Contracts, Vouchers, and Child Care Subsidy Stability: A Preliminary Look at Associations between Subsidy Payment Mechanism and Stability of Subsidy Receipt

The federal child care subsidy program, funded through the Child Care and Development Fund (CCDF), is the nation’s largest
public investment in early child care. However, little is known about whether and how subsidy payment mechanisms relate to
the stability of subsidy receipt or the stability of children’s care arrangements.

This study is the first to explore whether subsidized care administered through contracts paid directly to providers is associated
with greater stability of subsidy receipt than subsidized care administered through vouchers. Hypotheses predicted that contracts
would confer stability in subsidy receipt, especially among families whose children received care in family child care homes.

Data were drawn from administrative files on subsidy recipients in New York City and merged with data from a phone survey
of a small subsample. The analytic sample consisted of subsidy recipients who had a history of participating in the TANF cash
assistance program (weighted n = 9,087; unweighted n = 311).

Results indicate that subsidy payment mechanism was not associated with the number of interruptions in subsidy receipt. This
finding held true of children in both family- and center-based care arrangements.

This preliminary study finds no evidence that contracted care and care purchased with a voucher are differentially associated
with subsidy stability. Replication of this test with larger samples and stronger guards against selection into type of payment
mechanism is needed.