States Are Using American Rescue Plan Stabilization Funds to Address the Fragility of Child Care
Since the onset of the pandemic, there has been an unprecedented influx of federal funding into the early childhood space, including the American Rescue Plan Act (ARP) passed in March 2021. The ARP allocated $39 billion dollars in relief funding for the child care sector; $24 billion of which were dedicated to a one-time stabilization grant program to address the fragility of the child care industry and help providers remain financially viable. This blog summarizes how states have spent or committed these stabilization funds.
Nearly a year has passed since the American Rescue Plan Act allocated $24 billion to stabilize child care and help providers respond to the ongoing challenges from the pandemic.
Per ARP, the majority of funding each state receives must be distributed as subgrants to eligible child care providers. Providers must apply for funding through their state’s application. Funding can be used for personnel costs, rent and facility maintenance, personal protective equipment, equipment to deal with the public health emergency, goods and services needed to resume child care, and mental health supports for children and employees. As of early February 2022, three states have yet to release applications for providers to request funding: Texas, Missouri, and Florida.
The Bipartisan Policy Center has tracked how all the remaining states and the District of Columbia have chosen to allocate and spend their ARP stabilization funding. We found that state progress on distributing these funds varies widely. As of December 2021, 16 states have not obligated 50% of their stabilization subgrants, with nine states having obligated no funding, as reported by the Department of Health and Human Services. It is important to note that some states are releasing the funds to child care providers, but their reports are not yet reported to HHS pending state government review procedures.
While some states are behind, 21 states have released updates about how these funds have been liquidated. Of those with updates, 17 states reveal the number of providers who have received funds, and 15 states report the amount of funding disbursed. As per the most recent, publicly available data, the 21 states that have released updates have awarded $3,176,282,850 to providers, with over 60,160 qualifying child care providers receiving support.
Some states are obligating extra money to providers who use stabilization funds to support their workforce. In New Jersey, more than 2,000 child care workers have received bonuses of $1,000. Michigan has given $1,000 bonuses to 24,947 full-time child care workers, and bonuses of $500 to 13,213 part-time child care workers. To increase the transparency of the ARP stabilization funding progress, Indiana, Nebraska, New York, and Wisconsin have publicly available data dashboards to follow spending updates in real-time.
Of note, some states have struggled to obligate funds due to the need for state legislative approval for funds. State legislative approval places an additional administrative burden upon states when attempting to spend their federal dollars. In total, 29 states have restrictions on or were unable to spend ARP funds without state legislative action.
As states continue to obligate and distribute stabilization funds, it is clear that these funds are providing much-needed relief to struggling child care providers across the country. However, these funds are a one-time infusion of cash, rather than a sustained funding effort needed to address the child care crisis. BPC will continue to monitor the funding distribution process.
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