Smart Solutions

Program Description

Core Components for Model Fidelity

Money: Money flows through NCPC to the LP. The LP, after competitive bidding, may administer the dual subsidy activity in-house or through a contract with a DSP or child care site to administer the program. This activity is implemented outside of the state-level subsidy contract.
Expenditures: Reported in DCDEE's Smart Start Reporting System (SSRS) by the LP or DSP on a monthly basis.
Audience: Financial assistance paid on a direct per child basis for the purchase of part- or full-day care in a licensed child care facility and/or rate enhancements for families eligible for Temporary Assistance for Needy Families (TANF) or the Child Care and Development Fund (CCDF). Includes wrap-around care for children attending other publicly funded part-day programs such as NC Pre-K, Head Start or Developmental Day Schools. This activity may serve children of all ages prior to kindergarten.

Languages Materials are Available in

English

Program Implementation

Staffing Requirements

Staffing requirements vary between different Smart Start LPs.

Training for Model Fidelity

Please contact your Program Officer and Christine Bauer, NCPC's Fiscal Consulting & Contracts Director (cbauer@smartstart.org), or Lauren Walker, NCPC's Lead Fiscal Consulting & Contracts Specialist (lwalker@smartstart.org), for additional context and support when considering different subsidy programs.

Cost and Purveyor Information

Contact Information

For more information, contact your Program Officer or Christine Bauer.

Christine Bauer: Fiscal Consulting & Contracts Director at NCPC; cbauer@smartstart.org

Cost Estimates

Varies based on local needs, program costs, and other factors. Connect with your Program Officer or Christine Bauer for more information.

NCPC Reporting & Evaluation

Purpose Service Code (PSC)

2341 - Subsidy – Dual Subsidy: TANF/CCDF Eligible Only

Program Identifier (PID)

Dual Subsidy TANF/CCDF Eligible

Minimal Outputs for NCPC Reporting

FY 24-25:

Number of children funded

Minimal Outcomes for NCPC Reporting

FY 24-25:

Improved Access to High Quality Care

Minimal Measures for NCPC Reporting

FY 24-25:

NA

NCPC Evidence Categorization

Evidence Informed - Industry Standard

Research

Research Summary

Six of the most relevant publications on child care subsidies include an evaluation of the Child Care and Development Fund (CCDF),¹ a study evaluating the impacts of child care subsidies on low income families’ experiences of child care-related work disruptions,² an evaluation of the long-term impacts of Norway’s expansion of child care subsidies,³ an evaluation of the North Carolina Pre-Kindergarten program between 2017-2018,⁴ and a state policy roadmap⁵ and an evidence review from the Prenatal-to-3 (PN3) Policy Impact center.⁶ The sample populations in these publications included children ages 0-12 years, children born in Norway between 1967-1979, children eligible for the North Carolina Pre-Kindergarten program in 2017-2018, children from rural and urban municipalities, low-income families, various family formations, families from diverse racial and ethnic backgrounds (including Caucasian, Black, and Hispanic families), and parents experiencing unemployment. Results of these studies indicated that increasing child care subsidies was associated with higher rates of employment among potentially eligible women, particularly among women with children ages 0-3 years. Subsidy recipients were less likely to experience child care-related work disruptions and their children were more likely to delay child bearing. Child care subsidies were associated with an increased likelihood of attending college and had an equalizing effect on adult earnings for children with low and high incomes. Some findings indicated that these impacts were most notable for girls and children with low-educated mothers. Additionally, children in the North Carolina Pre-Kindergarten program had better vocabulary and letter and word recognition skills at the end of the pre-k year than their peers in a waitlist control group, and Spanish-speaking dual language learners also had a greater knowledge of math concepts than children in the control group at the end of the year.

The PN3 state roadmap for North Carolina reported that North Carolina does not meet their three key policy levers for child care subsidies of income eligibility, limiting copayments, and establishing equitable infant and toddler reimbursement rates. Based on federal guidelines, income eligibility thresholds should be set at or above 85% of the state median income (SMI), while North Carolina's income eligibility for child care subsidies is set at 62% of the SMI. North Carolina's child care subsidy copayments for families are approximately 10% of their income, despite federal guidelines indicating that limiting copayments to 7% of family incomes or less reduces the cost burden for families and is considered affordable by the federal government. Finally, the federal government indicates that reimbursement rates set to the 75th percentile or higher increase equal access to child care for low-income families. North Carolina has made progress toward this goal in recent years, particularly in infant classrooms, but reimbursement rates in toddler classrooms are not meeting federal guidelines.

The North Carolina Department of Health and Human Services (DHHS), Division of Child Development and Early Education (DCDEE) provides a Program Policy Manual that includes guidance on child care subsidy policies, procedures, needs, and goals. The manual also describes roles and responsibilities, eligibility determination, parental fees, licensing requirements, recipient rights and responsibilities, approval and enrollment procedures for licensed facilities, payment rates and policies, and more. Counties in NC are expected to implement subsidized child care programs consistent with the 2023 version of the SCCA manual, as of October 1, 2023. For more information, please view the SCCA manual on the NC DHHS website.

^ Six of the most relevant publications on child care subsidies include an evaluation of the Child Care and Development Fund (CCDF),1 a study evaluating the impacts of child care subsidies on low income families’ experiences of child care-related work disruptions,2 an evaluation of the long-term impacts of Norway’s expansion of child care subsidies,3 an evaluation of the North Carolina Pre-Kindergarten program between 2017-2018,4 and a state policy roadmap5 and an evidence review from the Prenatal-to-3 (PN3) Policy Impact center.6 The sample populations in these publications included children ages 0-12 years, children born in Norway between 1967-1979, children eligible for the North Carolina Pre-Kindergarten program in 2017-2018, children from rural and urban municipalities, low-income families, various family formations, families from diverse racial and ethnic backgrounds (including Caucasian, Black, and Hispanic families), and parents experiencing unemployment. Results of these studies indicated that increasing child care subsidies was associated with higher rates of employment among potentially eligible women, particularly among women with children ages 0-3 years. Subsidy recipients were less likely to experience child care-related work disruptions and their children were more likely to delay child bearing. Child care subsidies were associated with an increased likelihood of attending college and had an equalizing effect on adult earnings for children with low and high incomes. Some findings indicated that these impacts were most notable for girls and children with low-educated mothers. Additionally, children in the North Carolina Pre-Kindergarten program had better vocabulary and letter and word recognition skills at the end of the pre-k year than their peers in a waitlist control group, and Spanish-speaking dual language learners also had a greater knowledge of math concepts than children in the control group at the end of the year.
The PN3 state roadmap for North Carolina reported that North Carolina does not meet their three key policy levers for child care subsidies of income eligibility, limiting copayments, and establishing equitable infant and toddler reimbursement rates. Based on federal guidelines, income eligibility thresholds should be set at or above 85% of the state median income (SMI), while North Carolina's income eligibility for child care subsidies is set at 62% of the SMI. North Carolina's child care subsidy copayments for families are approximately 10% of their income, despite federal guidelines indicating that limiting copayments to 7% of family incomes or less reduces the cost burden for families and is considered affordable by the federal government. Finally, the federal government indicates that reimbursement rates set to the 75th percentile or higher increase equal access to child care for low-income families. North Carolina has made progress toward this goal in recent years, particularly in infant classrooms, but reimbursement rates in toddler classrooms are not meeting federal guidelines.
The North Carolina Department of Health and Human Services (DHHS), Division of Child Development and Early Education (DCDEE) provides a Program Policy Manual that includes guidance on child care subsidy policies, procedures, needs, and goals. The manual also describes roles and responsibilities, eligibility determination, parental fees, licensing requirements, recipient rights and responsibilities, approval and enrollment procedures for licensed facilities, payment rates and policies, and more. Counties in NC are expected to implement subsidized child care programs consistent with the 2023 version of the SCCA manual, as of October 1, 2023. For more information, please view the SCCA manual on the NC DHHS website.
^ See Forry & Hofferth (2011). This study evaluates the impacts of child care subsidies on low-income families' experiences of child care-related work disruptions. The study utilizes datasets from the Wait List study and the Fragile Families and Child Wellbeing (Fragile Families) study. The Wait List study was a quasi-experimental study based in Montgomery County, Maryland while the Fragile Families study was a national study of children born in urban areas between 1998 to 2000. The Wait List study sampled 40 parents who were predominantly single and low-income. They completed interviews in the summer of 2005 with a follow-up in the winter of 2006. In Montgomery County, families not exceeding 191% of the federal poverty threshold were eligible for receiving CCDF subsidies, and families who exceeded this threshold were eligible for participating in a county-funded subsidy program. The timing of this study coincided with the county lifting their waitlist for child care subsidies, so some families had received their subsidies prior to the first interview and some parents were no longer using the child care subsidy by the second interview. The Fragile Families study was a national, longitudinal study of families living in economically and politically diverse, urban cities in the United States (n = 4,700). Most participants were single, low-income parents with a child born between 1998 and 2000. Forry & Hofferth (2011) utilized a subsample of 459 low-income mothers with a singleton child who were eligible for a child care subsidy (117 of whom were receiving a subsidy at the time of the study). This subsample differed from the original Fragile Families sample as single working mothers with only one child were less likely than those with multiple children to receive a child care subsidy (34% and 42% respectively) and to use center-based care (40% and 47% respectively). They also had fewer people living in their household, lower family incomes, worked slightly shorter hours, had younger children, and were typically more highly educated than single working mothers with multiple children. The subsample of single working mothers with only one child were more likely to rely on multiple child care arrangements, use relative care, and have fewer protective factors against child-care related work disruptions. Measures included interviews assessing the respondents' child care-related work disruptions, subsidy status, and demographics. The Fragile Families study also used an indicator of maternal depression adapted from the Composite International Diagnostic Interview (CIDI). Subsidy recipients had lower household incomes (p ≤ 0.001), were less likely to be non-Black/non-Hispanic (p ≤ 0.05), were less likely to use multiple child care arrangements (p ≤ 0.05), and were more likely to receive non-governmental support to pay for child care (p ≤ 0.01) than non-subsidy recipients. Subsidy recipients were more likely to be in school (p ≤ 0.001) and live in census tracts with higher rates of unemployment (p ≤ 0.01)and lower median housing prices (p ≤ 0.05) than non-subsidy recipients. Subsidy recipients were more likely to use center-based care (p ≤ 0.05), had a lower ratio of out-of-pocket costs to household income (p ≤ 0.05), and were less likely to experience child care-related work disruptions than non-subsidy recipients (p ≤ 0.05). Families whose subsidy status changed over rime reported significantly fewer child care-related work disruptions while receiving subsidies (p ≤ 0.01). On average, they experienced 0.36 fewer disruptions over the course of 3 months compared to parents whose subsidy status did not change. Overall, subsidy recipients were less likely to experience child care-related work disruptions (Wait List =75% and Fragile Families = 51%). The Fragile Families data indicated that maternal depression (p ≤ 0.05), more adults in the household (p ≤ 0.05), and higher median housing prices (p ≤ 0.05) were associated with an increase in experiences of child care-related work disruptions. Study limitations include, but are not limited to, the small sample size and somewhat low response rate in the Wait List study as well as the restrictive analytic sample extracted from the Fragile Families study, which could limit the generalizability of Forry & Hofferth's (2011) findings.
^ See Havnes & Mogstad (2011). This study summarizes the effects of the 1970s reform and subsequent expansion of child care subsidies in Norway by assessing the adult outcomes of children in child care at the time of the expansion (measured in their early thirties). The study compares adult outcomes for children ages 3-6 years before and after the reform. To be included in the study, the children needed to be alive and residing in Norway in 2006, reside in one municipality during expansion, have a mother ages 16-49 years at the time of their birth, and have a mother who was married at the end of 1975 (n = 318,367). The researchers defined several cohorts based on the child's birth year in relation to the reform: pre-reform (1967-1969), phase-in (1970-1972), post-reform (1973-1976), and expansion (1976-1979). They also ordered all 414 municipalities by the percentage point increase in child care coverage rates from 1976-1979, then separated at the median to identify the municipalities where child care expanded greatly after the expansion (treatment group) and those that experienced little increase in child care coverage (comparison group). Demographic data indicated that the treatment and comparison groups covered rural and urban municipalities, although some municipalities moved from a rural to urban classification around the time of the child care reform. The treatment group had a lower ratio of child care coverage to employment rate of mothers to 3-6 year olds pre-reform. The data analyzed in this study is largely derived from administrative data covering the resident population of Norway from 1967-2006 as well as administrative data on formal child care centers and their locations in 1972. Overall, the expansion of subsidized child care had a positive impact on children's adult outcomes of earnings and welfare dependency, educational attainment, and family formation. Subsidizing child care was associated with a 5.84 percentage point decrease in the probability of dropping out of high school (p = 0.01) and a 6.85 percentage point increase in the likelihood of attending college (p = 0.01). The child care reform was associated with a 3.59 percentage point decreased probability of being a low earner (annual income less than $21,000 USD; p = 0.01). Subsidized child care had the opposite effect on high and top earners (annual income of at least $84,000 USD and $126,000 USD, respectively; p = 0.01). This suggests that subsidizing child care had an equalizing effect on earnings in adulthood. Additionally, the child care reform was associated a 5.11 percentage point decrease in the likelihood of being on welfare in adulthood (p = 0.01), which was a significant change from the pre-reform mean probability (16.24%). In terms of family formation, subsidized child care was associated with a decrease in the probability of being a parent by 7.99 percentage points (p = 0.01) and an increased probability of being single with no child by 3.47 percentage points (p = 0.01). Notably, the greatest impacts on earnings, educational attainment, and family formation in adulthood were seen for children with low-educated mothers (p ≤ 0.05) and girls (p ≤ 0.05). Additionally, the child care reform was associated with a move from informal to formal child care, rather than parental to formal care. Trends persisted when accounting for time trends, urban and rural municipalities, and children's height as adults (which is commonly associated with higher education and earnings). Study limitations include the lack of data on the quality of child care received and the homogenous sample. Another limitation is that Norway's child care subsidy policies differ from most subsidy policies in the United States, which tend to be based on parent employment, and therefore the results may be difficult to generalize to non-Scandinavian populations.
^ See Peisner-Feinberg et al. (2019). This feasibility study of the North Carolina Pre-Kindergarten program utilizes a randomized controlled trial design and samples children ages 4-5 years in two counties in NC. Each county had a waitlist of eligible children who had applied for NC Pre-K. Families were randomly assigned to the NC Pre-K treatment group (n = 473) or waitlist control group (n = 109). Of these participants, 163 children (treatment = 132, control = 31) were Spanish-speaking dual language learners (DLL). Classroom and teacher characteristics were fairly similar across groups, with most teachers identifying as female (99%), Black/African American (66%) or White (28%), and had an average of 14-15 years of teaching experience, with 8-9 of those years in pre-k settings. Teachers in the treatment group were significantly more likely to have a bachelor's degree or higher (100%) than the teachers in the control group (47%). They were also more likely to have a B-K license (88%) than the control group teachers (26%). The average class size was about 16 children with a fairly equal distribution of male and female children in each class. Most children spoke English as their primary language (70%) with a fifth of students reporting Spanish as their primary language (20%). Assessments were completed in the fall and spring during the pre-k year, and DLL students completed assessments in Spanish 2 weeks after completing the parallel assessments in English. Measures included the Woodcock-Johnson III Tests of Achievement (WJ) in English and the Batería III Woodcock-Muñoz Pruebas de Aprovechamiento (Bat) in Spanish, specifically the Picture Vocabulary, Letter-Word Identification, Passage Comprehension, Applied Problems, and Quantitative Concepts subtests of the WJ and Bat. Additional measures included the Forward Digit Span (FDS), Head-Toes-Knees-Shoulders (HTKS) Test, Problem Behaviors and Social Skills subscales of the Social Skills Improvement System (SSiS), the Pre-IPT (IDEA Oral Proficiency Test) Oral, parent and teacher demographic surveys, Classroom Assessment Scoring System (CLASS), and administrative data from statewide databases. Children who only completed fall data (n = 12) were more likely to have more educated parents, be slightly older, and score higher on the WJ Letter Word and Passage Comprehension measures. For children with fall and spring data (n = 570), families reported having an average of 49 books in the home, but there was substantial variation in both groups (Treatment SD = 55.9, Control SD = 53.5). Families reported engaging in early learning activities (e.g., telling stories, singing, counting, and more) an average of 2.9 times a week. About half of families (45.6%) reported that they did not use any non-parental early childhood education arrangements. Scores on initial assessments were relatively similar across groups. Most sites had a five-star rating (80%). Results indicated that children in the treatment group had better vocabulary (p = 0.001) and letter and word recognition skills (p = 0.001) at the end of pre-k than the control group, as measured by the WJ Picture Vocabulary and Letter-Word Identification subscales. The same trend was present for DLL students in the treatment group, who had better letter and word recognition skills (p = 0.001) and a greater knowledge of math concepts (p = 0.001) at the end of pre-k than their peers in the control group.
^ See Prenatal-to-3 Policy Impact Center (2023). This roadmap from the Prenatal-to-3 (PN3) Policy Impact Center summarizes key policy levers and strategies to support and improve access to child care through child care subsidies. Based on federal guidelines, PN3 identified the key policy levers as income eligibility, limiting copayments, and establishing equitable infant and toddler reimbursement rates. Income eligibility thresholds should be set at or above 85% of the state median income (SMI), but North Carolina's income eligibility for child care subsidies is set at 62% of the SMI, equivalent to 185% of the federal poverty level. Raising the income eligibility threshold allows more families to access child care. Additionally, North Carolina's child care subsidy copayments for families are approximately 10% of their income. Limiting copayments to 7% of family incomes or less reduces the cost burden for families and is considered affordable by the federal government. Finally, the federal government indicates that reimbursement rates set to the 75th percentile or higher increase equal access to child care for low-income families. North Carolina has made progress toward this goal in recent years with H. B. 574 (2021) which increased the child care subsidy market rates to the 75th percentile. PN3 reports that public data in North Carolina shows that, as of October 2023, the state is meeting this threshold only in center-based infant care.
^ See Prenatal-to-3 Policy Impact Center (2023). This evidence review from the Prenatal-to-3 Policy (PN3) Impact Center summarizes findings from high-quality studies evaluating the impacts of child care subsidy programs. PN3 (2023) defines child care subsidy programs as "means-tested, state-run programs that help low-income families pay for child care in a variety of settings, including licensed centers and homes, as well as some unlicensed settings" (p. 2). Child care subsidies help families with low incomes gain greater access to high-quality child care services. Child care subsidy programs are primarily used by low income families (household incomes below the federal poverty level). Black children are typically overrepresented among subsidy recipients but are more likely to live in families with very low incomes, which may be related to their overrepresentation. Hispanic children, on the other hand, are underrepresented. PN3 postulates that this may be due to inadequate access to applications and program information in Spanish in several states and restrictive TANF eligibility requirements (including documentation requirements). There is also some evidence that local caseworkers and administrators implement more stringent practices than state policies require. Although there are substantial variations in subsidy programs from state to state as well as a lack of standardized guidelines for best practices, there is evidence that increasing access to high-quality child care services through subsidy programs supports healthy child development and allows parents to work or attend education/training programs. Studies show that expanding the state subsidy spending per child by $1,000 is associated with an 86% increase in enrollment in center-based care. Increases in child care subsidy expenditures is associated with increased rates of employment for low-income mothers of children under age 3. Parents using subsidy programs were more likely to report receiving a higher level of quality care (self-report only, not based on external ratings using a validated tool). More research is needed to outline best practices and understand outcomes for diverse populations.

Researched Population

Children eligible for NC Pre-K in 2017-2018
Children ages 0-12 years
Low income families, including those with incomes below 85% of the state median income
Various family formations (married, divorced, single parents)
Families from diverse racial and ethnic backgrounds (including Caucasian, Hispanic/Latino, and Black families)
Various rates of employment
Families from urban and rural municipalities in Norway and the United States

Citations

Enchautegui, M. E., Chien, N., Burgess, K., & Ghertner, R. (2016). Effects of the CCDF Subsidy Program on the Employment Outcomes of Low Income Mothers. US. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation. https://aspe.hhs.gov/sites/default/files/private/pdf/253961/EffectsCCSubsidiesMaternalLFPTechnical.pdf

Forry, N. D., & Hofferth, S. L. (2011). Maintaining Work: The Influence of Child Care Subsidies on Child Care-Related Work Disruptions. Journal of Family Issues, 32(3). https://doi.org/10.1177/0192513X10384467

Havnes, T., & Mogstad, M. (2011). No Child Left Behind: Subsidized Child Care and Children’s Long-Run Outcomes. American Economic Journal: Economic Policy, 3(2), 97-129. https://doi.org/10.1257/pol.3.2.97

North Carolina Department of Health and Human Services. (2023). Policy/Manuals - Policies and Manuals. https://policies.ncdhhs.gov/divisional/child-development/child-care-subsidy-services/policies

Peisner-Feinberg, E., Zadrozny, S., Kuhn, L., & Van Manen, K. (2019). Effects of the North Carolina Pre-Kindergarten Program: Findings through Pre-K of a Small-Scale RCT Study. Chapel Hill, NC: The University of North Carolina, FPG Child Development Institute. https://ncchildcare.ncdhhs.gov/Portals/0/documents/pdf/2/2017-18_NC_Pre-K_Eval_Report.pdf?ver=2019-04-23-115537-033

Prenatal-to-3 Policy Impact Center. (2023). Prenatal-to-3 policy clearinghouse evidence review: Child care subsidies (ER 07D.1023). Peabody College of Education and Human Development, Vanderbilt University. https://pn3policy.org/policy-clearinghouse/child-care-subsidies

Dual Subsidy TANF/CCDF Eligible

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