As the COVID-19 pandemic hit our country in early 2020, widespread business closures and stay at home orders intended to prevent community spread of the virus caused massive disruptions to our everyday lives. For many parents with young children, this meant simultaneously working from home while juggling caregiving responsibilities due to child care and school closures. Child care businesses operate in a precarious position in normal times, but these closures, new requirements such as reduced class sizes, and lower attendance rates, all caused a perfect storm that exacerbated the thin margins already permeating the industry. In March, Congress provided initial relief in the CARES Act to help stabilize the industry. However, in August, 70% of parents reported their program was either still closed or operating at reduced capacity or hours, and a striking 14% of centers had permanently closed.
Early after the CARES Act passed, it was abundantly clear that the $3.5 billion in the law for the Child Care and Development Block Grant was insufficient for meeting the needs of providers and parents in the ongoing crisis. In May, BPC’s President joined the Early Childhood Initiative’s Director in an op-ed published in Newsweek, describing how child care is an essential workforce. In June, BPC was published in The Hill calling for more funding to stabilize the industry. We interviewed child care providers who discussed their experiences trying to stay open, and held a public event with ten state child care program administrators discussing their use of the CARES Act funds and highlighting the needs that were unmet by the legislation.
These messages resonated with Members of Congress on both sides of the aisle, who worked to ensure more funding would be available to help sustain child care businesses and support families. Unfortunately, after the CARES Act was passed in March, the next relief Congress provided to this critical industry occurred in December. The following is a summary of major legislative action related to coronavirus aid and relief during 2020, beginning with the CARES Act in March through the December 2020 aid package.
The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, was signed into law in March 2020 following nearly unanimous agreement in the House and Senate. This comprehensive legislation included $3.5 billion in emergency funding for the CCDBG to help states provide child care assistance to frontline workers and stabilize the child care market. Congress included flexibilities to ensure the funding could get to those families and programs in greatest need during the crisis. This funding represented a 60% increase in total discretionary appropriations for fiscal year 2020, which amounted to $9.326 billion. States took a variety of approaches in allocating this funding, though it mostly ran out by fall, according to our research, and states started pulling from other funding sources to continue supporting the vital industry.
The Paycheck Protection Program, established in the CARES Act, provided loans to more than 39,000 child care providers across the country, who received at least $2.3 billion in funding. These loans allowed 460,000 child care workers to keep their jobs, aaccording to our analysis of data released by the Small Business Administration. Subsequent updates and additional funding were meant to address both high demand and complaints from businesses concerned about the restrictions and short spending period of the original legislation. This program was a critical lifeline for many child care programs, despite recipients representing a small fraction of the overall lending through the program. Child care programs received less than 5% of the total $521.4 billion in lending.
In May, the Health and Economic Recovery Omnibus Emergency Solutions Act, the HEROES Act, was introduced by House Democrats, which included $7 billion for CCDBG intended to support states in their ongoing response to the crisis by providing child care to essential workers, and offering financial relief to providers. Additionally, this legislation provided amendments to the PPP; established a ‘Heroes Fund’ whereby essential workers—including child care workers—could receive increased wages; made the Child and Dependent Care Tax Credit and the Child Tax Credit fully refundable and increased the amount of reimbursement for 2020; and included other provisions that would have indirectly benefitted the child care industry and working parents with children. This legislation passed the House along partisan lines on May 15.
Also in May, after the Bipartisan Policy Center estimated that $26 billion was necessary to stabilize the industry for one year, a bipartisan letter to Senate leadership led by Senators Ernst (R-IA) and Sinema (D-AZ) and signed by 23 Senators called for increased support for child care. Additionally, Senators Loeffler (R-GA) and Ernst (R-IA) introduced a resolution calling for $25 billion in additional support for families and child care providers and workers through the CCDBG. These activities shifted the conversation about the level of aid necessary to sustain the child care industry, beyond the CARES and HEROES Acts.
In July, Senators Ernst (R-IA) and Alexander (R-TN) introduced Back to Work Child Care Grants, a proposal intended to stabilize the industry by offering financial assistance to providers to help them cover ongoing costs and declining revenues. This stabilization grant program was incorporated into the broader HEALS Act, detailed below, and was also introduced in the House on a bipartisan basis, by Reps. Reed (R-NY) and Gottheimer (D-NJ), and 29 cosponsors.
Also in July, Senate Republican leadership released the Health, Economic Assistance, Liability Protections, and Schools Act, or HEALS Act. This comprehensive legislation included $15 billion in specific aid for the child care industry through: Back to Work Child Care Grants, funded at $10 billion; and an additional $5 billion for CCDBG, including the flexibilities established in CARES. Other programs in the legislation, such as the Governors Emergency Education Relief Fund, and updates to the Paycheck Protection Program including ability for companies to apply for a “second draw” loan, would have helped child care providers around the country.
Later in July, a pair of complementary, Democrat-led, child care-specific, relief bills were passed. The Child Care for Economic Recovery Act: increased mandatory child care funding up to $10 billion annually; established a new investment of $10 billion in child care infrastructure and facilities through 2024; created new tax credits; and, expanded and enhanced the CDCTC, CTC, and flexible spending accounts. The Child Care is Essential Act creates a $50 billion stabilization fund to address ongoing loss of revenue child care providers face during the pandemic. The legislation gained bipartisan support—20 and 18 Republicans, respectively, voted for the measures—indicating momentum for a robust recovery allocation for the child care industry.
Despite each of the previous attempts at providing additional support for child care providers and working parents, by September, House and Senate leadership had still failed to reach a compromise on child care, as well as on a broader emergency relief package. A number of bipartisan lawmakers joined together to encourage leadership to reach agreement on such a package.
- On September 15, the bipartisan House Problem Solvers Caucus released a $1.5 trillion framework representing a middle road between the HEROES Act and HEALS Act. The “March to Common Ground” proposal included $15 billion for child care, closely aligned with the $10 billion in stabilization funding and $5 billion for CCDBG included in the Senate HEALS package.
- In December, a bipartisan, bicameral group of members released a proposal intended to spur conversations with the hopes of reaching a deal by the end of the year. The proposal, led by Sens. Manchin (D-WV) and Romney (R-UT), included $10 billion to support child care providers through a stabilization fund based off reconciling the Back to Work Child Care Grants and the Child Care is Essential proposals previously discussed. This proposal was credited with helping to jumpstart negotiations among Congressional leadership in pursuit of an agreement.
In late December 2020, Congressional leaders came to a bipartisan agreement on another emergency aid package to address the ongoing challenges of the pandemic. The legislation included $10 billion for the Child Care and Development Block Grant, along with important flexibilities intended to help states distribute the funding in an expeditious manner to the families and child care programs in the greatest need (similar to the CARES Act language). The legislation added new provisions, including reporting requirements, to allow for oversight of these funds. In total, Congress provided $13.5 billion in emergency supplemental appropriations for CCDBG during 2020 to help respond to the pandemic, more than double what the program has ever received in any fiscal year.
In addition to the emergency aid highlighted above, Congress approved the Fiscal Year 2021 appropriations package in December 2020, which continued the bipartisan commitment to child care programs. Specifically, the legislation included $5.911 billion for CCDBG, an increase of $85 million over FY 2020 funding. It also allocated $10.748 billion for Head Start, including for Early Head Start-Child Care Partnerships — an overall increase of $135 million from the prior year. While not necessarily in response to COVID-19, these commitments are crucial for increasing the base level of funding for these programs over time.
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