Good morning, Chairman Mendelson, members of the Committee of the Whole, and staff. My name is Audrey Kasselman, and I am a Senior Policy Analyst at DC Action and the Under 3 DC coalition. I appreciate the opportunity to testify today and thank the Council for its continued commitment to strengthening DC’s early childhood education system.
My testimony today will focus on the Child Care Subsidy program, highlighting program utilization, recent eligibility and application process policy changes, implementation progress and data reporting, and recommendations for growing our supply of subsidized seats. I want to emphasize, however, how interconnected the early childhood system is and how every program – the subsidy program, Pay Equity Fund, PKEEP, Capital Quality, and others – is essential in working together to advance one of the nation’s leading early care and education systems.
Maximizing the Impact of the Child Care Subsidy Program: Access, Utilization, and Barriers to Enrollment
The Child Care Subsidy program works
For families that currently participate, the Child Care Subsidy program provides access to free or low-cost high-quality early learning opportunities for their children. High-quality early education supports children’s cognitive, physical, social, and emotional development. Families with a child care subsidy voucher who earn less than 150% of the federal poverty level (FPL), or $37,290 for a family of three, have a $0 co-pay – free child care. Families who make between 150% FPL and 300% FPL ($74,580 for a family of three) have co-pays based on OSSE’s sliding fee scale. These co-pays range from $3.24 per day to $12.27 per day, equaling between approximately $70 per month to $265 per month.
Compare that to a private pay family, who, according to OSSE’s most recent Cost of Care report, pay on average over $2,000 per month for child care. $265 per month, at the highest end of the Child Care Subsidy co-pay rates, makes child care significantly more affordable for the families of the 5,132 infants and toddlers in the District who are enrolled in the subsidy program.
Nonetheless, funding for the Child Care Subsidy program has been reduced significantly (by over $20 million) over the past two years. In FY24, OSSE spent $105.5 million on child care subsidy reimbursements to participating providers. The budget for FY25 is only $96.3 million, leaving a $9.2 million gap just to maintain caseloads.
The Child Care Subsidy program could have broader utilization
While it is clear that the Child Care Subsidy program works for participating families, we know there are income-families who are being left out. As many as 24.4% of infants and toddlers in DC – approximately 5,900 babies – live in households with incomes less than 200% of the federal poverty line. This means at least 900 young children in some of the District’s poorest families may be missing out on foundational child development opportunities (as 5,132 infants and toddlers are currently enrolled yet DC’s eligibility extends to 300% FPL).
Underutilization of the Child Care Subsidy program relative to the eligible population could be due to a number of factors, including the number and location of subsidy- participating providers, insufficient publicity and awareness, reimbursement rates for providers that don’t match the cost of care, family challenges navigating the application process, or parent preference for alternative child care arrangements. Understanding underutilization and continuing to take steps to make this essential program accessible to all interested families must be an ongoing priority for OSSE’s Division of Early Learning.
Further, there is great potential for the subsidy program to increase access to affordable, high-quality early learning opportunities for thousands more DC children whose families struggle to afford tuition. Leveraging local funds to increase income eligibility for the subsidy program, as the Birth-to-Three for All DC Law requires, should remain the District’s north star for making affordable, high-quality early care and education a reality for every District family.
Child care provider participation in the child care subsidy program remains limited
According to OSSE’s FY24 performance oversight responses, approximately half of the District’s licensed child development facilities accept child care subsidies. This does not mean, however, that half of all child care seats accept subsidies, as some participating programs have very few subsidy-eligible children enrolled and others serve a majority subsidy-eligible children. There are several reasons that the remaining half of child care programs do not accept child care subsidies including, but not limited to, challenges with OSSE’s application process, administrative burdens and payment practices, and reimbursement rates that do not match the cost of care.
While OSSE has made a number of beneficial changes to improve the family experience when applying for the Child Care Subsidy program (as noted below), many child care providers still face barriers to joining the subsidy program and navigating OSSE’s processes for doing so. In a recent DCFPI report, program directors discuss challenges navigating OSSE’s processes to become a provider that accepts subsidies, including burdensome paperwork, high administrative burden managing various data systems and reporting requirements, and long application processes and approval timeline with limited communication from OSSE.
Child care subsidy reimbursement rates also play a role in the number of child development facilities that accept subsidies. When subsidy reimbursement rates are too low – which they currently are – early learning programs are unable to participate in the program and cover their costs, leading to fewer choices for families paying for child care with a subsidy. According to OSSE’s most recent Cost of Care report, FY24 reimbursement rates are lower than the true cost of care for centers serving infants and toddlers across all quality rating levels, though we are grateful rates are higher than in past years.
OSSE states in the Cost of Care report, “to make sure children who receive subsidies have access to quality early learning, subsidy rates must reflect what it costs to deliver quality care,” yet reimbursement rates are lower than the cost of care for most child care centers. In fact, later in the report, OSSE states, “ With a few exceptions, estimated per child costs exceed subsidy rates paid to child care providers across age groups and providers.”
This table compares OSSE’s reimbursement rates to the cost of care for a medium sized child development center serving infants and toddlers, highlighting the gaps:
This chart is simplified and only includes a few scenarios/metrics of current reimbursement rates
| OSSE Daily Average Cost of Care Estimate (Based on FY24 PEF Min Salaries) | FY23 Daily Subsidy Reimbursement Rates, High Quality Rating | FY23 Daily Subsidy Reimbursement Rates, Developing Rating | $ and % Difference between Rates and Estimated Cost, High Quality Rating | $ and % Difference between Rates and Estimated Cost, Developing Rating | |
| Medium center, infants and young toddlers | $132.80 | $107.24 | $98.65 | -$25.56
-23.8% |
-$34.15
-34.6% |
Source: DCFPI analysis of the 2024 update to the cost modeling study and the FY 2024 subsidy reimbursement rates
Reimbursement rates that do not meet the cost of care represent a financial hardship for child care providers who already operate on razor thin margins and have to navigate consistent cuts to their public funding sources. It is critical that OSSE engage in a concerted effort to increase participation in the subsidy program among child care providers in the District. Without further improvements, families who rely on subsidies will continue to face limited provider options, even as barriers to their application process are reduced or removed, as described above.
Longstanding challenges with the family subsidy application process has hindered participation
Families can apply for the Child Care Subsidy program in person at a Department of Human Services (DHS) processing center, in person at a Level II child care provider, or through OSSE’s online application. Historically, across application types, it takes too long for a Child Care Subsidy application to be processed. Some families have shared stories with the Under 3 DC Coalition of waiting up to two to three months for their application to be approved. This means months without child care for an infant or toddler, which, for many parents, means they are unable to work or continue their education.
In addition to lengthy processing times, the application itself can be burdensome. For many families, the application has required significant paperwork documenting income, residency, citizenship, work or education status, and more, even for families who are enrolled in other DHS-administered programs and already have paperwork on file. Fortunately, these challenges have been taken seriously by OSSE and systemic barriers to program participation are being removed.
Strengthening the Child Care Subsidy Program: OSSE’s Key Policy Updates to the Child Care Subsidy Policy Manual
OSSE’s recent policy changes have improved the child care subsidy program and application
While parents have historically faced many obstacles in navigating the child care subsidy application process, OSSE’s recent policy updates – outlined in the District’s FY25-FY27 Child Care and Development Fund (CCDF) State Plan and implemented in the recently updated Child Care Subsidy Policy Manual – are helping to simplify the process. These policy changes, if implemented well by DHS, are critical steps toward increasing access to high-quality, affordable early learning opportunities for DC families. We commend OSSE for its equitable approach to improving the application process for families and we look forward to working with OSSE and DHS to ensure the policy changes are implemented effectively.
Key changes to the manual include:
Simplified eligibility criteria and $0 co-pays for more families help more children. According to the updated manual, parents are no longer required to participate in work or education activities if their child(ren) has a qualifying need through a special circumstance.1 Families who do need to work or be in school to qualify no longer need to meet a minimum-hour requirement (which was previously 20 hours). This is an important change because all children should have access to high-quality early learning opportunities, regardless of their parents’ employment status.
Additionally, time-consuming and logistically difficult in-person family interviews are no longer part of the application process, and documentation can be legible, including electronic copies. The manual also makes more families eligible for $0 co-pays, including for children who:
- Qualify under child protective services;
- Have disabilities or whose parents or guardians have disabilities;
- Are in families experiencing homelessness;
- Have teen parents or elder caregivers;
- Are in families experiencing domestic or family violence;
- Have parents or guardians participating in addiction recovery programs;
- Are enrolled in Head Start, Early Head Start, or the Quality Improvement Network (QIN);
- Are in families receiving TANF;
- Where parents are engaged in job search activities; and
- Come from families with income below 150% of the FPL.
Simplified and expanded eligibility criteria for families, as well as the elimination of some paperwork and in-person application burdens, will enable the parents of more children to face fewer barriers to accessing the quality care and education their children deserve. More $0 co-pays eliminate the financial burden of child care for families in the most challenging circumstances.
Excluding income for staff employed at licensed child development facilities improves educators’ finances. The new manual requires OSSE and DHS to exclude any income earned from employment at a licensed child development facility when calculating family income for subsidy eligibility. This means that early educators can now qualify for child care subsidies for their own families if they are DC residents and any additional household income is below 300% of the FPL ($74,580 for a family of three). In addition to more early educators being able to afford child care, this policy change means less missed work, increased financial stability, and access to high-quality licensed child care programs that may have been previously out of financial reach. This policy change has a broader impact as well. If more early educators have access to affordable child care and can attend work consistently, families and the children in their care will have fewer child care disruptions, which results in a better educational experience for children.
Requiring faster processing of family child care subsidy applications gets children into child care sooner. Under the new guidelines, OSSE states that DHS eligibility workers must determine a family’s subsidy eligibility within 10 business days of receiving a complete application. Before this change, delays in application processing had serious consequences for families and child care providers. Families were left without care for extended periods, often risking their employment or schooling, while providers lost revenue when spaces remained unfilled. We are hopeful that faster application processing will encourage more child care operators to apply with OSSE to participate in the subsidy program, increasing the supply of affordable early learning seats that has been stagnant for far too long.
Streamlined enrollment for certain populations makes child care more equitable. The manual intends to speed up enrollment in the Child Care Subsidy program for children in child protective services; experiencing homelessness; enrolled in Head Start, Early Head Start, or QIN; and in families experiencing domestic violence. Once parents submit their application and one short required document verifying they are part of any of these populations, they are temporarily approved for a child care subsidy and can enroll in a program. They then have 60 calendar days to provide any other necessary paperwork. This quick approval process is effectively “presumptive eligibility” and can greatly improve access to affordable, high-quality child care, without the long wait times families currently face.
These reforms, if fully and effectively implemented, will significantly improve access to the Child Care Subsidy program, making affordable child care a reality for more families. As more families are able to access the Child Care Subsidy program, it is essential for OSSE to ensure there is enough funding to accommodate families seeking services, and that there are enough child care providers that accept subsidies and have space for children in their early learning programs.
More data and transparency is needed to ensure the program changes work for families and providers
To effectively assess the impact of recent policy manual changes, we need better data collection and transparency. We urge OSSE to work with DHS to quarterly report on:
- The percentage of subsidy applications processed within the required 10-day window.
- The number of families benefiting from new $0 co-pay policies.
- The impact of income exemptions for early educators on program enrollment.
- Number of children participating in the subsidy program (broken down by infants, toddlers, preschool and school age children) in each category of ‘qualifying need’ (as defined in the policy manual).
- The number of subsidy applications started but not completed, and reasons for application drop-off, if known.
- The way in which these metrics have changed over time – especially time periods before the manual changes and those following implementation of the manual changes.
Strengthening the Child Care Subsidy Program: OSSE’s Key Policy Updates to the CCDF State Plan
OSSE’s FY25-FY27 CCDF state plan includes more beneficial policy changes
In addition to the changes OSSE implemented through the updated Child Care Subsidy Policy Manual, the District’s FY25-FY27 CCDF State Plan outlines additional key commitments OSSE must fulfill. We encourage this Committee to ensure OSSE remains accountable to these commitments. For example, the state plan:
Increases child care slots for children with disabilities through a new grant program called Access to Quality Child Care for Children with Disabilities, which compensates providers through grants and contracts for providing this type of care. In October 2024, DC was awarded a Preschool Development Grant Birth through Five (PDG B-5 ), which is a three year federal, competitive grant that supports implementation activities across the early childhood education system. One of the expected outcomes of the grant is to increase the supply of quality, inclusive slots serving infants/toddlers with disabilities and developmental delays. With the PDG B-5 grant, OSSE hired a program manager for the Access to Quality Child Care for Children with Disabilities program. We commend OSSE for swift implementation of this funding which has already supported four child care programs to provide services for 78 infants and toddlers to date in FY25. This grant will lead to families having more options to find care that meets their needs for their child(ren) with disabilities while also providing child care facilities with fair compensation and necessary financial predictability to operate these more expensive, intensive-services seats.
Improves subsidy payment practices for providers by paying based on enrollment rather than attendance, which ensures more financial stability for providers regardless of child absences. Greater stability could lead to fewer closures of child care providers or facility ownership turnover and create more job security for educators and growth in the number of seats available to families.
Includes a two-year waiver request for the federal CCDF regulation requiring OSSE to make prospective subsidy payments for providers, similar to how private pay families typically are required to pay tuition on the first of the month. Federal rationale for this requirement states that the policy will support stability of child care operations and increase parent choices in finding child care that meets their families’ needs. The current policy of retrospective reimbursement requires providers to cover costs up front, including staff salaries, rent, utilities, insurance, cleaning, etc. We strongly encourage the Council to engage in close oversight on this matter to ensure OSSE is transparent about the steps it is taking to meet the federal requirement and that the agency shares any barriers, work plans, and next steps for implementing prospective payments for the Child Care Subsidy Program.
Furthermore, in the appendix of the State Plan, the federal government identifies 13 areas of OSSE’s non-compliance. OSSE includes action steps for how the agency will address areas of non-compliance and target completion dates. There are a number of target completion dates that have passed, or are coming up this month. We encourage this Committee to work closely with OSSE to determine whether the action steps have been completed and whether the policy change has been achieved. Ensuring proper implementation of the updated policies in both the State Plan and the Policy Manual is essential to making the Child Care Subsidy program more accessible, and therefore making high-quality child care more affordable for more DC families. We also look forward to working with OSSE and the Council to monitor OSSE’s progress toward compliance and reaching the goal of increasing our supply of high-quality, affordable care.
Ensuring Accountability and Expanding Access for DC Families
More broadly, we call for improved data collection and transparency surrounding the Child Care Subsidy program as a whole, especially as it relates to programmatic budget.
We commend OSSE for its progress in making the Child Care Subsidy program more equitable and accessible for families, and continued work and oversight will be critical to ensuring these policies are effectively implemented. We look forward to working with the Council and OSSE to expand access to affordable, high-quality child care for DC families.
Thank you for the opportunity to testify. I welcome any questions