ARPA Saved Child Care, But Recovery Requires Significant Federal Funding

By Rachel Wilensky

Recent reports on the American Rescue Plan Act (ARPA) Child Care Stabilization Program and supplemental resources show that children, families, and the workforce are experiencing positive impacts from the relief funds allocated over the last two years. This funding has been a lifeline for the child care sector during a time of exacerbated need by improving access to care for families and wages for providers, but the resources are temporary.  

With the FY2023 federal appropriations bill currently under negotiation, Congress must allocate the largest possible increases for non-defense discretionary funding, and specifically, for early childhood programs. This will address urgent labor shortages, help parents work, and grow our economy in the short and long term.  

To date, Congress has delivered $50 billion to support children, families, and early educators. In total, this relief came from the 2020 Coronavirus Aid, Relief, and Economic Security Act (CARES) Act, the 2021 Coronavirus Response and Relief Supplemental Appropriation Act (CRRSA), and the 2021 ARPA funding. The ARPA funding included two major investments:  

  • Nearly $24 billion for the Child Care Stabilization Program  
  • Almost $15 billion in supplemental Child Care and Development Block Grant (CCDBG) discretionary funds and an increase in annual mandatory CCDBG funding to $3.55 billion (which was exempted from the state match requirement in 2021 and 2022) 

Relief funds have been effective in maintaining child care access 

The ARPA investments have had significant and positive impacts on the child care workforce and access to care. Recent data released by the U.S. Department of Health and Human Services’ Administration for Children and Families (ACF) show that the Child Care Stabilization Program supported more than 200,000 child care providers, resulting in more than 9.5 million children having access to care. A survey conducted by the National Association for the Education of Young Children (NAEYC) reported that one-third of programs likely would have closed without this relief funding.  

While many providers are still struggling to stay open due to staffing shortages and other financial challenges, funding from the stabilization program has helped. The ACF data show that providers primarily used the funding to cover basic operational costs like rent and utilities. Additionally, some used it to provide wage increases to early educators. But, due to the lack of stable long-term funding, providers had to structure these increases as temporary bonuses, a small incentive to stay in a field that often does not offer competitive compensation. In fact, a recent survey found that nearly half of respondents who had been in the field for only a year or less—and over a third of those with 2-5 years in the field—said they were considering leaving. 

States have also made a concerted effort to reach families with low incomes. In most states, providers received assistance in 98 percent of counties where at least 20 percent of residents have lived in poverty over the past 30 years. This is important, as access to quality, affordable child care can significantly impact a family’s economic security.  

Federal investments have also advanced racial equity 

It is also vital to ensure the stability of child care providers in racially diverse counties. Occupational and residential segregation due to racism have made telework less accessible to parents of color, and data show that child care-related job disruptions are more likely for Black and multiracial parents. ARPA stabilization funds made progress on this front too, as over half of the providers receiving stabilization funds were operating in the most racially diverse counties in the country. 

Overall, these relief funds were more equitably distributed than earlier relief efforts, such as the Paycheck Protection Program and Small Business Association loans. Those programs were not accessible for child care providers, particularly Black-owned child care businesses, due to pervasive racial inequities in the banking system. ACF data show that 44 percent of providers receiving assistance through the Child Care Stabilization Program are owned and operated by people of color. That’s significant, considering child care workers are disproportionately Black (15.6 percent, compared with 12.1 percent in the overall workforce) and Hispanic (23.6 percent, compared with 17.5 percent in the overall workforce). Moreover, this is likely a conservative estimate given the lack of comprehensive data on the full spectrum of care providers (unlicensed, unregulated, etc.). Those who are left out of data collection are often people of color who are more likely to experience systemic barriers and inequities in accessing or connecting to a formalized system that would track their role as a child care provider. 

States are improving child care systems thanks to federal support 

In addition to the valuable support that the stabilization funds provided, the supplemental CCDBG resources have also proved to be an important support for states—and the families and providers that live there. 

A recent report from the National Women’s Law Center (NWLC) highlights that states are using the ARPA resources to help make care more affordable, support the workforce, increase the availability of care, and improve the care children receive. Here are a few examples of what states are doing:  

  • Oklahoma is increasing access by offering start-up grants in areas with a limited supply of licensed child care.  
  • Rhode Island is advancing quality by expanding mental health consultation services and programming, and implementing care coordination teams to address the needs of families, staff, and programs.  
  • Tennessee is building operational capacity by providing technological devices to providers along with coaching and technical assistance for using the equipment to support their business practices. 

Without continued, increased funding, families and providers will lose critical gains 

Relief funding, including the Child Care Stabilization Program and CCDBG Supplemental Discretionary resources, has been a critical lifeline for child care providers and families with young children. But providers need additional support to recover fully, and even more robust and sustainable resources are necessary to see the transformative change the sector needs. 

Temporary relief made a significant impact on recovery but will not solve the child care crisis. We urge Congress to include the largest possible increases for non-defense discretionary funding, and specifically, for early childhood programs, to address the urgent needs of families across the country.