Declining TANF Child Care Funds Underscore Need for Major Child Care Investment

By Hannah Matthews

August marks the 20th anniversary of welfare reform, which created the federal Temporary Assistance for Needy Families (TANF) program.  As part of welfare reform, Congress also made new investments in the Child Care and Development Block Grant (CCDBG) recognizing that low-income mothers need help paying for child care so they can go to work. Since TANF’s creation, states have been permitted to spend TANF directly on child care assistance or transfer up to 30 percent of state funds to CCDBG. After cash assistance, child care is the second largest use of TANF funds.

This month, the Administration for Children and Families at the U. S. Department of Health and Human Services released expenditure datashowing that TANF spending on child care decreased by $45 million in 2015. Nationally, about $2.6 billion of TANF funds were used for child care through direct spending on child care and transfers to CCDBG.

In the early years of welfare reform, combined TANF transfers and direct spending on child care reached $4 billion. However, as the block grant has declined in value, the amount spent on child care has fallen by 35 percent, remaining near $2.6 billion or below for the past four years.

While the net expenditure change from 2014 to 2015 is not dramatic, the overall trend is reason for distress. Prior to this latest release of data, CLASP’s analysis of 2014 data shows that combined CCDBG and TANF spending on child care assistance is at a 12-year low and the number of children receiving CCDBG-funded child care assistance is at a 16-year low, with only 1.4 million children receiving any help. Never have so few children gotten help.

TANF has failed poor children and their families in providing a safety net and buffering them from the harm caused by poverty. TANF is also not a reliable or sufficient source of funding for child care assistance. Since Congress has not allocated significant new resources, as states move forward with the 2014 bipartisan reauthorization of CCDBG, they are facing increased pressure for resources, as implementing important health and safety and continuity provisions of the law could come at the cost of serving even fewer children. To avoid further decreasing the number of children served, CCDBG needs an immediate $1.2 billion increase in the federal 2017 fiscal year. In future years, far greater investments will be necessary to ensure that more low-income families have access to affordable, high-quality child care that can support family economic stability and children’s success.