This report examines the government role in subsidizing child care for poor families. The report reviews the development of federal and state policy with regard to child care, and explores the evolution of competing child care policy goals. The report begins with an exploration of why child care has become a national issue. It describes the current framework of federal child care subsidy programs, and presents policy choices that states must make in implementing child care subsidy programs. The report discusses competing goals of child care policy, and addresses how government should allocate scarce government child care funds among poor families. The report specifically reviews Texas subsidized child care policy, namely the Child Care Management System implemented by Texas in 1991.