ARRA Funds Helped States Hold the Line on Child Care Policies

Oct 06, 2010

By Hannah Matthews

In its annual report on state child care assistance policies, the National Women's Law Center (NWLC), finds that most states did not make significant changes to their child care assistance programs in the past year; however, $2 billion in ARRA funds helped keep these programs together.

States were required to commit those funds by Sept. 30, although they have an additional year to spend them. As these funds are spent, NWLC reports that states plan to further restrict access to child care assistance in response to budgetary pressures by reducing income limits, increasing or beginning waiting lists, or restricting or ending programs such as extended job search that allowed parents access to child care while they were looking for employment. Even before future potential cuts, state policies mostly remain at or behind where they were in 2001, in terms of waiting lists, income eligibility, and provider payment rates.

  • Nineteen states had waiting lists in 2010, compared to 21 states in 2001.
  • In 21 states, income eligibility limits were lower as a percent of federal poverty than they were in 2001.
  • Only six states have set provider payment rates at the 75th percentile of current market rates, the level recommended in federal guidance, compared to 22 states in 2001.

Despite the need for increased resources, Congress adjourned last week without passing a budget for FY 2011. Instead, lawmakers passed a Continuing Resolution that will continue federal funding at the FY 2010 level. As ARRA funds were one-time, they are not included in continued child care funding.

Children and families will feel the effect of any potential cuts. In a recent national poll conducted by the National Association for Child Care Resource and Referral Agencies, more than half (51 percent) of parents with young children said the economy affected their child care arrangement in some way. Nearly half (45 percent) of parents rate affordable child care as one of the most important factors in helping working families. 

Those with the most restricted access to affordable quality child care are low-income earners. While these families struggle to meet their household costs, they will likely not have the resources to ensure that their children are in child care arrangements that offer adequate stimulation and foster healthy development and that could better prepare them for the future. Additional funding for child care could prevent these cuts and maintain assistance for families in need.

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