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 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). 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. 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 co- payments 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). 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. 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 pre- kindergarten program. In November 2014, Congress passed the Child Care and Development Block Grant Act of 2014. 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; (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; 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. 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. Children who received child care subsidies differed across a variety of characteristics when compared to the eligible population in their state. 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. 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. 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. 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. 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. Moreover, of the 14.2 million children meeting federal requirements, 1.5 million (11 percent) received them (see fig. 1). 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 policies. 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. 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. 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. It is the 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. 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. 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 it for more than a month. 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). Education: Based on our analysis of the CCDF Policies Database Book of Tables, most states allow secondary or postsecondary education as qualifying activities. 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. 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. 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. 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.