Inside America’s Child Care Crisis: Even After a ‘Historic’ Federal Investment, Today’s System Only Serves 1 in 6 Eligible Kids. Could More Funding Now Be on the Way?

Correction appended June 12

U.S. child care is widely seen as being in crisis. It’s costly, in many states more expensive than college tuition, and hard for parents to find. Workers in the field receive low wages, leaving many eligible for public assistance. And the programs available for many families are often not up to the quality standards that support learning at a crucial stage of young children’s brain development.

Last year, Congress dramatically increased the major federal source of child care funding, allowing states to begin chipping away at problems left unaddressed after years of stagnant funding. The increase, an additional $2.37 billion each in fiscal years 2018 and 2019, allows states to add more children to program rolls, increase payments to providers, and pay for new congressionally mandated safety and quality improvements.

There’s been bipartisan support for the issue, with figures as politically divergent as Sen. Elizabeth Warren and presidential daughter and adviser Ivanka Trump making it a policy focus.

“There’s a real national conversation going on about broadening eligibility, universal child care,” said Christine Johnson-Staub, senior policy analyst at the Center for Law and Social Policy. “I feel like this is a moment where no matter which side of the aisle people are on, people really get that child care is a critical issue for families and it’s a linchpin issue economically.”

Though advocates hailed the increase as “truly historic,” they are seeking more funding for the program, which still only serves about 1 in 6 eligible children. Early-education groups asked Congress for another $5 billion for fiscal 2020; House Democrats proposed adding about half of that, $2.4 billion next year.

The House is considering that bill this week. But despite the bipartisan appetite for new dollars, additional funds for child care, like everything else, are contingent on Congress and President Trump agreeing to a budget deal that raises overall spending caps.

The new funding goes through the Child Care and Development Block Grant, which has existed in its current form since the 1990s. It sends money to states, territories and tribes to fund child care for low-income families. Participating children must be under the age of 12, with at least one parent who is working or in school. Federal laws set the maximum family income at 85 percent of a state’s median income, though states can set that bar lower.

Beyond the amount Congress appropriates every year, the child care program receives about $3 billion annually in mandatory funding. That money, like funding for Social Security and Medicaid, is covered annually every year without congressional action — but it hadn’t increased since the mid-90s.

“This program historically has been underfunded,” particularly given its dual purposes as both an educational policy for kids and an economic policy that allows more parents to work, said Jay Nichols, director of federal policy and government affairs at Child Care Aware of America.

Despite that flat funding, Congress in 2014 mandated needed, but often costly, quality improvements for federally eligible child care providers. That combination meant fewer children were covered than just a few years ago: 1.37 million on an average month in 2016, the lowest number served since the mid-’90s.

Long-term, it would probably take about $100 billion annually to cover every eligible child, Nichols estimated, based on current spending and the number of eligible children served. Policymakers would also have to address widespread child care deserts, where providers simply aren’t available.

To allow states to make more long-term plans, much of that funding should come from mandatory sources, meaning it wouldn’t be subject to congressional whims, he added.

“Basically, there needs to be much more — more longer-term congressional support down the road,” Nichols said.

States decide how to use new dollars

Advocates estimated that states could use the new funding to implement the 2014 recommendations and add up to 230,000 children to the program nationwide.

A February study by the nonpartisan Government Accountability Office found that 44 states planned to use the new funding to meet some of the 2014 law’s regulations, like professional development for child care workers. More than half of states reported they’d use the new funding to help pay for background checks of workers required under the 2014 law.

Fewer states, 16, planned to add families to the program from their waiting lists. Two states, Arkansas and Mississippi, went so far as to clear their waiting lists.

Many states increased the monthly value of the vouchers, which gave families more options and sent more money to low-paid providers.

One was Iowa, which has lost 42 percent of its child care providers in the past five years, largely due to low wages.

“Any way that we can increase the income that our providers are making, hopefully we’ll be able to [keep] from losing another 42 percent over the next five years,” said Dawn Oliver Wiand, executive director of the Iowa Women’s Foundation. “It won’t help everybody, but for the providers it is helping, it’s a huge benefit to their bottom lines.”

In Maryland, lawmakers added state dollars on top of the federal increase. That allowed the state to increase the subsidy rate to cover 60 percent of average costs by the summer of 2021, and to double the income cap for participating families, to more than $70,000 for a family of four. They also added enough funding to clear their waiting list.

That means new families can participate and will have more choices, and hopefully that more providers will take vouchers in the future, said Christina Lopez, co-president of the Maryland Association for the Education of Young Children.

“It’s meant a lot of different things to a lot of different people. Most substantially, what it says is that Maryland has made a commitment to early childhood education, to families and to the understanding of how these early years impact us,” Lopez said.

Despite the increase, there’s still much to be done to provide truly high-quality options to all families, Lopez said. “It’s a great investment and we’re excited for it, but we know that the work isn’t done.”

Correction: This story has been updated to clarify the amount of mandatory funding the program receives each year, relative to the discretionary amount Congress appropriates. In the years immediately preceding the 2018 increase, the annual discretionary funding was about equal to the amount of mandatory funding. Discretionary funding has now surpassed the mandatory funding allocation. 

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