Using the Child Care and Development Block Grant to Support and Preserve Child Care

Updated: September 14, 2020

The Challenge

Child care has emerged as an essential industry as state leaders scramble to respond to the COVID-19 pandemic. Across the country, state leaders are considering how to shut down most licensed care to prevent the spread of the virus, while organizing emergency care opportunities in response to the needs of essential workers.

The financially precarious nature of the child care industry, which includes many small businesses, non-profits, and home-based child care providers, means most cannot survive for long without stable income. Further, although quality child care providers can keep children of health, emergency response, and other essential workers safe and nurtured while their parents work, doing so puts themselves and their families at risk.

States need to make strategic choices swiftly in order to prevent lasting negative impacts to the child care industry and to help their economies get back up and running later. In doing so, they will want to consult center and family child care providers, child care resource and referral agencies, associations, employers of essential workers, and other stakeholders. In addition, other state and federal agencies may have resources that would benefit child care providers, and elected officials can ensure linkages among these agencies are made.

New Federal Resources are Coming to States for the Child Care Block Grant

Congress made an additional $3.5 billion available to states in the Child Care and Development Block Grant (CCDBG) as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The CCDBG is the main federal source of funding states use to pay for child care for children in low-income families, and to improve the quality of child care for all children. (Other provisions in CARES – such as small business loans/grants – are also relevant to child care, but are not covered in this brief.) As state leaders decide how to support their child care industry, they may wish to review provisions of CCDBG, and the flexibilities available to use these new funds. According to CARES provisions, the CCDBG funding may be used to:

• Continue payments and assistance to child care providers in the case of decreased enrollment or closures related to coronavirus, and to assure they are able to remain open or reopen as appropriate;
• Provide child care assistance, without regard to income, to health care sector employees, emergency responders, sanitation workers, and other workers deemed essential during the response to the coronavirus; and,
• Fund child care providers who were not participating in the subsidy program prior to the public health emergency for the purposes of cleaning and sanitation and other activities necessary to maintain or resume the operation of programs.

Note that the CARES language explicitly says that states are “encouraged to place conditions on payments to child care providers that ensure that child care providers use a portion of funds received to continue to pay the salaries and wages of staff.” This new funding is available to states without applying the typical set-asides for quality. In addition to prior guidance permitting flexibility in declared emergency situations, the federal Office of Child Care (OCC) in the Administration for Children and Families (ACF) has established a resource page relevant to COVID-19 which includes specific guidance about flexibilities in the CCDBG that states may need to know in order to support children, families, and providers. This brief summarizes some key considerations for states and the relevant guidance. For in-depth discussion, states should refer to the OCC resource or contact their ACF regional office child care program manager.  According to OCC, states may implement changes consistent with federal regulations and the CARES act and submit a block grant plan amendment within 60 days, without having to wait for approval. In some cases states may need to file waivers with OCC to make changes that are inconsistent with current regulations.

Policy Considerations

Consideration: Preserving the Supply of Child Care Providers for Children in Low Income Families

What states choose to do now will have an impact on whether child care providers will be able to sustain themselves and their teachers, as well as re-open their businesses when the pandemic ends. Centers and family child care homes may be required to close by state order or they may lose children when parents become unemployed. In either case, states have flexibility in the CCDBG to help sustain these centers and family child care homes so they can continue to have income and weather this crisis. For example:

• Continue to pay providers of child care for children who were eligible before the crisis at the same rate they had prior to closings and/or reductions in attendance. This should be based on number of children who were in care (enrollment) rather than on daily attendance, since the absences are caused by the crisis. Programs need this money to continue to pay rent, salaries, benefits, and other costs of doing business. As mentioned above, states are encouraged to require programs to continue paying salaries to their staff.
• Maintain higher payments or bonuses to providers and early educators that they had previously earned for achieving high quality levels. These payments will help programs maintain costs of high quality, such as salary levels for specially trained teachers.
• Pay higher rates or bonuses to providers willing to continue to provide child care despite the risks of infection from working in groups or taking children into their homes for family child care.
• Set up community-based staffed family child care networks to support the need for round-the-clock child care. Essential workers need child care day and night. Family child care home providers who are willing to meet this need have experience in caring for siblings together, non-traditional hour needs, and offering nutritious meals through the Child Care and Adult Food Program. However, states may want to contract with local trusted organizations to identify a dedicated staff person who can coordinate care slots, support providers, and coach them through challenging situations with children and families under stress.

Consideration: Maintain and Promote Family Stability through the Crisis

During the crisis, it is even more important to use support programs to keep families and essential programs stable. OCC guidance stresses that states “may not terminate assistance for a family impacted by COVID-19 prior to the end of the minimum 12-month eligibility period if a family experiences a temporary job loss or temporary change in participation in a training or education activity.”  Due to COVID-19, families may see fluctuating income and work hours, or lose their employment altogether. States can provide stability to families. For example, states can:

• Extend eligibility periods despite long-term loss of work. OCC guidance says that states “have the option to continue serving the child until the next eligibility redetermination, and may establish eligibility periods longer than 12 months.” States have the leeway to cushion the blow for families who are struggling due to the impacts COVID-19 is having on their family or the local job market.
• Not require a co-payment from families affected by COVID-19 and loss of work hours. States can waive fees for priority groups, and define those groups. If the state does this, it is important that the child care provider still receives the full amount of the rate, so the state will need to make up the difference of the missing co-pay.
• Pay for care for children of essential workers, regardless of income. Congress explicitly made new funding available for this purpose. States already have the flexibility to raise their income eligibility level up to 85 percent of State Median Income (SMI), and define essential workers as having “priority” or being in a “protective” class, which makes them automatically eligible.

Consideration: Hold Providers Harmless for the Increased Costs of Keeping Children Healthy and Help Them to Re-open

Although many states have closed licensed care in the state, some are allowing providers to remain open, letting family child care homes decide whether to stay open, or recruiting providers to re-open to meet the needs of essential workers for child care. In any case, child care providers need materials to reduce risk, such as virus-killing wipes, paper towels, cleaning agents, cleaning services, etc. For example, states can:

• Use new CCDBG funds to help source, pay for, and distribute health and safety supplies and services. States may consider helping to source and distribute materials since child care providers may be working around the clock to meet the needs of health care workers and are unable to take the time to find needed health and safety supplies that are in high demand. States may want to consider whether other agencies or federal emergency dollars could cover some of these costs.
• Boost payments to providers to cover extra costs that may be incurred, including those related to the health and safety of workers, that child care providers may face. States always have the flexibility to provide payment rates based on cost of quality care or offer bonuses to encourage provision of a certain kind of care. Caring for children during the COVID-19 pandemic is risky and deserves higher levels of support for programs, and specifically, compensation for the early educators working with children.
• Rebuild supply by using CCDBG quality funds to give grants or contracts to cover costs of re-opening programs and family child care homes when the pandemic emergency ends. States may target hard hit areas of the state and help programs open doors even if the local workforce is not back to pre-crisis levels.

The COVID-19 pandemic puts a strain on children, families, and child care providers that state leaders rightfully seek to lessen. Though more will need to be done, the $3.5 billion in CCDBG emergency funding coming to states should enable them to make strategic choices to preserve and protect child care as a critically needed service in the near term. At the same time, the impact of COVID-19 shines a light on the fragility of the child care system that state leaders can highlight and use to help inform federal leaders about additional resources needed to build stronger infrastructure once this crisis abates.

← Click to access The Hunt Institute COVID-19 Resources & Policy Considerations Page