Show Me (How to Spend) the Money

by Karen Schulman, Senior Policy Analyst
National Women's Law Center

States will soon be receiving something that they have not seen in a long time: new federal funds for child care. The recently passed American Recovery and Reinvestment Act included $2 billion in additional funding for the Child Care and Development Block Grant. This presents states with a tremendous opportunity, but also a tremendous challenge. States are expected to get the money out quickly, so that it can start helping our economy as soon as possible, while at the same time keeping a careful eye on how the money is spent. States are asked to use the funds effectively and efficiently to address the most pressing needs, but without any assurances that the funds will be there in the future—making it essential that states spend the money now in a way that will enable them to make the case for future investments.

To assist states as they manage this difficult balancing act, the National Women’s Law Center and the Center for Law and Social Policy have collaborated on a memo and a conference call that offer guidance for states on implementing the child care provisions of the ARRA. 

The top priority for states in spending the economic recovery funds should be to assist more low-income families with child care costs. States with waiting lists should serve families on those waiting lists and states that are currently serving all eligible families should make more families eligible by raising their income eligibility limits. With these measures, states help parents afford the child care they need to work and reduce parents’ financial burdens during these difficult economic times.

States can use the funds set aside for quality improvement ($255 million, of which $93.6 million is reserved for improving the quality of infant and toddler care) to support start-up grants and low-interest loans to providers in low-income communities, scholarships and grants for provider education and training, increased compensation for providers with higher levels of education, additional child care licensors, and/or infant/toddler care specialists. Such policies create jobs while encouraging better learning environments for young children.

There are a number of other alternatives states have for using their new child care funding to expand the availability of child care assistance and enhance the quality of care. Each state will ultimately decide how to use their own funds based on their particular needs and circumstances. But there is no time to waste—not with so many families straining to pay for child care on top of all their other bills, so many children in inadequate care, and so many child care providers struggling to stay in business. States can surely spend these new funds quickly and wisely to help families, children, providers—and our economy.