For most families, child care is indispensable. It is not only vital to a child’s developmental well-being, but it also has economic impacts on families as childcare costs are often the largest part of a family’s budget. 

As childcare costs continue to increase, there are numerous government financial assistance options available to help families pay for child care. These subsidy payments are often an important source of revenue for childcare centers, however, managing these various payments requires a great deal of administrative work and a different set of tools and features than managing payments from a child’s family. Utilizing a subsidy management software can help you easily track the money you are owed and have received from agencies, saving you valuable time as you manage your center’s finances.

In this article, we’ll discuss childcare subsidies, how they can impact revenue, and how you can efficiently manage them in your program.

What are childcare subsidies?

Childcare subsidies, also called vouchers or certificates, are forms of financial assistance offered to eligible families to help cover the cost of child care. States receive funding from the federal government to help low-income families pay for child care so they can work or attend school. These subsidies can strengthen the financial stability of low-income families and allow them to access services that can support their child’s early learning and development. 

As a childcare provider, the families you serve may be eligible for financial assistance from these programs, meaning that you may receive funding through childcare subsidies for your services. Your participation in a government financial assistance program can help promote values of diversity, equity, and inclusion, as you support the ability for all families in your community to access high-quality care. The lead agency in your state or a local Child Care Resource and Referral (CCR&R) agency can provide more information about financial assistance and funding opportunities in your area.

Daycare revenue

Having a centralized childcare billing process is one of the most important aspects of running a successful and profitable program. Subsidy payments from various federal, state, and local agencies can have a direct impact on your childcare center revenue and how you manage payments.

While these programs offer necessary assistance to the families who need them, managing these revenue streams can become overwhelming and pose challenges such as:

• Keeping track of family subsidy payments to determine how much is owed by families or the agency
• Managing payment timeliness, paperwork, and administrative tasks related to financial assistance programs
• Monitoring when subsidy payments are made on a family’s behalf each month

Using technology to track and manage your payments from both families and agencies can help streamline your administrative workflow, saving you time and reducing paperwork. However, the tools and features you need to manage subsidy payments are not necessarily the same as those you’d use for regular payments made from families. 

With brightwheel’s subsidies feature, administrators can easily track and manage money owed to their daycare center and money received from agencies. Bill plans, student profiles, and reports can be integrated into the subsidies tracker, as the tool allows administrators to add agencies as payers for specific students, create bill plans for agencies, log agency payments more easily, and filter student profiles and billing reports for agency invoices and payments.

Subsidies are fully integrated with bill plans, student profiles, and reports. This means that the subsidies experience will:

• Save you time with recurring bill plan setup, ability to log payments from agencies for multiple students at once, and waiving balances in a click
• Allow you to manage your finances in one place, giving you a centralized view of your finances across private and agency payers
• Help you track subsidies with flexibility by allowing you to easily add, edit, and backdate subsidy payments through the agency tracker

With a comprehensive tool like this, you can equip your childcare business to accept payments and revenue from any of the childcare subsidies offered to families.

Types of child care subsidies

Listed below are the different childcare subsidy programs that are available to help families in need with the cost of child care:

Government programs

• Child care financial assistance: The federal government grants funding to states and territories to assist them with providing daycare options to low-income families. Each state has its own eligibility requirements. Select your state or territory on the “See Your State’s Resources” page at Childcare.gov and review the “Financial Assistance for Families” tab for more information on local child care financial assistance programs.
• Head Start and Early Head Start: Head Start and Early Head Start are federal programs that promote school readiness for children from birth to age 5. These programs focus on enhancing the cognitive, social, and emotional development of young children by supporting their early learning and development, mental well-being, and physical health. Head Start and Early Head Start are available at no cost to eligible low-income families. Select your state or territory on the “See Your State’s Resources” page and review the “Child Development and Early Learning” tab to find Head Start programs in your area.
• State-funded prekindergarten: State-funded prekindergarten is a large-scale effort to provide school-based early childhood education opportunities to preschool-aged children as they prepare for kindergarten. These programs serve children between 3 and 5 years old and typically come at low or no cost to eligible families. State-funded pre-K programs vary from state to state and may offer half-day or full-day care. Select your state or territory on the “See Your State’s Resources” page and review the “Child Development and Early Learning” tab to see if public prekindergarten is available in your state or territory.
• Military child care financial assistance programs: There are several programs and child care financial assistance options that help military families pay for child care. MilitaryChildcare.com (MCC) allows families to search for child care options based on their needs. Additionally, active duty service members who cannot access military-operated child care can apply for fee assistance programs based on their military branch—Air Force, Army, Marine Corps, Navy, and U.S. Coast Guard.

Local and provider-specific assistance and discounts

• Local assistance and scholarships: Some local nonprofits and childcare organizations may provide tuition assistance, fee assistance, or scholarships.
• Sibling discount: Sibling discounts may be offered by individual childcare providers who serve multiple children from the same family. Usually, a percentage or specific dollar amount is deducted from the weekly or monthly fee. To provide additional discounts, providers might also offer to waive registration or other fees. 
• Military discount: Some civilian childcare providers offer discounts to military service members including active duty, reserves, veterans, and retirees.

Work- and school-related programs

• Employer-sponsored dependent care flexible spending account: Employers may sponsor a plan that allows employees to set aside a portion of their income on a pre-tax basis and put it into a special fund referred to as a Dependent Care Flexible Spending Account (FSA). Parents and guardians may use these funds to pay for eligible, employment-related dependent care expenses like child care.
• College and university child care: Some colleges and universities have onsite childcare centers that may offer discounts to students, faculty, and staff.

Native Hawaiian, Native Alaskan, and American Indian programs

• Tribal child care financial assistance: The federal government provides child care financial assistance to many tribes and tribal organizations in the form of grants. American Indian and Alaska Native families also have over 150 Head Start and Early Head Start programs that serve low-income families at no cost.
• Child care assistance for Indigenous People of Hawaii and other Pacific Islands: The people of Hawaii and other Pacific Islands can contact PATCH, a childcare support organization, for programs that assist with the cost of child care and preschool.

Furthermore, the Office of Child Care (OCC) released a new initiative to support families applying for child care assistance. The guide provides recommendations to help Lead Agencies simplify the financial assistance application process for families. The changes will reduce the burden on families and make the overall process less confusing and time-consuming, ultimately making it easier for more families to access childcare subsidies.

Help is on the way

With the cost of child care on the rise, financial assistance programs and subsidies can help families pay for quality care. While managing the revenue associated with subsidies can be challenging as a provider, using a subsidy management software is an efficient way to keep your business growing and continue providing a valuable resource to the families and children in your program.