This is the third blogpost in our series highlighting key findings from the Child Care Subsidy Expansion Impact Study. First Five Nebraska led this study in collaboration with the Nebraska Department of Health and Human Services, as well as other researchers and child care subsidy experts. The Legislative Summary Report and Technical Report were published in August 2024 to inform lawmakers of the impact of income eligibility expansion on Nebraska children and families.
Research is a critical resource for policymakers to understand complex issues facing Nebraska children and families. For early childhood public policy, one such complex issue is the Child Care Subsidy program. At First Five Nebraska, we recently led a study on the impact of expanding the income limits for the Child Care Subsidy in Nebraska.
In 2021, the Nebraska Legislature passed LB485, expanding the initial income eligibility limit for the child care subsidy from 130% of the Federal Poverty Level (FPL) to 185% FPL. LB485 also expanded the income limit for transitional child care from 185% to 200% FPL for families who were redetermined eligible. To understand the impact, we looked at many things—how many children received subsidized care through the expansion, the economic impact of expansion on families, child care providers and Nebraska and how expansion affected the everyday lives of families and the child care providers who serve them. The answers to these questions are in our recently published report: Impact of Income Eligibility Expansion of the Child Care Subsidy Program in Nebraska
In our recent post, Spotlight on program enrollment: Impact of Income Eligibility Expansion of the Child Care Subsidy Program in Nebraska, we discussed enrollment in the subsidy program and why more families aren’t enrolling despite expanding the income eligibility guidelines. Today we want to explore how Nebraska’s eligibility guidelines compare to other states and what we can learn from other states regarding child care subsidies.
How does Nebraska compare to other states?
The Child Care Subsidy program is primarily funded by the federal Child Care Development Fund (CCDF). CCDF rules require that eligible children and families have incomes at or below 85% state median income (SMI). However, states have flexibility in setting the initial income eligibility limit (Congressional Research Service, 2024).
In 2020, when the nationwide average income eligibility limit was 185% FPL, Nebraska ranked 45th nationally with an eligibility limit of 130% FPL (Prenatal-to-3 Policy Impact Center [PN3], 2020). When LB485 passed in 2021, Nebraska increased its limit to 185% FPL. Many other states increased their income eligibility limits at the same time as Nebraska, as additional federal funds were allocated for child care as part of COVID relief efforts.
By 2023, Nebraska ranked 36th in the nation (PN3, 2023). When our impact study was published in August 2024, we found that if Nebraska’s income eligibility limit reverted to 130% FPL, Nebraska would rank 50th in the nation, just above West Virginia. (See Figure 1, click to enlarge)
As shown in Figure 2 (click to enlarge), Nebraska’s income eligibility level is higher than neighboring states Wyoming, Iowa and Missouri, but lower than Kansas, Colorado and South Dakota. Should Nebraska revert to 130% FPL, income eligibility will be lower than all six neighboring states.
Child care subsidy’s changing landscape since 2024
The additional CCDF funding associated with the American Rescue Plan Act had to be obligated on September 30, 2024, and as a result, many states changed their CCDF policies starting October 1, 2024. (Girouard, 2024). So how does Nebraska compare now?
As of January 2025, Nebraska ranked 35th in the nation—tied with Delaware, Montana and West Virginia (Administration for Children & Families, 2025). If Nebraska reverts to 130% FPL, Nebraska will rank 48th in the nation (tied with Idaho), just above Nevada (128% FPL) and Georgia (103% FPL). Of the 43 states that increased their income eligibility limits between 2021 and 2024, 37 of them (including Nebraska) have maintained or increased their FPL limits from 2020. (See Figure 3, click to enlarge)
What are other states doing to increase subsidy access?
Setting higher FPL threshold limits is one way to increase subsidy access, but what are other ways to increase access for more families?
Set initial eligibility limits to the federal maximum. Per CCDF rules, the federal maximum income limit is 85% SMI. Although about half of states implement their guidelines based upon percentages of FPL, more and more states are explicitly setting their initial income limits to 85% SMI. In 2020, only five states set income limits at 85% SMI. This number has grown currently to 16 states (PN3, 2024).
Use other funds to help families over 85% SMI. When families make over 85% SMI, they are no longer eligible for federal funding through the CCDF. However, states such as Maine, New Mexico and Vermont have opted to support these families using state funds. Recently Florida approved its School Readiness Plus Program, which utilizes state funds to help families who were previously enrolled in subsidy but are over income (up to 100% SMI). As a family’s income increases, so does their paid contribution toward child care.
Priority groups and wait lists. All states are required to prioritize certain populations, such as children with special needs or experiencing homelessness. But states can prioritize other populations, too. For example, South Dakota identifies children receiving protective services as a priority group. Priority group status is also used to determine who can waive the wait list. Although Nebraska does not have a wait list, many states do. For example, some states like Mississippi and Kansas expand income eligibility levels to 85% SMI. If funding was ever unavailable, these states would implement a wait list and prioritize families according to their priority group. In some cases, families could even enroll without being placed on a wait list. By waiving wait lists for priority groups, states ensure that the most vulnerable children receive access to subsidy first.
Use improved technology. Technology plays an important role in how subsidy programs are administered. Through an integrated data system, agencies are better able to share information across multiple partnering agencies (e.g., Head Start, early intervention, home visiting). In doing so, agencies are more agile in addressing problems with child care access or quality. For example, Arkansas recently replaced its aging child care subsidy system with a new School Readiness Assistance Portal that integrates data across several state systems, including administration of CCDF approvals. Iowa also released its new Child Care Connect dashboards, which show in near real time current child care openings based upon geography, age group, provider quality rating and whether providers accept subsidy.
In summary
Nebraska’s Child Care Subsidy program benefits thousands of children and families each year who could not otherwise afford child care. If Nebraska kept its current income limits, it would be ranked in the bottom half of the nation. However, if Nebraska’s current income limit expires on October 1, 2026 as planned, Nebraska would have some of the most restrictive income eligibility limits in the nation. By implementing other solutions, such as making use of other state funding, waitlists or improved technology, Nebraska can provide even more families with access to quality early childhood education.
Learn more about the Child Care Subsidy Expansion Impact Study
If you have questions about the subsidy expansion study, please contact FFN’s Policy Research Manager Katie Bass at kbass@FirstFiveNebraska.org
References
Administration for Children & Families (2025). FY 2025-2027 State/Territory CCDF Plans. Office of Child Care. U.S. Department of Health & Human Services. https://www.acf.hhs.gov/occ/form/approved-ccdf-plans-fy-2025-2027
First Five Nebraska. (2024). Impact Study of Income Eligibility Expansion of the Child Care Subsidy Program in Nebraska. https://www.firstfivenebraska.org/subsidy-expansion-impact-study/
Girouard, D. (2024, October). Federal Relief Funding for Child Care is Over. Now What? [blog]. ChildCare Aware of America. https://info.childcareaware.org/blog/federal-relief-funding-for-child-care-is-over.-now-what
Congressional Research Service. (2024, December). The Child Care and Development Block Grant: In Brief (Report R47312). https://crsreports.congress.gov/product/pdf/R/R47312
Prenatal-to-3 Policy Impact Center. (2020). Prenatal-to-3 State Policy Roadmap 2020: Building a Strong and Equitable Prenatal-to-3 System of Care. Child and Family Research Partnership. Lyndon B. Johnson School of Public Affairs, University of Texas at Austin. https://pn3policy.org/pn-3-state-policy-roadmap/complete-roadmap/
Prenatal-to-3 Policy Impact Center. (2021). 2021 Prenatal-to-3 State Policy Roadmap. Lyndon B. Johnson School of Public Affairs, University of Texas at Austin. https://pn3policy.org/pn-3-state-policy-roadmap-2021/
Prenatal-to-3 Policy Impact Center. (2023). 2023 Prenatal-to-3 State Policy Roadmap. Peabody College of Education and Human Development. Vanderbilt University. https://pn3policy.org/pn-3-state-policy-roadmap-2023/
Prenatal-to-3 Policy Impact Center. (2024). 2024 Prenatal-to-3 State Policy Roadmap. Peabody College of Education and Human Development. Vanderbilt University. https://pn3policy.org/pn-3-state-policy-roadmap-2024/
