This post is written by Karen Babbs Hollett, a former teacher, instructional leader, and director at a state department of education. She is currently a doctoral candidate at Penn State University where she studies racial equity in early care and education (ECE) policy.

The pandemic has made clear how reliant our nation is on early care and education (ECE) providers. With so many ECE providers forced to close temporarily or even permanently because of Covid, families have struggled to return to work. **I am literally writing this from my kitchen table as my 1.5 year-old empties all the shelves and my 5 year-old uses our couch as a trampoline because Covid exposures closed their preschools for the week. See my “home office” below.**

At the same time, the pandemic has exacerbated the financial struggles already experienced by ECE providers, as revenue losses from forced closures make it difficult to pay teachers, invest in educational resources, and stay open. ECE leaders and advocates have long called for the recognition of ECE as a vital public good that demands public investment, and some policymakers may finally be listening. President Biden has pledged substantial federal funding for ECE to increase the supply of providers, boost resources and quality, and increase teacher wages.

Such legislation would fundamentally change how ECE is funded for the better. However, as outlined in a 2019 CECR report and related blog post, current ECE systems are rife with inequalities. Simply adding more money to current funding streams could risk just widening them. That means now is an especially crucial time to examine how ECE is funded, and how specific funding policies may contribute to inequality. To that end, this post summarizes a recent study Erica Frankenberg and I published in Educational Policy Analysis Archives on racial disparities in ECE subsidy funding.

A Critical Analysis of Racial Disparities in ECE Subsidy Funding, Karen Babbs Hollett & Erica Frankenberg

Participation in high-quality early care and education (ECE) is associated with a range of positive academic and social outcomes for children. However, Black and Latinx children – and especially Black children – are significantly less likely than their White peers to be enrolled in a high-quality ECE program. Because funding is a key determinant of quality in ECE (as it is in K-12), we theorized that racial differences in funding could be one mechanism driving racial differences in quality.

The problem: funding tied to evaluation scores

In this critical policy analysis study, we examined funding policy associated with the federal Child Care Development Fund (CCDF), which provides funding for ECE subsidies to over 1.3 million children nationwide, a plurality of whom are Black. Specifically, we analyzed tiered reimbursement, a policy approach to ECE subsidy funding currently implemented in 43 states and the District of Columbia. Tiered reimbursement awards higher subsidy reimbursement rates to ECE providers with higher scores on evaluation systems designed to measure quality. Tiered reimbursement policies are intended to offset some of the higher costs associated with providing higher quality early care and education, while also incentivizing high-quality ECE providers to serve children with subsidies.

However, ECE scholars and advocates have questioned the validity and cultural responsiveness of the evaluation systems on which tiered reimbursement funding is based. Research suggests ECE providers that serve more Black children, as well as those that are owned or operated by Black educators, are assigned lower average evaluation scores. Some ECE leaders have gone so far as to call quality evaluation systems racist. This evidence raises concerns that if evaluation systems discriminate in the assignment of quality scores, then tiered reimbursement policy may also discriminate in the distribution of funding.

Racial discrimination has historically been embedded in ECE funding

While the CCDF was most recently reauthorized in 2014, its policy heritage dates back to the early 1900s through programs like mothers’ pensions and Aid to Dependent Children (ADC). Boddie (2016) argues that racial discrimination is dynamic and regenerative, adapting to laws and social norms over time to entrench racial disadvantage through White privilege, racialized class ideologies, and implicit bias. Using this theory of adaptive discrimination, we situated our study within the social and historical context of CCDF funding policy.

Here are some examples of racial disparities and racial exclusion in ECE funding policy:

• “Suitable home” policies allowed caseworkers to deny funding to mothers who were not deemed morally or mentally fit to care for their children. This standard was used to disproportionately deny mothers’ pensions and ADC funding to Black mothers from the 1920s through the 1960s, until the Supreme Court found such policies to be unconstitutional.
• “Employable mother” policies required mothers on ADC rolls to work as agricultural or domestic laborers if jobs were available, such as during cotton picking season. Such requirements were only ever enforced against Black mothers. “Employable mother” policies were also eventually struck down by the Supreme Court.
• Contemporary policies continue to impose racially disparate burden. For example, 13 states currently require single mothers receiving ECE subsidies – who are more likely to be Black and Latinx – to work with child support agencies to establish paternity and child support orders and enforce child support obligations. This requirement that single parents initiate legal action against the non-custodial parent to be eligible for ECE subsidies was cited by the U.S. Commission on Civil Rights.

Understanding how ECE funding policies created racial disparities in the past is critical for understanding how racial discrimination has adapted to reproduce such disparities today.

Our study

We explored racial differences in tiered reimbursement subsidy funding in Pennsylvania, a state that serves large shares of Black and Latinx children in its CCDF-funded ECE program. We specifically asked: To what extent are there disparities by children’s race and community racial composition in tiered subsidy funding? How have funding patterns changed over time? To answer these questions, we analyzed de-identified child-level and provider-level data from Pennsylvania’s Office of Child Development and Early Learning from 2014-2019, a pre-pandemic period during which the state’s tiered reimbursement rates changed several times.

Key finding #1: Black and Latinx children were less likely to be enrolled with ECE providers with high quality ratings. Disparities were especially large for Black infants and toddlers.

First, we examined differences in enrollment with providers with different quality evaluation scores (Figure 1). In Pennsylvania, STAR 1 is the lowest evaluation score, and STAR 1 providers are not eligible to receive additional funding under tiered reimbursement policy. A STAR 4 is the highest quality evaluation score, and these providers receive the most funding through Pennsylvania’s tiered reimbursement system.

We found White children had the highest rates of enrollment with STAR 4 providers and the lowest rates of enrollment with STAR 1 providers across years. Conversely, Black children were the least likely to be enrolled with STAR 4 providers and the most likely to be enrolled with STAR 1 providers. Even by 2019, half of all Black children were enrolled with STAR 1 providers. These findings mean ECE providers that enrolled Black children were far more likely to receive a low quality evaluation score and far less likely to be awarded a high one, outcomes that directly affect tiered reimbursement funding.

When exploring differences by age, we found especially stark racial disparities for infants and toddlers. For example, in 2019, 56% of Black infants were enrolled with STAR 1 providers, the highest STAR 1 enrollment rate of any subgroup. Only 14% of Black infants were enrolled with STAR 4 providers, the lowest STAR 4 enrollment rate of any subgroup. These gaps are especially concerning given the rapid brain development that occurs during children’s first years of life and the significant role ECE plays in this development.

Key finding #2: Children living in predominantly Black communities were the least likely to be enrolled with ECE providers with high quality ratings.

We also explored variation in ECE enrollment by the racial composition of children’s communities and found similar patterns of exclusion for children from predominantly Black communities (Figure 2). Children living in communities where the majority of residents were Black were the least likely to be enrolled with a STAR 4 provider, at just 6% in 2014 and 14% in 2019. These children were also the most likely to be enrolled with STAR 1 providers. Conversely, in 2019, children in communities with the fewest Black residents were more likely to be enrolled with STAR 4 providers than with STAR 1 providers.

Key finding #3: Black children’s ECE providers received the least funding, across age groups.

These differences in access to ECE providers with higher quality scores translated into differences in tiered reimbursement funding, especially as Pennsylvania changed its funding policies in 2015, 2017, and 2019 to award higher tiered reimbursement rates to ECE providers with the highest quality scores (Figure 3). For the sake of parsimony in this post, we’re only displaying results for infants and preschoolers, though results for toddlers followed similar patterns.

By 2019, White infants’ providers received on average $6.00 a day in additional funding, almost double the amount Black infants’ providers received. Black infants’ providers even received less average tiered reimbursement funding than the providers of White and Latinx preschoolers, despite the higher costs associated with their care. Among preschoolers, White children’s providers again received the highest average funding and Black children’s providers the lowest.

We found similar patterns by the racial composition of children’s communities, with the providers of children from predominantly White communities receiving the most funding and the providers of children from predominantly Black communities receiving the least funding, on average.

We also estimated yearly funding to show how disparate daily reimbursement rates add up over time, assuming constant attendance patterns (Figure 4). In 2019, the average White infant’s provider received $1,440.00 in tiered reimbursement to support their quality care, according to our estimates. In contrast, the average Black infant’s provider received only $756.00. The average White preschooler’s provider received nearly $1,000 in extra funding over the course of the year, far more than the average Black and Latinx preschoolers’ providers.

Key finding #4: Average tiered reimbursement funding was lowest for children enrolled with ECE providers with high subsidy density. Black children were the most likely to be enrolled with such providers.

Lastly, we explored relationships with subsidy density, which refers to the share of children with subsidies enrolled with the same ECE provider. In 2019, among those with low subsidy density (i.e., served low shares of subsidy recipients), Black and Latinx children’s providers actually received more tiered funding than White children’s providers, on average (Figure 5). But among those serving the most children with subsidies, White children’s providers received substantially more funding than Black and Latinx children’s providers. These findings are significant because Black and Latinx children, and especially Black children, were overwhelmingly enrolled with ECE providers with high subsidy density.

Disrupting intergenerational discrimination

Our findings indicate racial discrimination has again adapted through tiered reimbursement policies to limit the resources available to Black and Latinx children and Black communities, results that are all the more concerning given the importance of ECE to children’s healthy development and the widespread use of these policies across states. Equity-oriented and anti-racist policy alternatives could disrupt the intergenerational cycle of adaptive discrimination and ensure all children experience the benefits of high-quality, adequately-funded ECE.

Current subsidy funding allocations are based on race-neutral variables such as children’s age. Instead, the federal government should encourage states to adopt progressive funding formulas for CCDF subsidy allocation that consider the unique contexts in which children learn and the differential costs providers may incur in providing high-quality ECE under those conditions. Similar to K-12 foundation funding formulas, ECE subsidy amounts could be higher for providers with higher subsidy density, those located in communities with higher levels of poverty, or those that serve larger shares of English learners.

Any form of tiered reimbursement policy can only achieve equitable funding outcomes if the quality evaluation system it is based on is also inherently equitable. States should revise their quality evaluation systems to include specific equity indicators and ensure accompanying policies like tiered reimbursement do not penalize ECE providers that serve Black and Latinx children and other historically-oppressed groups.

Check out our full article here, as well as other articles in the same special issue focusing on critical policy analysis.