I have some local files that I put on a shared playlist with my daughter. She can't see them in the playlist. Is this by design? Is there a workaround? It's just an audio file that her dance class is using. I want her to have it on her Spotify as well as mine.
It's currently not possible to share local files with other Spotify users, with or without the Family plan.
Your local files will not show up for others.
However, a family member can add local files to a private account by signing into her\his account on the computer which has the local files stored, then follow thesteps provided here to add the files to his\her Spotify account.