also held two additional semi-structured discussions with reserve servicemembers at Camp Lejeune. During these semi-structured discussions we inquired into how parents learned about DOD-subsidized child care and any barriers they may have encountered obtaining this care. In addition, we conducted phone interviews with child care officials and military parents at two additional large military installations—Naval Station Norfolk, Va., and Nellis Air Force Base, Nev. The information obtained during these visits and through phone calls is illustrative and not representative of each service or of DOD programs as a whole. In order to select servicemembers for our small discussion groups at the two sites we visited, we provided DOD with selection criteria that they used to identify servicemembers to invite to these groups. Because we held separate discussions with officers and enlisted servicemembers, we used the same criteria for each. Our criteria were officers and enlisted servicemembers with children 12 and under who were using DOD child care—including both on-installation facilities and off-installation community care subsidies—and those not using such care. In addition, at each site we visited we also met with a small group of spouses of servicemembers with children 12 and under. Many of these spouses worked for a DOD family support office or were members of military organizations that serve spouses, such as the Marine Corps L.I.N.K.S program, which is a volunteer, mentoring program, designed by Marine Corps spouses to help family members understand and adapt to the unique challenges of military life. To assess the methodological quality of a NACCRRA study we used to support the scarcity of providers eligible to receive DOD child care subsidies, we reviewed the study’s methodology and also obtained responses from NACCRRA to questions we had about this methodology. We used a different NACCRRA study to identify differences in how states oversee and regulate private child care providers.not include a methodology, we obtained information from NACCRRA about the methodology it used to prepare this report. We also confirmed certain information NACCRRA included in the study for the two states where we performed site visits at installations in order to help verify the accuracy of this information and found no relevant discrepancies between the study and state-provided information. We found these reports to be sufficiently reliable for the purposes described above. Appendix III: Supplemental Data from Sample of Families Using DOD-Subsidized Off- Installation Care 95% margins of sampling error for these estimates range from +/- $5,197 to +/- $14,928. 95% confidence intervals for these estimates do not exceed $33,155 to $59,947. 95% confidence intervals for these estimates do not exceed $93,432 to $183,538. 95% margins of sampling error for these estimates range from +/- 5.7% to +/- 10.5%. Janet Mascia, Assistant Director, and Julianne Hartman Cutts, Analyst-in- Charge, managed this assignment. Caitlin Croake, Lauren Gilbertson, Hayley Landes, and Suzanne Rubins made significant contributions to all aspects of this report. Kate Van Gelder, Holly Dye, and James Bennett provided writing and graphics assistance. In addition, Kirsten Lauber, Terry Richardson, Jeff M. Tessin, and Cynthia Grant provided design and methodological assistance. James Rebbe provided legal assistance.

Summary: About a million military servicemembers serve the United States while raising a family, and many need reliable, affordable child care. Paying for high-quality child care can be challenging for these families, so the Department of Defense (DOD) offsets costs by subsidizing on-installation child care centers and offering subsidies for approved off-installation care providers. Deployments related to the wars in Iraq and Afghanistan increased the demand for child care. The extent of military families out-of-pocket child care costs for those using subsidized care are not known, and families may face barriers to obtaining DOD-subsidized care. GAO was mandated to examine: (1) the out-of-pocket child care costs paid by military families who use DOD-subsidized care; and (2) the barriers, if any, to obtaining DOD-subsidized care, and what has DOD done in response. To address these objectives, GAO reviewed DOD policies and guidance; interviewed officials from DOD, its contractor that administers DODs off-installation child care subsidies, and organizations that support military families; reviewed DOD fee data for school year 2009-2010 (school year 2010) and school year 2010-2011 (school year 2011); and analyzed child care costs for a random probability sample of 338 families using off-installation care in school year 2010. GAO conducted nongeneralizable discussion groups with military parents at two large military installations. GAO is not making recommendations in this report.DOD generally agreed with the reports findings and also provided additional information on several specific points in the report. Out-of-pocket costs for military families who use DOD-subsidized child care are largely driven by policies that vary by service. DOD establishes income-based fee ranges for on-installation child care, but each service sets its own fees and discounts within these parameters. As a result, in school year 2010 the per-child costs that families from the same income categories paid for on-installation care varied by service and installation. For example, the monthly per-child cost for a family with an income of $50,000 could have ranged from $335 to $518. Families costs for off-installation child care through private providers are also affected by policy differences among the services. All services offer subsidies for off-installation care that are intended to make families costs comparable to those for on-installation care. In an effort to offer benefits to more families, some services use a fixed cap to limit the subsidy amount. In school year 2010, the Air Force and Navy capped their subsidies at $200 per child per month, and families in these services had higher average monthly costs for off-installation care than Army and Marine Corps families, and also had higher costs than what they would have paid for on-installation care. For example, on average, Navy families using off-installation care paid $87 more per month than they would have paid for on-installation care, while Army families paid $63 less. Other factors, such as the number of children in care, also contributed to families costs for off-installation care. DOD and the services recent policy changes reduced differences among and within services in families costs for on-installation care, and DOD plans to further reduce these differences in the next 3 to 5 years. While the effects of these policy changes on individual families costs for off-installation care vary by family, families in services with fixed subsidy caps will likely continue to have higher average costs than families in services that do not. Military families face two main barriers to obtaining DOD-subsidized child care: lack of awareness and insufficient availability. According to DOD officials and based on GAOs group discussions, some families remain unaware of subsidized child care, particularly off-installation care, despite DODs efforts to provide information at pre-deployment briefings, and through other outreach efforts. Families who are geographically isolated from an installation, such as reservists and recruiters, may be less likely to be aware of subsidized care. The individual services have taken steps to increase awareness of DOD-subsidized child care, such as establishing positions for professionals who educate families about child care options. However, even families who are informed about DOD-subsidized child care may face barriers obtaining it due to a lack of available space at on-installation centers and a scarcity of eligible child care providers off installation. The shortage of on-installation child care spaces resulted, in part, from heavy deployment demands, and DOD has responded by approving construction projects that it anticipates will provide over 21,000 new child care spaces using fiscal year 2008 through 2010 funding. DOD and the services have initiatives under way to increase the availability of eligible off-installation providers. In addition, DOD is developing an agencywide system that will provide servicemembers a central place to request both on-installation and off-installation child care. DOD plans to pilot the system in the spring of 2012 and intends to market it DOD-wide to servicemembers once it is fully implemented. The agency is in the process of contracting for the development of a marketing plan.