Federal law and regulations establish state reporting requirements for  administering CCDF funds. Such states may wait list applicants or place limits on  when families can apply for the program or which families receive  subsidies. According to GAO’s analysis, out of the estimated  14.2 million children under age 13 nationwide who met federal work and  income requirements for subsidies in an average month in 2011 and  2012, an estimated 8.6 million were eligible according to the eligibility  policies in their states, and about 1.5 million received them. States that used wait lists to manage demand for subsidies tended to  have higher income limits. 5). The Number of Families Receiving Subsidies Does Not Fully Reflect the Number of Eligible Families Who May Be Interested in Obtaining Them, Which Can Be Difficult to Predict

The number of children in families receiving subsidies does not equate to  the population of eligible children in families who are interested in  pursuing subsidies or who need them. Various officials and stakeholders  told us it is difficult to accurately predict the extent to which families with  eligible children are likely to apply for and receive subsidies. Wait lists can be challenging to administer. State child care  officials from 23 of the 32 states that participated in our group interviews,  for example, reported various challenges, such as being able to easily  contact wait listed families and ensuring that they continued to want and  qualify for subsidies. Prioritizing certain eligible families over others: Based on our analysis  of the CCDF Policies Database Book of Tables, most states (40 out of 51)  develop priority policies that specify which eligible families they will serve  before other types of eligible families. Modifying eligibility policies: According to child care stakeholders and  state child care officials, states may modify their eligibility policies to  manage the size of their subsidy caseloads. States Leverage Other Programs and Funds to Help Meet Subsidy Need

Child care officials from 22 states described ways in which their states  leverage funds and other programs to meet the child care needs of low- income working families. The agency noted that the report provides valuable  information to states and federal officials about access to subsidies, and  breaks new ground by analyzing state-by-state data on families eligible  for and those that actually receive Child Care and Development Fund  (CCDF) services. Appendix I: Objectives, Scope, and Methodology

Our review focused on: (1) what is known about the number and types of  families eligible for child care subsidies and the extent to which they  receive them; and (2) how states determine which eligible families receive  subsidies when subsidy need exceeds supply. We used a variety of  methods to address these objectives, including analyzing data from  Urban Institute’s Transfer Income Model, version 3 (TRIM3) on subsidy  eligibility, the U.S. Department of Health and Human Services’ (HHS)  summary tables of administrative data on subsidy receipt (HHS  administrative data), and HHS public use sample data on Child Care and  Development Fund (CCDF) recipients (HHS sample data). When reporting national totals,  we included all states and the District of Columbia. Group Interviews

To understand how states manage demand for child care subsidies, we  held interviews with child care administrators or their designees  (collectively referred to as state child care officials in the report) from 32  states that had wait list policies in 2014 about how they assess need for  subsidies in their states, prioritize who they serve, and manage wait lists  (see table 4).
Why GAO Did This Study

Child care subsidies help low-income families pay for care, allowing parents to work or attend school or training. Through the CCDF, the federal government provides states funding to assist these families. Federal law sets broad subsidy eligibility requirements and allows states to establish more restrictive policies. Due to limited funds, some eligible families may not be able to get subsidies and may be placed on wait lists.
Congress included a provision in statute for GAO to review participation in the CCDF program across states. GAO examined: (1) what is known about the number and types of families eligible for child care subsidies and the extent to which they receive them; and (2) how states determine which eligible families receive subsidies when subsidy need exceeds supply. GAO used Urban Institute data from 2010-2012 to estimate eligible children (most recent at time of analysis) and U.S. Department of Health and Human Services (HHS) data on subsidy receipt (same years as Urban's data). GAO also held interviews with child care officials from 32 states with wait list policies about subsidy need and management. GAO also interviewed HHS officials and child care stakeholders (selected by reviewing studies and websites, and obtaining suggestions); reviewed federal laws and regulations; and examined state policies in the CCDF Policies Database Book of Tables, an HHS funded project that compiles policies for the 50 states and District of Columbia.
GAO makes no recommendations in this report. HHS noted that the report provides valuable information about access to CCDF subsidies.

What GAO Found

According to GAO's analysis of nationwide data for an average month in 2011-2012 approximately 8.6 million children under age 13 were estimated to be eligible for subsidies under the Child Care and Development Fund (CCDF) program based on policies in their states, and about 1.5 million received them. When compared with all eligible children, those receiving subsidies tended to be younger (under age 5) and poorer (in families below federal poverty guidelines). (See figure.) Some state-by-state variations existed in these and in other characteristics GAO analyzed, such as race, when comparing children eligible for and receiving subsidies.
According to various officials and stakeholders, the number of families receiving subsidies does not equate to the population of eligible families who are interested in pursuing them or who may need them. They also said that it is difficult to accurately predict the extent to which eligible families are likely to apply for and receive subsidies. For example, some eligible families may not pursue subsidies because they may not know about them or find applying burdensome.
Child care officials GAO interviewed said that they use wait lists and other strategies to manage caseloads when more families want subsidies than their states can serve. Wait lists can be challenging to manage, according to child care officials from 23 of the 32 states that GAO interviewed. Challenges included keeping lists current and accurate. Forty states also prioritize certain families for subsidies, such as recipients of the Temporary Assistance for Needy Families program and children in protective services. States also stop taking applications from all or some types of eligible families and modify eligibility policies to manage caseloads. Child care officials also noted that they leverage other programs and funds to meet the child care needs of low-income working families.