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Congress Supports the Child Care Market Through COVID-19

Last night, the Senate passed a sweeping economic stimulus package, the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act. This legislation is the third and largest package passed by congress in response to the coronavirus pandemic, and is intended to provide broad and significant relief to families, businesses, and the American economy as we collectively face the impacts of COVID-19. The House is expected to pass the legislation on Friday, March 27.

Throughout the legislation are provisions that will help the child care market stay afloat throughout this crisis and beyond. Child care businesses are already recognizing the strain, as many are facing extended closures, while at the same time, many are staying open to provide critical child care services to essential workers on the frontlines of the coronavirus. In a recent NAEYC survey of over 6,000 providers, 46% said they would not survive a closure of more than one month without significant investments and supports that would allow them to retain staff, pay mortgages, and cover other fixed costs, while an additional 17% said they could not survive a closure of any time.

Congress, through the CARES Act, has directly responded to this need in several ways, which are outlined below. Importantly, this legislation provides several methods of relief and assistance for child care businesses, parents, and communities, to help them all weather the impacts of COVID-19 now and in the future.

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Direct Child Care Supports

Child Care and Development Block Grant

The CARES Act provides an additional $3.5 billion for the Child Care and Development Block Grant, a significant increase to the FY 2020 appropriations total of $5.826 billion. This funding is intended to support parents of young children whose participation in the workforce is of critical importance during this pandemic, such as health care employees, emergency responders, and sanitation workers, and importantly waives the requirement that they must make under 85% of state median income to qualify for child care assistance.

In addition, this funding comes with several important policy provisions that will help child care providers. Specifically, funding may be used to continue payments to providers in the case of decreased enrollment or closures, to ensure they are able to remain open or reopen, and providers are encouraged to use funds to continue paying staff. Lastly, these funds are available to any child care provider, not just those who were receiving CCDBG prior to the coronavirus.

Head Start

The CARES Act provides $750 million for Head Start, exempting payments from the base grant in subsequent fiscal years, and allows up to $500 million for operating supplemental summer programs through non-competitive grant supplements to existing grantees.

Community Development Block Grant

The legislation includes $5 billion for CDBG to respond to the coronavirus, which may be used by communities to expand child care. Additionally, CARES allows states to increase eligibility to those making up to 200 percent of the FPL, an increase from 125 percent. This ensures that more families, all of whom are struggling with the impacts of COVID-19, may be able to receive these critical services.

Education Stabilization Fund

The CARES Act creates a $30 billion Education Stabilization Fund for states with three separate funding streams: Governor’s Emergency Education Relief Fund, Higher Education, and K-12. The Governor’s fund, which will receive $3 billion, may be used to support services to students including the provision of child care and early education. The Higher Education fund ($14.25 billion) may be used to defray costs to students and institutes of higher education, including child care.

Health Professionals’ Workforce Needs

The CARES Act continues this demonstration project that provides low-income individuals with opportunities to obtain education and training in the health care field, including by receiving child care and other financial aid and supports. 

Temporary Assistance for Needy Families is extended through November, 2020.

Small Business Supports

Note: For more information, please see this summary of the Small Business Administration Supports included in CARES, jointly produced by the BPC and the Committee for Economic Development.

Loan Guarantee Program (7(a) Loans)

The CARES Act expands eligibility for this program to nonprofit organizations and other entities that have not been historically eligible, opening up this program to many child care providers who would otherwise not be able to access these loans. These loans must be used for specific purposes such as wages, paid leave, health insurance or retirement benefits, mortgages or rent, or utilities. Businesses may have these loans forgiven.

Economic Injury Disaster Loans (EIDL)

The CARES Act provides $10 billion for EIDL to ensure that small businesses, including nonprofits, can have capital during the disaster to allow them to continue operating. Applicants may also request an advance, which they shall not have to repay, of up to $10,000 to be paid within 3 days of their application, which may be used for providing paid sick leave, maintaining payroll, and making rent or mortgage payments.

More information is included in our summary, including supports for Minority Business Centers, Small Business Development Centers, and Women’s Business Centers.

Other Supports

Public Housing Operating Fund is provided $685 million. These funds may be used for activities to support education and child care for impacted families.

Economic Development Administration is provided $1.5 billion for economic adjustment assistance through September 2022, to help revitalize local communities and respond to economic injury due to COVID-19. EDA assistance can be used to help rebuild impacted industries, capitalize local funds to provide low-interest loans to businesses of all sizes, and support locally-identified priorities for economic recovery.

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