Federal Investments in Child Care Funding Grow, but States are Side-Stepping Safety Regulations, Possibly Putting Children at Risk

Washington, DC – As the second largest public source of U.S. child care funding, the Temporary Assistance for Needy Families block grant program allows states to help families access and afford child care, but a new analysis, released today from the Bipartisan Policy Center, finds that many states may be side-stepping federal health and safety regulations when allocating TANF funding. The Intersection of TANF and Child Care is the first comprehensive review of 20 years of data and recommends that all federal assistance for child care be subject to health and safety requirements established under the Child Care and Development Block Grant.

The report and accompanying state fact sheets find that states are transferring a smaller proportion of their TANF funds to the Child Care Development Fund, a program that requires adherence to minimum health and safety standards established under the CCDBG program. Instead, states are allocating funds on direct services, which may not meet these same standards and have the potential of placing children’s safe and healthy development at risk. Between 2000 and 2019:

• Annual transfers from TANF to CCDF decreased by over $1 billion;
• The percentage of all TANF child care spending transferred to CCDF dropped from 40% to 25%; and
• The number of states transferring funds dropped from 46 to 26.

Between 2000 and 2017, Congress increased CCDBG allocations by 63%, while transfers to the program from states’ TANF funds fell by almost half—therefore, the decline in transfers muted their impact.

In some cases, states are not transferring any TANF funding to CCDF. In 2019, 24 states and the District of Columbia transferred none of their TANF funds to the CCDF program. In addition, four of these states—Arizona, Georgia, Tennessee, and Texas—did not report any of their TANF funds were spent on child care, either on direct services or by transferring funds to CCDF.

“States’ ability to transfer TANF funds to the CCDF program is crucial for promoting the high-quality environments children need to build a healthy foundation and families need to access the stable child care arrangements,” said Director of BPC’s Early Child Care Initiative Linda K. Smith. “Unfortunately, over time, states have favored the outdated policy of direct spending, a practice which may not meet minimum safety standards and has the potential to negatively impact low-income, working families who rely on a stable child care subsidy to work, as well as on their children, who deserve safe, high-quality child care arrangements.”

Numerous studies have found that the unavailability of high-quality, affordable child care is a barrier to parents finding a job and remaining in the workforce, and forces families to make significant financial decisions. The lack of high-quality child care and early education can also have long-term negative impacts on a child’s success in school and into adulthood.

To support parents in finding a job and staying employed, TANF funds can be spent on child care services in three ways. States may:

• Transfer up to 30% of their federal TANF funds to the CCDF program;
• Allocate any amount of their federal TANF funds directly to child care services, including pre-K and Head Start; and
• Spend a portion of their own required state funding on TANF-related activities—known as the state maintenance of effort—directly on child care services.

The report recommends that Congress reauthorize TANF, increase CCDF transfer limits, and require all child care spending to be transferred to CCDF to ensure it meets minimum standards already established under the CCDBG. TANF funding should be subject to these minimum health and safety standards and reporting requirements to ensure proper oversight and accountability and promote children’s healthy development.

The report also recommends strengthening data reporting and analysis of Tribal TANF. Despite robust monthly and quarterly data collection required by law and reported by tribes, the Department of Health and Human Services provides minimal information about the demographic recipients of tribal TANF dollars, making it nearly impossible to identify impacts or inform any future reauthorization of the law.

“Congress should take the opportunity to fix the current bifurcated child care system by requiring that all public child care funding meet the bipartisan-supported CCDBG standards,” Smith continued. “Safe, quality child care is essential to ensure that all America’s children have the opportunity to grow up healthy and equipped to realize their full potential and become productive, responsible adults.”

Download The Intersection of TANF and Child Care here.