Subsidy Models

Each model includes an example. The same family situation is used for each model for comparison purposes.

Model A – Based on a variable percentage of a family’s total child care costs that the agency pays, linked to total family income. This is the most popular model currently being used by the agencies.

In this model, the agency establishes an upper limit or threshold for TFI eligibility. In this example, it is $60,000. This is an arbitrary amount used to illustrate how the subsidy calculations would be made. Agencies may choose to set higher or lower threshold amounts.

The subsidy for all of the children in child care, including before and after school care, in a particular family is determined as a set percentage of the family’s total child care costs. The agency prorates the percentage amounts based on total family income (TFI). The lower the TFI, the greater is the subsidy provided by the agency.

Total Family Income	% of Total Child Care Costs Paid by the Agency
60,001 and above	0
45,001-60,000	30
26,001-45,000	40
26,000 and under	70

Example: If a family’s TFI is $50,000 and its total annual cost of child care is $6,000, the agency will pay 30% ($2,000) and the family pays the rest ($4,000).

Model B – Based on a specific percentage of total family income that the family is expected to pay for their total child care costs. The agency pays the remainder. The concept is similar to Model C.

According to this model, a family is eligible for a subsidy only when actual child care costs exceed the specified percentage set by the agency. The specified percentage is the same for all income brackets. No TFI threshold amount is set in this model. This model is particularly helpful to families that have extraordinary child care expenses such as families that have multiple births.

Example: In this example, the agency sets 15% as the percentage of total family income the family is expected to pay for child care, regardless of their income level. Again, the percentage might be set higher or lower than 15%; 15% is used here to illustrate the effects of the model.

If the family’s total family income is $50,000 and its annual costs of child care are $6,000, the family is expected to pay up to $7,500 (15% of TFI) for child care costs. Since its actual costs are $6,000, it would not receive subsidy because this is less than the amount it is expected to pay. However, if the same family had annual child care costs of child care are $9,000 (more typical for a family with more than one child), the family is still expected to pay $7,500. In this case, the agency pays $1,500.

Model C – Based on a specific percentage of total family income that the family is expected to pay for their total child care costs. The agency pays the remainder.

This model sets a threshold amount of total family income. In this case, it is $50,000, meaning that no family earning over $50,000 a year is eligible for subsidy. The model uses a percentage of total child care costs the family is expected to pay and the agency pays the difference. This model is similar to Model B except that the percentage of total family income the family is expected to pay is based on a graduated scale. An agency interested in this model may wish to change the income bracket amounts and/or change the percentage amounts.

Total Family Income	% of TFI a Family is Expected to Pay for Child Care
40,001-50,000	15
25,001-40,000	10
25,000 and under	5

Example: If a family’s total family income is $50,000, it is expected to pay 15% of TFI or $7,500 for child care costs. Since their costs are $6,000, the agency does not provide subsidy. However, if the total child care costs are $9,000, the agency pays $1,500.

Model D – Based on a low income eligibility threshold with a specified graduated amount the agency pays regardless of the family’s actual child care costs. This is a flat fee model.

The income eligibility TFI threshold is set at a specified total family income amount; in this case it is $50,000 to illustrate the effects of the model. Agencies may choose to set the threshold higher or lower. They may also wish to set the subsidy amount higher or lower than the example shown here. Only those families earning less than the threshold amount ($55,001) are eligible for a subsidy. The subsidy amount is on a sliding scale and determined by the family’s total family income bracket. This model does not take into consideration a family’s actual child care costs for all of the children in care in a family. If child care costs are less than the amount of subsidy for which the employee is eligible, the subsidy will be the cost of the child care. For example, if an employee’s family earns $50,000, and its annual child care costs are $3,000, the employee will be eligible to receive $2,000. If its costs are $7,000 per year, it will receive subsidy of $2,000.

Total Family Income	Subsidy Amount per Family
Over 55,001	-0-
40,001-55,000	2,000
25,001-40,00	3,000
25,000 and under	4,000

Model E – Based on a child care cost sliding scale per child that is paid by the family. The agency pays the remainder.

This model specifies a sliding scale of child care rates a family is expected to pay per child and the agency pays the difference. Therefore, the amount the agency pays is calculated for each child in care. This chart is from the Military model. The Military model does not set a threshold amount.

Category	Total Family Income	Range of Weekly Fees Per Child Paid by Employees
I	0 - 23,000	40-53
II	23,001 - 34,000	50-64
III	34,001 - 44,000	61-76
IV	44,001 - 55,000	74-86
V	55,001 - 69,999	88-100
VI	70,000+	103-114

Example: If a family’s total family income is $50,000 and it has one child in care, the family will pay $4,160 a year (based on the midpoint fee of $80 per week). The weekly rates are considerably below the market rates for similar child care.