This is the second blogpost in our series highlighting key findings from the Child Care Subsidy Expansion Impact Study. First Five Nebraska led this study in collaboration with the Nebraska Department of Health and Human Services, as well as other researchers and child care subsidy experts. The Legislative Summary Report and Technical Report were published in August 2024 to inform lawmakers of the impact of income eligibility expansion on Nebraska children and families.
Research is a critical resource for policymakers to understand complex issues facing Nebraska children and families. For early childhood public policy, one such complex issue is the Child Care Subsidy program. At First Five Nebraska, we recently led a study on the impact of expanding the income limits for the Child Care Subsidy in Nebraska.
In 2021, the Nebraska Legislature passed LB485, expanding the initial income eligibility limit for the child care subsidy from 130% of the Federal Poverty Level (FPL) to 185% FPL. LB485 also expanded the income limit for transitional child care from 185% to 200% FPL for families who were redetermined eligible. To understand the impact, we looked at many things—how many children received subsidized care through the expansion, the economic impact of expansion on families, child care providers and Nebraska and how expansion affected the everyday lives of families and the child care providers who serve them. The answers to these questions are in our recently published report: Impact of Income Eligibility Expansion of the Child Care Subsidy Program in Nebraska.
In our last post, Spotlight on child care providers: Impact of Eligibility Expansion of the Child Care Subsidy Program in Nebraska, we discussed that, despite income eligibility expansion, enrollment in the child care subsidy program has not surpassed 2019 enrollment. Today we want to take a closer look at enrollment in the subsidy program pre- and post-policy change to address a major component of the study: What was the impact of child care subsidy income eligibility expansion on enrollment in the program?
What did we expect vs. what did we learn?
By increasing the income eligibility guidelines to qualify for the child care subsidy program, we expected that more families would enroll in the program, rebounding to pre-pandemic levels. Instead, the number of children and families enrolled in the subsidy program was 15% lower in 2023 compared to 2019 (see Figure 1). This amounts to about 2,338 fewer children being served each year on average or 1,181 families (Technical Report Table 6).
While 2019 is an important baseline for comparison, the four–year-trend doesn’t tell the full story. Income eligibility expansion went into effect in August 2021, and since that time there have been incremental increases in children and families enrolled in the subsidy program.
What is behind the trend?
Pre-policy change: The impact of Covid-19 on child care subsidy enrollment
Enrollment in the child care subsidy program decreased substantially beginning in spring 2020 with the onset of the COVID-19 pandemic, as did overall enrollment in child care in Nebraska and the nation. Temporary and permanent program closures, reduced capacity due to public health measures and parent concerns of potential exposure all contributed to reduced enrollment (Lin & McDoniel, 2023). Additionally, access to the child care subsidy requires parents to demonstrate a need for child care, which is most often employment. With U.S. unemployment rates as high as 14.8% in April 2020 and remaining upward of 5.4% through July 2021 (Congressional Research Service, 2021), fewer parents were likely to meet the eligibility requirements.
By 2021, the average enrollment in child care subsidy had dropped by 20% (see Table 1).
Post-policy change: Income eligibility expansion
Increased income expansion took effect in August 2021 and over the next two years enrollment in the subsidy program did increase, even if it was not at the pace expected. To understand why enrollment numbers have not greatly improved, we needed to examine the subpopulation of enrollees who were affected by income eligibility expansion. These “new access” families would not have been eligible for the child care subsidy program without the legislative changes to income eligibility. Equally important was the comparison of new access families to those who would have access to the program regardless of the eligibility changes. These “existing access” families served as a comparison group, because we could examine how enrollment patterns for the two groups changed over time.
To ensure that both groups were as similar as possible, we identified children and families who became eligible after income eligibility expansion was implemented (September 2021), had a provider who billed the Nebraska Department of Health and Human Services for subsidy and were not in child care as part of the Child Welfare program. A key difference between the two groups was their income levels at the time they were determined eligible. New-access families were determined eligible initially at 130%-185% FPL or they were redetermined eligible for transitional care at 185%-200% FPL. Existing-access families were determined eligible according to the previous income guidelines (i.e., initially at 100%-130% FPL or redetermined at 130%-185% FPL).
Table 2: New vs. Existing-Access Families
New-Access Families
Existing-Access Families
When tracking cumulative enrollment of new and existing access families over time, we found that new–access family enrollment grew over time but at a slower rate than existing–access families (see Figure 2; Technical Report A-Table 20). Notably, there were no differences between the groups in terms of characteristics such as geography, ethnicity or gender. However, we did find that there were proportionally more newly eligible infants (17.8%) than infants with existing access enrolled in the program (12.5%; Technical Report Table 14).
Whether we are looking at families in the new or the existing access group, one thing is clear: Not all families that meet eligibility requirements for subsidy enroll in the program. Likewise, not all families that enroll in the program are able to access a child care provider who accepts subsidy to use the benefits they are entitled to. If every family that was eligible for child care subsidy enrolled in the program, there would not be sufficient licensed child care capacity in the state to meet the demand. In fact, at the same time more families became eligible for the subsidy, the number of providers decreased (See our previous blog on eligibility expansion’s impact to child care providers).
When we compared the number of families enrolled and connected to a child care program to Census data, we estimated the subsidy uptake rate for households with at least one child age 5 and younger to be 29.2%. The map below shows that county-level uptake rates are very low in much of the state, with 63 out of Nebraska’s 93 counties having an uptake rate of less than 20% for households with at least one child age 5 and under (see Figure 3). Counties with uptake rates estimated to be around 100% all have relatively small populations. Nebraska’s urban counties consistently display household uptake rates higher than the state average.
Why aren’t more families enrolling?
Although we cannot know the exact causes of low uptake rates, we examined the application process to search for more clues to the enrollment numbers. For an equivalent comparison, we calculated how many initial applications were denied or approved in the 24 months before and after the legislative changes. Both before and after, households were more likely to be denied for reasons other than income eligibility (such as failure to provide verification or the householder withdrew). For the first application, the portion of denials for non-income reasons was 60% before the expansion and 65% post-expansion. This is contrasted with the fact that approvals stayed steady pre- (25%) to post-expansion (24%; Technical Report Figure 16).
Families who spoke with us discussed the various barriers they experienced with applying to the program, including difficulty navigating the form, time spent during the verification and interview process and child support enforcement requirements (Technical Report p. 48). In addition to completing the application form in paper or online, applicants are required to attend an interview either in person or via phone and submit all requested verification documents within 30 days. As one provider told us, “If a parent doesn’t have time or even if they work until 5 o’clock at night and then they have to get all their kids, they don’t even have time after work. They don’t have time before work if they go in at 6.” Whereas these examples do not establish a cause for slow enrollment numbers, the truth remains that many working parents simply don’t have the time to go through these administrative hurdles.
How does subsidy benefit Nebraska?
Given the barriers to program enrollment, the small trend of increasing enrollment in recent years is promising. This is because the child care subsidy program benefits children, families and communities across Nebraska. Countless parents and providers told us about how access to the child care subsidy supported their children developmentally. Whether it be language, physical or social development, children in the child care subsidy program benefitted from having access to quality early childhood education. Parents from across the state shared with us how the subsidy supported their families’ well-being by helping them maintain work-life balance, lower their daily stress and rely less on other family members or older children for child care (Technical Report Table 4).
These benefits extend beyond children and their families. The child care subsidy program also benefits Nebraska by supporting the workforce. If parents can work, then local communities can thrive. Based upon an economic analysis, we found that when estimating the economic impact of newly eligible families’ access to the program, Nebraska benefited around $5.81 million to $8.93 million during Fiscal Year 2022-2023 (Technical Report Table 19). Therefore, even small, incremental gains in program enrollment have the potential for large economic gains downstream.
In summary
In conclusion, enrollment numbers in the child care subsidy program have not rebounded from the pandemic even though income eligibility was expanded in 2021. There are many factors to explain this trend, which include slow enrollments of newly eligible families, low enrollment uptake rates, and difficulties with applying to the program. Despite these challenges, there are modest annual gains in program enrollment since implementation of income eligibility expansion. These modest gains end up having a large impact on Nebraska in terms of supporting child development, family well-being, strengthening the workforce and positively impacting Nebraska’s economy by millions of dollars each year. As one parent told us plainly, “It’s useful and I’m happy I qualify for [child care subsidy].”
Learn more about the Child Care Subsidy Expansion Impact Study
If you have questions about the subsidy expansion study, please contact FFN’s Policy Research Manager Katie Bass at kbass@FirstFiveNebraska.org.
References
Congressional Research Service. (2021). Unemployment rates during the COVID-19 pandemic: In brief (Report No. R46554). https://crsreports.congress.gov/product/pdf/R/R46554/21
First Five Nebraska. (2024). Impact Study of Income Eligibility Expansion of the Child Care Subsidy Program in Nebraska. https://www.firstfivenebraska.org/subsidy-expansion-impact-study/
Lin, Y.-C. and McDoniel, M. (2023). Understanding child care and early education program closures and enrollment during the first year of the COVID-19 pandemic (Report No. 2023-237). U.S. Department of Health & Human Services, Administration for Children & Families, Office of Planning, Research, & Evaluation. https://www.acf.hhs.gov/sites/default/files/documents/opre/2023-237%20COVID%20Highlight.pdf
U.S. Census Bureau. (2023). American Community Survey 5-Year Estimates (2022): Detailed Tables B17024 and B23008. https://data.census.gov/table?q=B23008,%20B17024
