Examining the Gaps
Child Care Prices, Costs, and Subsidies
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The child care math doesn't add up.
Policymakers, administrators, advocates, parents, and providers alike want to understand what it would truly take to strengthen our child care system. We already know part of the answer: payments from child care subsidies and from parents must cover the actual costs of providing care. This report examines state assessments of those costs in detail, and the findings are clear: Across most states with available data, our gap analyses showed that subsidy rates fall below both current market prices and the true cost of providing child care, and in many cases market prices are below cost. These gaps reveal deep underfunding in state child care systems.
Download Examining the Gaps
This report provides an overview of the methods states are currently using to investigate child care prices and cost, to inform government subsidy rates across all 50 states and Washington, D.C., as well as the gaps among child care market rates (prices charged by providers to private-pay families), public subsidies (provided by federal and state governments to help families with low incomes afford child care), and “true” costs (actual cost to provide care, as revealed in narrow cost analyses or cost models).
The report’s central finding is clear: These gaps reveal deep underfunding in state child care systems.
To strengthen the child care system, we must eliminate these gaps.
The Findings
Several key findings emerged across the states:
Subsidy rates fall below current market prices...
...leaving parents who receive subsidies without sufficient access to child care and limiting parental choice.
Subsidy rates fall below the true cost of providing child care...
...leaving providers in the lurch and disincentivizing them from participating in the subsidy system. This, in turn, undermines child care program stability and limits parental choice.
Market prices are often below true cost...
...again leaving providers in the lurch.
What We Recommend
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Revise Subsidy Rates
States should set subsidy rates to cover the true cost of care so families using subsidies have meaningful access to a wide range of child care options. -
Focus on the Workforce
Strengthening and stabilizing the child care workforce must also be a central focus of policy changes, as labor drives cost, quality, and supply. -
Expand Access to Subsidy
Subsidy systems should be expanded to ensure more families are eligible and to serve all children who need care. -
Conduct Market Rate Surveys
To fully understand both affordability and access, states should continue conducting market rate surveys alongside cost models, as the two methods together provide a more complete picture of true costs and whether families with subsidies can access care.
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