You are here

Building the Supply of Child Care

The key to increasing access to child care for at-risk populations is increasing the supply of child care services in underserved areas and for targeted groups. The law and final rule require states to develop strategies for increasing the supply and quality of child care services for these groups:

Grants, Contracts, and Vouchers

Lead Agencies may provide services through grants and contracts with eligible providers to directly serve CCDF-eligible families.

Child care vouchers, also referred to as certificates, are issued by Lead Agencies directly to parents to confirm eligibility for payment for child care services.

  • Children in underserved areas
  • Infants and toddlers
  • Children with disabilities
  • Children in nontraditional-hour care.

These strategies may include using grants and contracts, establishing alternative payment rates to providers, and offering child care vouchers. States must report in their CCDF Plans which strategies they use to increase the supply and improve the quality of child care services for underserved populations.

States must also include whether they plan to use grants and contracts in building supply, and how supply-building mechanisms will address the needs identified. Their descriptions must

  • identify shortages in the supply of high-quality child care providers,
  • list the data sources used to identify shortages, and
  • describe the method of tracking progress to support equal access and parental choice.

Existing needs assessments and population data collected by State Advisory Councils, Head Start State Collaboration Offices, child care resource and referral agencies, and Head Start and Early Head Start grantees may help states make a determination of which needs are most pressing and how best to target state and CCDF funds to build the supply of quality care for particular populations.

The use of grants and contracts, as well as vouchers, is an allowable strategy for addressing the needs of underserved populations and communities. States can award grants and contracts to providers in order to provide financial incentives to offer care for special populations, require higher quality standards, and guarantee certain numbers of slots to be available for low-income children eligible for subsidy.

Grants and contracts can provide financial stability for child care providers by paying in regular installments, paying based on maintenance of enrollment, or paying prospectively rather than on a reimbursement basis. Without stable funding, it can be difficult for providers—particularly those in low-income or rural communities—to pay for the higher costs associated with providing high-quality child care. States are encouraged to explore how grants and contracts can be used as part of a strategy to increase the supply of high-quality care. While Lead Agencies may use grants and contracts to build supply, they must still provide CCDF families with the option of choosing a certificate or voucher to access child care. [1]


[1] CCDBG Act of 2014 658E(c)(2)(A); Child Care and Development Fund, 45 C.F.R. § 98.30(a) (2016).