TANF Child Care in 2012: How Low Can It Go?

Aug 20, 2013

By Stephanie Schmit and Hannah Matthews

Federal TANF funds used for child care, including direct spending and transfers to the Child Care and Development Block Grant (CCDBG) program, have reached the lowest level since 1998.

Following welfare reform, the number of families receiving cash assistance declined dramatically. Many states choose to spend a portion of their TANF block grant funds directly on child care.  States are also permitted to transfer a total of 30 percent of their block grant to CCDBG or a combination of CCDBG and the Social Services Block Grant (SSBG)-and many have done so.

During the early years of TANF, the amount directed to child care grew from $1.2 billion in 1998 to a high of $4 billion in 2000. That figure then began to fall until reaching $2.6 billion in 2012, according to the latest data from the Administration for Children and Families. Thirty states are using fewer TANF funds for child care as compared to 2000, with California accounting for 75 percent of the total drop. Most of the decline was in TANF transfers to CCDBG, which fell from $2.4 billion in 2000 to $1.4 billion in 2012. Once TANF funds are transferred, they become subject to CCDBG expenditure rules, which include a requirement to spend a minimum of 4 percent of funds on initiatives that improve child care quality. Fewer TANF transfers mean fewer funds dedicated to quality improvement.

While a critical component of funding child care systems, TANF funds are inherently unstable, as states must decide on a yearly basis how to use that money to provide a wide range of services.  The TANF block grant has not been adjusted for inflation since its creation in 1996, and thus has lost about one-third of its value.  States faced particularly tough choices in 2012, as less carryover funds were available from the TANF Emergency Fund, and some states also lost the funds they had previously received from the Supplemental Grants, which Congress failed to fund in FY 2012 for the first time. Including state "maintenance of effort" spending, the TANF block grant saw an overall spending decline of $2 billion.

The decline in TANF spending is only the latest in a series of assaults on child care funding. In a report on budget actions in 23 states, the National Conference of State Legislatures (NCSL) reported this week that state child care appropriations decreased by $60 million in FY 2013, with 7 states reporting reductions. Deeper cuts were made the previous year in 15 states.

While CCDBG has received some small increases in federal funding in recent years, the last boost of real significance was a one-time appropriation of $2 billion in the 2009 Recovery Act-and those funds are all gone. Moreover, a portion of CCDBG funds are now subject to sequestration, which is projected to eliminate 30,000 children from receiving child care assistance.

States do not report the number of children receiving child care through TANF. However, data on participation in CCDBG show fewer children getting help. In 2011, 1.6 million children received CCDBG-funded assistance-150,000 fewer children than CCDBG served in 2006. Adding sequestration on top of that will leave even more children without the care they deserve.

Parents need child care to go to work and provide for their families. Child care assistance supports parents' employment and helps children access early learning opportunities. When they enacted welfare reform in 1996, policymakers understood the connection between work and child care. But while today's low-income workers need that same support, there is less and less to go around.  

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