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Home > Advocacy > CWLA 2005 Children's Legislative Agenda > Child Care


CWLA 2005 Children's Legislative Agenda

Child Care


  • Support efforts by Senators Olympia Snowe (R-ME) and Christopher Dodd (D-CT) to increase mandatory child care funding as part of the reauthorization of the Child Care and Development Fund (CCDF). Without increased funding, more families will lose child care services.

  • Keep child care's dual mission as a child development program and a support for working families by increasing the child care quality set-aside within CCDF.

  • Strengthen child care law to clarify that children in foster care have the same status and eligibility for child care as do children in the child protection system. This change will complement current law making children in protective services categorically eligible for, but not entitled to, child care, regardless of a parent's work status.

  • Support legislative efforts to improve and increase reimbursement rates child care providers receive. Increased reimbursement rates improve salaries and the quality of services and stabilize the child care workforce.

  • Maintain current federal law that sets maximum child care eligibility at 85% of a state's median income. This standard is a critical measure of CCDF's mission of addressing the needs of families receiving cash assistance, as well as low-income families not receiving Temporary Assistance for Needy Families (TANF).


The 1996 welfare reform law, which fundamentally changed the way the federal government provides funding to states for child care, created CCDF by combining child care funds under the old Aid to Families with Dependent Children program with the annual discretionary Child Care and Development Block Grant (CCDBG). Despite federal and state investments, numerous studies indicate a tremendous need still exists for greater child care services and improvements.

In FY 2005, $4.8 billion is available to states from CCDF. Funding has been frozen at this level since FY 2002. The 1996 welfare law provided states with approximately $1.1 billion annually in mandatory child care funds. States receive additional funds if they match federal dollars with state dollars. Matching funds for states increased each year between FY 1997 and FY 2002, but increases in matching funds stopped in fiscal years 2003 and 2004, with the federal government providing $1.5 billion in matching funds each of the last two years.

States also receive CCDBG discretionary funds. These funds do not require a state match. CCDBG funding increased from $1 billion to $2.1 billion between FY 1997 and FY 2002, but the increases in these discretionary funds have actually decreased from that high point in 2002.
States can transfer up to 30% of their federal TANF block grant into CCDF, or spend funds for child care directly out of TANF. But states are no longer increasing the amount of TANF funds they spent on child care. In 2001, the use of TANF funds for child care peaked at slightly less than $4 billion. In the last two years, the use of TANF funds for child care has decreased, down to $3.5 billion in 2003. 1
The flexibility of TANF funding has created competition within some human service programs. TANF represents approximately 20% of federal child welfare spending nationally, and nearly half of child care spending. As inflation erodes the TANF block grant, lack of funding increases in the child care block grant, and limited increases in child welfare continue, these tensions can only increase at the state and local level. In some instances, states may choose to increase funding for one program, such as child welfare, at the expense of reducing funding for other programs, such as child care.

States have flexibility in setting eligibility standards. A state can designate any family earning up to 85% of the state median income as eligible for a child care subsidy. Children must be younger than 13, and their parents must be in work, training, or school. Children in the protective services system or in need of protective services are eligible, regardless of their parents' eligibility (work status). A child in foster care, however, qualifies only if a state indicates in its child care plan that the foster care system is considered part of its child protection system.

High turnover within the child care workforce affects the quality of services. Many states report difficulty retaining workers in the child care field due to extremely low wages. Despite the great need to address child care workforce issues, provider reimbursement rates, and better quality, the debate has been limited to funding levels.

The 2005 Debate

In 2005, Congress will once again consider reauthorizing CCDF as part of the reauthorization of the TANF block grant. Congress has considered several proposals in the last several years, but has not been able to complete action. The Administration has proposed no increases in child care funding in either mandatory or discretionary spending since 2002.

The House of Representatives passed legislation in both 2002 and 2003 that would have increased mandatory child care funding by just $200 million in the first year, then freezing funding at that level for the next four years. The Senate Finance Committee approved legislation in 2003 that would have increased mandatory child care funding by the same amount. This funding was included in the Senate Finance Committee's TANF reauthorization bill.

When the Senate began its debate on TANF reauthorization in the spring of 2004, Senator Snowe offered the first amendment, which would have increased funding for child care by an additional $6 billion over five years. That amendment passed by a vote of 78-20. After the vote on the child care amendment, however, debate on the overall TANF bill was discontinued and never resumed.

Jurisdiction of the laws and regulations governing the use of child care funds is initiated by the Senate Health, Education, Labor, and Pensions Committee and the House Education and Workforce Committee. Before debating or voting on the child care legislation in 2005, a child care reauthorization bill is likely to be combined with TANF reauthorization into one piece of legislation.

Key Facts

  • In FY 2000, states were able to serve approximately 14%, or one in seven, of the federally eligible children with child care needs. 2

  • Since 2001, child care funding through CCDF and the TANF block grant has peaked, with mandatory funding frozen at $2.7 billion, discretionary spending frozen at 2002 levels, and TANF child care funding declining. 3

  • Reauthorization legislation proposed in 2002 and 2003 would have increased child care funding by $200 million. This limited funding would mean that at least 360,000 children receiving child care subsidies would lose that coverage by 2008. This loss does not take into account any effect that may result from changes to the TANF work requirements that would require TANF recipients to work additional hours. 4

  • Under CCDF, states can, at their option, cover families up to 85% of the state median income. Between 2001 and 2004, nearly three-fifths of the states reduced their income eligibility level, thus decreasing the number of eligible families. 5

  • Many states have decreased eligibility standards, allowing fewer and fewer families to qualify for child care subsidies. Despite these decreases, waiting lists nationwide either increased or were frozen by states between 2001 and 2004. California estimates its waiting list to be as high as 280,000. In other states that maintain waiting lists, as many as 46,000 children per state are waiting for child care services. 6

  • The child care workforce faces a serious challenge. A 2001 study found that 75% of all teaching staff and 40% of all directors in 1996 were no longer on the job when those centers were revisited in 2000. 7

  • Low reimbursement rates that states pay child care providers affect parents' ability to obtain child care and the ability of providers to pay their workforce. Low rates set by the state may cause some providers to limit whom they can serve. The U.S. General Accounting Office has found that, in some areas, families receiving state child care subsidies have access to as little as 6% of child care programs. 8

  • States can spend child care quality funds on a range of services, including teacher training, enhanced reimbursements, safety and health measures, inspections, and increased compensation for workers. States must spend at least 4% of their child care funds on quality. In addition to this set-aside, the federal government provides $100 million for infant and toddler quality, $19 million for school-age resource and referral, and $172 million for general quality enhancements. Of these total funds, 20% is spent on resource and referral, 14% for enhanced inspections, 13% for meeting state standards, and 12% for caregiver compensation. 9


  1. Mezey, J., & Richie, B. (2003). Welfare dollars no longer an increasing source of child care funding. Retrieved online, January 4, 2005. Washington, DC: Center for Law and Social Policy (CLASP).
  2. Mezey, J.; Greenberg, M.; & Schumacher, R. (2002). The vast majority of federally eligible children did not receive child care assistance in FY 2000: Increased child care funding needed to help more families. Retrieved online, January 4, 2005. Washington, DC: CLASP.
  3. Mezey, J. (2003). Making the case for increasing federal child care funding: A fact sheet. Retrieved online, January 4, 2005. Washington, DC: CLASP
  4. Mezey, Greenberg, & Schumacher. (2002).
  5. Child Care and Development Fund, 45 CFR, Parts 98 and 99.
  6. Schulman, K. & Blank, H. (2004). Child Care Assistance Policies 2001-2004: Families Struggling to Move Forward, States Going Backward. (Issue Brief September 2004). Retrieved online, January 4, 2005. National Womens Law Center, p. 2.
  7. Ibid., p.3.
  8. Whitebook, M.; Sakai, L.; Gerber, E.; & Howes, C. (2001). Then and Now: Changes in Child Care Staffing, 1994-2000. Retrieved online, January 4, 2005. Washington, DC: Center for the Child Care Workforce.
  9. U.S. General Accounting Office. (2002). Child care: States exercise flexibility in setting reimbursement rates and providing access for low-income children (GAO-02-894). Retrieved online, January 4, 2005. Washington, DC: Author.
  10. U.S. General Accounting Office. (2002). Child care: States have undertaken a variety of quality improvement initiatives, but more evaluations of effectiveness are needed (GAO-02-897). Retrieved online, January 4, 2005. Washington, DC: Author.

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