Recent Child Care Growth to Fade, Startling Drop in Assistance Projected

March 01, 2012

By Hannah Matthews

The number of children receiving child care assistance will fall to a 15-year low in FY 2013, according to information from the U.S. Department of Health and Human Services (HHS).  

Spending and participation in the Child Care and Development Block Grant (CCDBG)program increased in 2010, the latest year for which data are available and also the year in which states spent the bulk of their funds from the American Recovery and Reinvestment Act (ARRA). The increases in spending and the number of children receiving assistance are not surprising due to the large amount of ARRA dollars spent in 2010, which comprised 12 percent of CCDBG expenditures. However, documents released as part of the FY 2013 HHS budget request signal a disturbing trend.

The administration estimates that only 1.5 million children would be served in CCDBG in 2013 if President Obama's funding request of an $825 million increase for CCDBG is adopted. Absent an increase in funding in 2013, as few as 1.4 million children might be served in 2013. This large decrease in children served would result in the smallest number of children reported in CCDBG since 1998.

Child Care Spending, Participation Increased in FY 2010

Total child care spending increased from $12.4 billion in 2009 to $12.6 billion in 2010, largely the result of ARRA expenditures. Forty-two states increased spending, while nine states decreased spending. Child care spending was comprised of federal and state CCDBG and TANF-related funds:

  • Federal and state CCDBG spending increased from $9.1 billion in 2009 to $9.4 billion in 2010. This includes $1.1 billion in ARRA funds spent in 2010, compared to $262 million spent in 2009. (States had until the end of FY 2011 to spend these funds.) Absent the ARRA funds, CCDBG spending would have decreased over this time period. CCDBG spending data include TANF transfers to CCDBG. In 2010, states transferred $354 million fewer funds to CCDBG.
  • In 2010, states spent $3.2 billion in state and federal TANF funds directly on child care, compared to $3.3 billion in 2009.

Approximately 1.7 million children were served in CCDBG in 2010, compared to 1.6 million in 2009. Twenty-seven states increased participation from 2009 to 2010, including Texas (+18,000), Georgia (+15,800) and Tennessee (+7,200). Twenty-two states decreased participation, including Michigan (-19,200), Wisconsin (-11,200), and Ohio (-7,600). States do not report on the number of children served directly with TANF funds; however, HHS estimates 2.6 million children received child care from all sources in 2010.

A Bleak Picture for the Future

Clearly, ARRA dollars provided a much needed boost to state child care programs. But these funds are gone and we are left with a bleak picture:

Nearly half of the 1 million low-income families receiving child care assistance have incomes below the federal poverty level. Ninety-three percent of families receive help because they are working or in training or education programs. In the context of growing poverty, declining household incomes and still unacceptably high unemployment, taking help away from the working poor is irrational. Child Care assistance makes a difference in the economic health and security of families. It helps families sustain their participation in the workforce and reduces instability in care arrangements that can impact work. A substantial investment in child care is needed now to shore up help for working families and change course and maintain a child care system that helps families work and children learn.

Further detailed analysis of national and state trends in child care spending and participation in 2010, as well as state-specific fact sheets, will be forthcoming from CLASP.

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