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Home > Advocacy > CWLA 2007 Children's Legislative Agenda > Child Care


CWLA 2007 Children's Legislative Agenda

Child Care

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  • Support substantial increases in annually appropriated child care funds (Child Care and Development Block Grant) and increased funding designated for infants and toddlers in FY 2008.

  • 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.

  • Support improvements and increases in reimbursement rates for child care providers by increasing funds dedicated to quality set asides and by strengthening the market rate survey standards.

  • Place limits on child care eligibility re-determinations so that families will not lose child care due to a slight change in income or work hours.

  • Reaffirm the priority and importance of child care and its role in child development, early learning, work support, and child well-being by reinstating the Child Care Bureau.

Child Care Development Fund (CCDF) Spending and Trends

The 1996 welfare reform law fundamentally changed the way the federal government provides funding to states for child care. The law created the Child Care Development Fund (CCDF) by combining child care funds previously available from the Aid to Families with Dependent Children (AFDC) program with the annually appropriated Child Care and Development Block Grant (CCDBG). Since rapid expansion in the late 1990s, child care services have essentially reached a plateau in this decade and are projected to fall. Between 2000 and 2005, the number of children receiving child care subsidies through CCDF went from 1.75 million children to 1.78 million children. In some years, the number of children served has been below 2000 levels 1 When adding in children and families receiving child care through all federal sources, including the Temporary Assistance for Needy Families (TANF) block grant, the Administration projects federally supported child care to decrease from 2.2 million children in 2005, to 1.8 million children in 2011. 2

Understanding the child care funding structure can be confusing, as states draw from the child care block grant, TANF, and the Social Services Block Grant (SSBG) and can both transfer from one fund to another and carry over funds from year to year. In FY 2006, the CCDF gave states approximately $5 billion for child care, a slight increase of $200 million from 2005. The $5 billion is allocated to the states as follows: $1.1 billion in mandatory funds or funds that do not require an annual approval by Congress; $1.8 billion in matching funds also provided without an annual appropriation; and just under $2.1 billion in discretionary, annually appropriated funds.

States receive the same amount of mandatory funds each year. In addition, if states spend an additional amount of their own funds to match the federal dollars, states can draw on federal matching funds. Between FY 1997 and FY 2002, matching funds for states increased each year, but there were no increases in 2003, 2004, or 2005. The Deficit Reduction Act of 2005 (P.L. 109-362) extended the mandatory and matching funds through 2010, with a slight $200 million increase in matching funds.

In addition to these mandatory and matching funds, states also receive CCDBG discretionary funds that do not require a state match. These funds have always been a significant source of funding in addition to the mandatory and matching funds. CCDBG funding received several increases between FY 1997 and FY 2002, but after an increase to $2.1 billion in 2002, Congress continually froze or has enacted cuts. In FY 2006, child care discretionary funding was set at $2.06 billion. The total amount of CCDF funding has remained at nearly the same rate since FY 2002 due to White House opposition to funding increases and lack of Congressional support.

In addition to these CCDF dollars, states can transfer up to 30% of their federal TANF block grant into CCDF, or spend funds for child care directly out of TANF. With TANF funding remaining at the same level as in 1996, states are left with a dwindling reserve of TANF funds to use for child care. Federal TANF funds used for child care peaked in 2000 when states spent $4 billion in TANF funds on child care. In 2004, funding fell to $3.3 billion, and in 2005, TANF funds spent on child care again fell to $3.2 billion. 3

Child Care Structure at the State and Local Levels

States have flexibility in setting child care eligibility standards and allocating funds. A state can designate any family earning up to 85% of the state median income (SMI) as eligible for a child care subsidy. In 2005, 48 states had eligibility levels below 85% of SMI. In fact, in three-quarters of the states, families earning 200% of poverty (earning $32,180 a year, for example) did not qualify for assistance. 4 In the past, this 85% ceiling has been used to determine all of the children potentially eligible for child care, and then that number is compared to the number of children who do receive child care. Based on such calculations in FY 2000, only 14% were receiving a child care subsidy. In addition to low-income eligibility levels, families may lose or not receive child care if certain changes in their working conditions force a family to have to re-apply and have its child care eligibility re-determined. A shift from working days to working nights may require such a re-determination and an increase in hours worked may push families over the income eligibility limit-even if the increased income amounts to only a few dollars a week.
To be eligible for child care assistance, children must be younger than 13, and their parents must be working, receiving training, or in school. Children in the protective services system or in need of protective services are eligible, regardless of their parents' eligibility, such as their work or school 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. At the local program level, this can create confusion and result in a lack of services for foster parents who are actually eligible for child care services.

Child Care Workforce

High turnover within the child care workforce affects the quality of services. Many states report difficulty with retaining workers in the child care field due to extremely low wages. Despite the great need to address child care workforce issues by providing reimbursement rates and better quality of care, the Congressional child care debate has been limited to funding levels. The child care workforce faces a serious challenge. A 2001 study found that 75% of all teaching staff and 40% of all directors working at certain centers in 1996 were no longer on the job when those centers were revisited in 2000. 5 Because child care workforce and quality initiatives draw their funding from the same block grant funding and that funding has been frozen, states are forced to choose between services, quality, and reimbursement rates-all of which, of course, are fundamental components and interrelated.

Developments in 2006

Since its establishment in l995, the Child Care Bureau has been at the forefront of promoting quality of care as an essential component to child and youth development. The visibility and active leadership provided by the Child Care Bureau after the enactment of TANF in 1996 was key to the rapid and successful expansion of child care services and quality in the latter part of the 1990s. In March 2006, the Administration reorganized and consolidated the Child Care Bureau into the Office of Family Assistance. CWLA joined forces with more than 200 advocates and child care organizations in signing a letter opposing the demotion of the Bureau. The letter argued that the "move fails to recognize the importance of child care to the education and well-being of children, [and] minimizes the importance of child care assistance in supporting working families, particularly low-income parents…" Despite the protests, the Administration still chose to pursue its reorganization.

In 2006, Congress completed the reauthorization of the TANF block grant. Congress had considered several proposals in the preceding years, many with increased child care funding. Senators Olympia Snowe (R-ME) and Christopher Dodd (D-CT), for example, had sponsored bills and amendments to increase child care funding between $3 to $5 billion in the past two Congresses. The final TANF agreement, included as part of the Deficit Reduction Act (P.L. 109-171), contained only a very limited one-year, $200 million increase in matching child care funds, however. This means that the overall matching funds increased in FY 2006 to $1.8 billion and will remain stagnant for five years. This agreement also increased the work requirements on both single- and two-parent families. No other changes were enacted to child care. With the increased work requirements and the fact that the TANF block grant will stay at the $16.8 billion level until 2011-the same level as 1996-child care funding from the TANF block grant may actually decrease as states have to pull money back into their TANF program and away from child care to address new requirements in the TANF law.

Key Facts

  • Considered a high point in child care services, states served approximately 14%, or 1 in 7, of the federally eligible children with child care needs in FY 2000. 6

  • As of early 2005, an estimated 436,808 children nationwide were on the waiting list for subsidized child care. 7

  • In 2006, a family at 150% of poverty in 28 states was charged a co-payment of $150 per month (7% of income) or more; in addition, families at this income level in eight states were not even eligible for child care assistance. 8

  • In 2006, less than one-fifth of states paid child care providers at 75% of an up-to-date market rate. In 2001, nearly half the states did. 9

  • 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. 10

  • Families typically receive child care assistance for a period of only three to seven consecutive months before exiting the subsidy system. One-third to over one-half of families who leave child care return to the subsidy system within one year. 11

  • Of the children who receive child care through the CCDF, 56% are in licensed child care centers; 14% are in relative care; 13% are in regulated family care; and 6% are in legally exempt family care; 4% are in regulated group child care; 3% are in in-home care; and 2% are in legally exempt care. 12

  • Among children receiving child care assistance through the CCDF, 28% are under age 3, 36% are ages 3 through 5, and 36% are ages 6 to 13. 13


  1. Matthews, H. (2006, September). Child Care and Development Block Grant participation in 2005. Available online. Washington, DC: Center for Law and Social Policy. back
  2. Executive Office of the President of the United States. (2006). Analytical perspectives: Budget of the United States government, FY 2007. Available online. Washington, DC: Author. back
  3. Mathews, H., & Ewen, D. (2006, November). Child care assistance in 2005: State cuts continue. Available online. Washington, DC: Center for Law and Social Policy. back
  4. Schulman, K., & Blank, H. (2005). Child care assistance policies 2005: States fail to make up lost ground, families continue to lack critical supports. Available online. Washington, DC: National Women's Law Center. back
  5. Whitebook, M., Sakai, L., Gerber, E., & Howes, C. (2001). Then and now: Changes in child care staffing, 1994-2000. Available online. Washington, DC: Center for the Child Care Workforce. back
  6. 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. Available online. Washington, DC: Center for Law and Social Policy. back
  7. Schulman & Blank, (2005). back
  8. Schulman, K., & Blank, H. (2006). State child care assistance policies 2006: Gaps remain, with new challenges ahead. Available online. Washington, DC: National Women's Law Center. back
  9. Ibid. back
  10. 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). Available online. Washington, DC: Author.  back
  11. National Conference of State Legislatures. (2006). Highlights of early care and education funding increases in 2006. Denver: Author. back
  12. Ibid. back
  13. Child and Family Policy Center. (2006, June). Every child counts. Des Moines, IA: Author. back

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