TANF Spending on Child Care Up Slightly in 2014
According to 2014 data on the Temporary Assistance for Needy Families (TANF) program, states spent slightly more TANF funds on child care assistance than they did the previous year. The data show an increase of $137 million (from $2.5 billion to $2.6 billion) over the 15-year low seen in 2013. These figures reflect the total amount of TANF funds used for child care, combining direct expenditures and transfers.
Under federal law, states have the option to use TANF funds to provide child care assistance to families in need. They can do so by spending funds directly on child care under their state TANF programs or by transferring money into the state Child Care and Development Block Grant (CCDBG) program. In 2014, direct spending on child care assistance totaled $1.2 billion, a $122 million over 2013. TANF transfers to CCDBG nominally increased by $15 million to $1.4 billion. Only nine states transferred 30 percent of their block grant (the maximum amount allowed) to CCDBG or a combination of CCDBG and the Social Services Block Grant (SSBG): Florida, Idaho, Indiana, Iowa, Massachusetts, Mississippi, Montana, Nebraska, and Oklahoma. Seven additional states transferred 25-30 percent of their TANF funds: Minnesota, New Mexico, North Carolina, Pennsylvania, Vermont, Washington and Wisconsin.
State TANF maintenance of effort (MOE) spending also rose slightly over 2013 levels, according to the data. Under TANF, states are required to maintain the levels of state dollars targeted at needy families, based on their historical spending. In 2014, states reported spending $2.5 billion that could be claimed toward the TANF MOE requirement (an increase of $181 million from 2013). A portion of TANF MOE funds spent on child care may also be directed toward states' CCDBG MOE requirement.
The Administration for Children and Families has yet to release FY 2014 expenditure data for CCDBG, making it impossible to determine total child care spending (CCDBG and TANF combined) for 2014. CLASP will provide additional analysis when the data are released.
These increases in state TANF spending on child care, though small, are significant. Because the TANF block grant has not received a funding increase since its establishment in 1996, it has lost more than one-third of its value to inflation. While child care remains a priority for states, they face tough choices with limited dollars and many areas of need. The history of TANF and CCDBG state spending illustrates the dramatic consequences of consolidating programs into block grants with limited funding. Despite recent increases in state spending, fewer than one in six children eligible for child care subsidies under federal CCDBG guidelines actually get help. Further, CCDBG participation is at an historic low.
As CLASP noted in TANF and the First Year of Life: Making a Difference at a Pivotal Moment, it’s essential that we revisit state TANF investments and develop new policies and priorities that place a two-generational model—especially serving very young children and their families—at the center of state TANF plans. Child care expenditures are a critical part of this approach and could include:
- Guarantees of access to the highest-quality child care for TANF families.
- Assurances that CCDBG reauthorization provisions regarding quality and continuity of care are applied to TANF-funded child care to ensure TANF families have access to these vital improvements.
- Referrals for TANF families with infants to home visiting programs and Early Head Start. Such referrals could include credit toward their TANF work requirements. and
- Development of partnerships and intensive services to serve TANF families who have young children.
The small increase in TANF funds for child care provides some optimism that states will reverse decades of underspending. As state agencies examine their spending, the opportunity to increase investment in child care and better serve young children and their families through TANF should be a top priority.