Child Care: Funding and Spending under Federal Block Grants (CRS Report for Congress)
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| Release Date |
March 19, 2002 |
| Report Number |
RL31274 |
| Report Type |
Report |
| Authors |
Melinda Gish, Domestic Social Policy Division |
| Source Agency |
Congressional Research Service |
Summary:
The welfare reform law of 1996 ( P.L. 104-193 ) sharply increased federal child care funding for
low-income families, with the expectation that new work requirements for welfare parents (most of
whom were single mothers) would increase demand for child care services. This additional funding
was accompanied by the creation of a unified and expanded Child Care and Development Block
Grant (CCDBG) program, with the aim of serving low-income families, regardless of welfare status.
The expanded program is financed through two funding streams commonly referred to in
combination as the Child Care and Development Fund (CCDF).
CCDF appropriations in FY2002 from the two funding streams total $4.8 billion: $2.7 billion
in mandatory funding and $2.2 billion in discretionary funds ( Figure 1 ). The two
funding streams
fall under separate committee jurisdictions, and carry with them different rules regarding allocation,
state matching requirements, and time limits for obligating and spending money. A portion of the
mandatory funding is "guaranteed" to states and is based on states' spending on child care prior to
the 1996 welfare law. In order for a state to be eligible for its share of the remaining mandatory
funds, which require state matching, the state must first spend a designated amount (also based on
historical spending) of its own state funds. Discretionary CCDF funding is 100% federal (i.e.,
requires no state match) and is allocated according to a different formula than either portion of
mandatory funds. Both the mandatory and the discretionary funding streams
expire at the end of
FY2002 and are due to be reauthorized this year, the mandatory funding as part of welfare (TANF)
reauthorization.
Although the CCDF is the only federal grant program dedicated solely for the purpose of
providing child care subsidies and activities for low-income families, states also are using two other
federal block grants for this purpose: TANF and the Social Services Block Grant (SSBG). States
have increasingly used TANF dollars for child care services within their TANF programs ($2.2
billion in FY2000) in addition to transferring TANF funds to the CCDF. The TANF transfers to
CCDF in FY2000 ($2.4 billion) exceeded the discretionary funds appropriated for any single year
so far. Overall, expenditure data show that in FY2000, states spent more than $9 billion in federal
and state funds associated with the CCDF and TANF -- more than double the amount spent on child
care via these programs in FY1997. SSBG expenditure data are not available for FY2000, but states
are reported to have spent almost $400 million in SSBG funds in FY1999 to support child care
services.
As Congress decides how much funding to make available for child care, it will need to
consider multiple programs, and the various funding streams within them. It is unclear whether the
current level of child care funding via TANF and SSBG will be sustained if the recent economic
downturn gives rise to needs perceived to be more pressing.
