New website answers child care providers' questions about Michigan child care subsidy

November 16, 2022

A new website answers child care providers' frequently asked questions about Michigan's Child  Development and Care Subsidy—an underused resource that can help families pay for child care. 

The University of Michigan's Poverty Solutions developed the Updated Michigan Child Development and Care Subsidy, in partnership with the Michigan Department of Health and Human Services, to support child care providers in completing the necessary steps to accept the subsidy. Michigan made a number of changes to its child care subsidy program in the past year, and the website provides information on how to accept the subsidy, the licensing process, payment rates and more.

In 2022, Michigan expanded eligibility for the child care subsidy to another 105,000 families. However, only about 10% of children under age 12 in eligible households receive child care subsidies, according to Poverty Solutions' Barriers to Benefits child care study. Other families who apply and receive the subsidy do not use it, in part due to Michigan's child care shortage.

Analyses by Poverty Solutions found there are about four children for every available child care spot in Michigan. More than 40% of Michiganders live in areas considered "child care deserts," or areas with more than 50 children under age 5 with no child care providers or more than three times as many children as licensed child care slots.

"Child care is an essential part of economic development and can play a major role in addressing social inequities. But if we are going to encourage families to use the Child Development and Care Subsidy, we need to make sure child care providers are ready to accept it," said William Lopez, clinical assistant professor at U-M's School of Public Health and senior adviser at Poverty Solutions, who worked on the Barriers to Benefits study. 

"The Updated Michigan Child Development and Care Subsidy website presents essential information about the subsidy program in a user-friendly way, specifically addressing the questions of child care providers." 

Through 2023, income eligibility for Michigan's Child Development and Care Subsidy is raised to 185% of the federal poverty level—about $51,000 a year for a family of four. The annual cost for center-based care for an infant is about $13,548, or about 14% of median income for a married couple in Michigan. According to the U.S. Department of Health and Human Services, child care is considered affordable if it costs no more than 7% of a household's income.

To better understand why more families do not access and use Michigan's Child Development and Care Subsidy, Poverty Solutions researchers conducted 41 interviews with parents of children under 18 and professionals who work for organizations that provide child care, support the operations of child care centers or advocate for child care resources. A policy brief by Lopez, Karen Kling and Amanda Nothaft summarizes findings from the interviews and makes policy recommendations to address barriers to using the child care subsidy. 

"We learned child care can be impossible to find for people working jobs that require flexible schedules, like servers in restaurants or in the seasonal tourism industry," said Kling, senior strategic projects manager at Poverty Solutions. "Parents were frustrated with the 'catch-22' of needing to be employed to qualify for the child care subsidy but being unable to take a job without child care."

There are a few exceptions to the work requirement for the child care subsidy, including if the parent is completing high school, engaged in a family preservation activity like a counseling program, or engaged in another approved activity like attending college or employment training. The researchers recommend allowing parents actively searching for employment to receive the child care subsidy and shortening the 30-day application processing period so parents could start using the subsidy more quickly after receiving a job offer. 

Other barriers when applying for the child care subsidy include extensive paperwork requirements, language barriers, distrust of the government and a reliance on internet-based applications. Immigrants face a complicated web of eligibility requirements for government assistance, often being eligible for some assistance programs, but not others, depending on their immigration status.

Applying for the child care subsidy requires proof of income, value of assets, marital status, evidence of receipt of child support and more. Parents with tenuous relationships with co-parents, including domestic violence survivors, often avoid applying for the child care subsidy because they have to attempt to claim child support through the court system before they can receive the subsidy. 

"People are doing things very informally, as opposed to having someone from the state coming in," said one mother interviewed for the study. "Working for Head Start, I know about all of the requirements to be a licensed school or center. You have to have the handbook, (be limited to only so many) kids in a room, and things like that. I don't think most people would want that coming into their home when they're just (working) informally with people in their community or through word of mouth, just like dropping the kid off and not having to worry about all that stuff."

Sometimes, the study finds, child care providers do not accept subsidies because they worry parents will lose their eligibility and be unable to pay for care. 

For some providers, the complexity of the application process and the investment needed to meet the state's quality standards presented costs that outweighed the benefits of the subsidy program. This is particularly true for license-exempt providers, who have a maximum reimbursement rate of $5.50 per hour per child for toddlers and infants; at the top of the reimbursement scale, licensed child care centers with five-star quality ratings receive $10.65 per hour per child for toddlers and infants. 

Researchers recommended reducing application materials to make the process more welcoming for child care providers and parents and extending the time between re-certifications even further so families retain their eligibility for more than one year.

"Michigan has made progress toward increasing access to the Child Development and Care subsidy," said Nothaft, senior data and evaluation manager at Poverty Solutions. "To support the growth of healthy, stable families in the years to come, additional efforts are needed to address the absence of available child care, decrease application challenges and increase application accessibility."

Policy brief: The Child Development and Care Subsidy: Challenges and Opportunities

This article was written by Lauren Slagter of Poverty Solutions.