The government contributes to low-quality care when its agencies impose payments at market rate (i.e., subsidies are capped at levels determined by what families with average incomes are willing and...

The government contributes to low-quality care when its agencies impose payments at market rate (i.e., subsidies are capped at levels determined by what families with average incomes are willing and able to pay) for child care services or fail to provide higher reimbursement for higher quality care. Generally speaking, government agencies use estimated costs to determine what they will pay for services and thus, to some degree, circularity results. In other words, because agencies pay a certain number of dollars, program designers plan their programs on the basis of expected amounts of money. If funded the first year, program designers write a similar program the next year in hopes of being re-funded. The agency pays approximately the same amount again, and the cycle continues. The program is thus designed around a specific dollar value whether or not it makes for the “best” program. What’s more, it is difficult for owners or stockholders to approve budgets based on anticipated cash flow rather than historical financial information.