The Child Care and Development Block Grant (CCDBG) provides funding to the states to help low-income families pay for child care so that parents can work. At the current funding level, CCDBG provides help for only one eligible child in seven. Other source of child care assistance are the Social Services Block Grant and the nation’s largest public assistance program, Temporary Assistance to Needy Families (TANF). This year Congress is expected to reauthorize CCDBG and TANF together.

The Senate Finance Committee hopes to mark up its proposal sometime in May and take it to the floor for a vote in June. This will be followed by conference with the House to reconcile the differences between the two versions. If final legislation is not passed and signed by the President by June 30, Congress will have to extend funding for the current TANF program. It could do that for a few days, a quarter, or any other period it chooses.

The TANF legislation was enacted in 1996, in the early days of a robust economic expansion, when entry-level jobs were plentiful. Many states had rapidly decreasing welfare caseloads and so elected to use funds not needed for cash benefits to assist low-income working families with child care subsidies. Combining all federal fund sources, about one-fourth of all eligible children have been assisted in recent years. The availability of the welfare-related funding is rapidly decreasing, however, as unemployment has escalated, the economy remains sluggish, and families are returning to the rolls of the TANF program for cash benefits.

Federal child care funding comes through two funding streams:

Administration Proposal: President Bush has offered an Early Childhood Initiative (not in bill form) that would fund CCDBG at the current $4.8 billion per year. The Administration says no additional child care funds are required because the need is reduced through the decline in welfare rolls. The Secretary of Health and Human Services points out that, on a nationwide basis, TANF caseloads have not yet increased, even though rates are on the rise in the majority of states and states have been cutting services in order to meet the need for cash benefits.. The Administration’s argument fails to take note of the fact that the supply of child care has always been far short of the need, and that its own TANF reauthorization proposal, by increasing the work requirement for adult recipients, will increase the child care need as well.

House Action: The House has passed H.R. 4, reauthorizing Temporary Assistance to Needy Families (TANF). It also reauthorized CCDBG and increased mandatory-matching funds by $1 billion over five years, at the rate of $200 million per year. HR 4 authorized Congressional appropriators to make available additional discretionary funds if they choose to do so in the future, totaling up to $3 billion over five years, with caps set for each year. Whether or not Congress would choose to spend this money is likely to be influenced by economic conditions and budget pressures at the time. Programs for children tend to fare badly when competing for funds against strong interest groups and international pressures.

Senate Action: The Senate Health, Education, Labor and Pensions (HELP) Committee has passed S. 880, which authorizes appropriators to provide additional discretionary funding for child care if they choose, on the same schedule as provided by the House bill. The Senate Finance Committee will probably mark up the mandatory funding for CCDBG along with TANF, in early May and will take that bill, along with the HELP bill, to the Senate floor, probably in June. Senate leaders in both parties say they will not reauthorize TANF without increased child care funding, but there is great disagreement over the amount, with proposals ranging from $1 billion to $11.25 billion over five years.

Three funding bills introduced in the Senate, which could help shape the debate, are:

In addition, Sen. John Kerry (D-MA) has introduced S. 822, The Child Care Lending Pilot Act of 2003, to create a three-year pilot program that makes small, non-profit child care businesses eligible for Section 504 loans from the Small Business Administration. This program could make a significant contribution to increasing the supply of child care by enabling new providers to operate facilities.

Issues:

Child Care Supply: Both the supply of affordable, quality child care and the funding to support it are woefully inadequate by any standard. With a maximum of one eligible child in four being assisted, the prospects for the remaining three-fourths of children in need are grim. A funding increase of $20 billion over five years would double the number of poor children served, but even such a large increase would still leave most eligible children without subsidized child care. In the absence of a significant increase in the supply of child care, many low-income working parents have no choice but to leave their children in self-care, with unreliable caregivers, or in unsafe settings.

Quality: Another major issue is the quality of care. The fact that a child care slot available does not mean that it is a safe or developmentally appropriate place for a child. The care available to low-income families is often in settings that do not meet health and safety standards, and that are staffed by people who are not experienced and trained in early childhood education. The HELP bill, although its funding provisions are inadequate, has a strong focus on assisting states improve the quality of child care, promote school preparedness in child care settings, and promote parental involvement in the education of young children in child care.