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Don’t Expect too Much too Soon: States will Need Help to Spend Historic Level of Child Care Investments

Last week, Congress passed, and President Biden signed the American Rescue Plan (ARP) Act into law, which included an historic uptick in funding for families and the child care sector—funding four times the amount of money provided in the 2020 December COVID-19 relief package, and significantly more money than has ever been provided by the annual, federal appropriations process ($5.8 billion was appropriated for the Child Care and Development Block Grant in fiscal year 2021). While this injection of cash is likely appreciated, state child care administrators will find themselves as gatekeepers because this funding will need to be channeled through states before reaching providers and families. It is the largest influx of child care funds to date that states have ever needed to administer.

The ARP includes:

  • $14 billion appropriated through the Child Care and Development Block Grant; and
  • $23.97 billion appropriated through a new child care stabilization fund.

Attached to this new funding is an added sense of urgency for states to authorize how the stabilization money will be spent quickly. There is a provision in the law requiring obligation of the money within the next two years and a requirement that states report to the Department of Health and Human Services within nine months of enactment (by December 2021) whether they are unable to spend 50% of their allotted stabilization funding.

In light of the strains COVID-19 has placed on families – especially women – and the child care sector, it is understandable that Congress, providers, and advocates should want to see the money spent quickly. And while some state agencies will be able to work expeditiously, others could face legislative obstacles that will make it difficult to authorize spending the money in a timely manner.

According to 2015 data from the National Association of State Budget Officers, and displayed in the table below,19 states must receive legislative approval before spending any unanticipated funds.1 For example, in Oregon, the executive branch is required to make a request to the legislative branch to increase any expenditure authority.

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Table 1: National Association of State Budget Officers Depiction of Gubernatorial Budget Authority and Responsibility

Source: National Association of State Budget Officers Budget Processes in the States (Spring 2015)

 

 

Additionally, some states are still facing challenges in spending the $10 billion provided for child care in the December aid package. A recent case study in Idaho found that despite the state receiving $58 million in child care funding from the December relief deal, the legislature only authorized the Governor to spend $24 million, or half of what the federal government gave the state, while the remaining funding was allocated as a state budget line item that cannot be spent until July 2021. These checks and balances at the state-level, while important for accountability, could further complicate the ability for executive agencies to spend the new ARP funding quickly.

Idaho is not an isolated or exceptional incidence—43 states experience some level of restriction placed on their authority to spend unanticipated funding (see Table 1 above). While not all of the minor restrictions directly apply to spending federal funds, the ones that do could significantly limit how much money child care state administrators can spend at any one time or how quickly they can get federal funds out the door.

Because state child care administrators are facing the looming responsibility of managing an unprecedented amount of money, understanding their potential challenges and creatively considering how to support their efforts should be a priority as they begin to expend the funds from the ARP. As states work through these obstacles, it is important for federal policymakers to understand these policies and how they will interact with the requirements under the American Rescue Plan.

End Notes:

1 The 19 states are the following: Alaska, Arizona, Illinois, Iowa, Kentucky, Louisiana, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, Nevada, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, and Texas.

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