by Patrick Gill, CHILDREN AT RISK

In the recently released report, Building Brains & Economies: Quality Child Care as an Engine for Economic Development in a 21st Century Texas, CHILDREN AT RISK examines how quality child care can be leveraged to drive Texas’s economy forward today and for years to come. This blog series summarizes key findings from this report. This post, three of six, summarizes the current landscape of quality child care in Texas.

Subsidized Child Care in Texas. In Texas, the subsidized child care system is managed by the Texas Workforce Commission (TWC). This system provides child care assistance to low-income parents who are working or in school. Funded by the federal Child Care & Development Block Grant (CCDBG), this program provides reimbursement to child care providers for the services they provide to families receiving assistance. For more on how access to early childhood education benefits both parents and children, please see the previous two posts in this blog series. 

Subsidized child care has two goals: 1) to help low-income parents engage fully in the workforce, and 2) to provide children with high-caliber early education.


Subsidized child care is TWC single largest expenditure each year, and represents nearly half its annual budget. Despite this large budget, Texas still only serves about 10% of the more than 1.3 million children statewide who would be eligible for subsidy assistance. TWC sets statewide policy for the subsidized child care system, and daily operations are managed by its 28 Local Workforce Development Boards. Responsibilities include managing Texas Rising Star (TRS), Texas’s only quality rating system for early childhood programs. TRS is a voluntary program open to all child care providers that accept child care subsidies. Participating providers are certified at one of three star levels (2-4, with 4-star being the highest rating available) based on their ability to meet progressively more rigorous quality standards.

Lack of Child Care Quality. Statewide, there are about 15,000 total child care providers, with half participating in the subsidy program. These 7,500 providers are all eligible to become TRS-certified, so this high-quality care has the opportunity to impact many providers and children across the state. Unfortunately, only about 7% of all child care providers in Texas are TRS-certified. In addition to low overall participation in quality programs, growth in TRS participation across the state has been inconsistent in recent years.

Subsidy Reimbursement Rates. The reimbursement rates for providing care to families on the subsidy is one issue facing child care providers in Texas. These rates are often too low to promote quality, compared to overall child care market rates (what all child care providers charge for care, on average).

The federal government recommends that states reimburse providers at the 75th percentile of market rates, meaning that reimbursements would be higher than 75% of prices across the child care market. This helps to ensure that families receiving subsidy assistance have access to a range of child care options. Unfortunately, compared to overall child care market rates, base reimbursement rates paid to non-TRS providers in the subsidy program have historically been quite low, often falling below the 30th percentile of market rates:

Progress toward Quality. Fortunately, in 2018 Congress passed a substantial increase of CCDBG funding, resulting in nearly $230 million additional dollars for Texas to spend on the subsidized child care program. TWC and the governor announced last summer that they will be spending this increased funding on increasing reimbursement rates, serving about 30,000 more children each day through the subsidy program, supporting early childhood teachers, and other initiatives.

The reimbursement rate increases should be especially helpful to TRS-certified child care providers. Though base rates paid to non-TRS providers only increased by 2% across the board, TWC raised reimbursements for TRS 4-Star providers to the 75th percentile of market rates. This works out to a nearly 20% daily increase on average across the state.

While this increase should help stabilize existing TRS 4-star providers and incentivize others to achieve this quality level, more can be done to ensure Texas is adequately reimbursing providers for providing quality care to its most vulnerable children.

Other TWC Investments. A portion of the new CCDBG funding was also set aside to encourage local school districts to partner with high-quality child care providers to provide full-day pre-kindergarten (Pre-K). This promising practice allows school districts and child care providers to blend funding streams—the money available for public Pre-K and the money available for subsidized child care—in mutually beneficial ways.

Some districts across Texas have utilized this practice with exciting results. For example, Dallas ISD has partnered with child care providers and saved the district an estimated $20,000 per classroom compared to what they would spend to provide that instruction in their own school buildings. These savings are passed directly to partner child care providers, a portion of which they must invest in their child care teachers.

The Texas Workforce Commission has made great progress toward increasing quality in Texas’s child care system in recent years, and our state leaders must continue this positive momentum. Increasing access to quality, affordable child care will support Texas’s families and its economy by giving all of our children the strong foundation they need.

To learn more about how Texas can help families and children, check out CHILDREN AT RISK’s full report: Building Brains & Economies: Quality Child Care as an Engine for Economic Development in a 21st Century Texas.

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