The American Rescue Plan (ARP) Act allocated $39 billion in dedicated child care relief funding to states. The ARP Act funds began to flow to states during spring 2021, with the intention to get funds out the door and provide relief to providers and families as quickly as possible.
This funding is broken down into two distinct streams, of which nearly $24 billion must be spent in the form of stabilization grants to help existing programs remain open or reopen. The remaining $15 billion is provided through supplemental Child Care and Development Fund (CCDF) discretionary funding to support allowable CCDF activities that help make child care more affordable and accessible for families. For a side-by-side comparison of the amounts available through both funding streams, see this state-by-state breakdown.
This blog provides an update on how states are using ARP Act funds as of October 2021. An initial update was shared in August 2021. Some states have made announcements for both streams of ARP Act funding, while others have only announced updates on one stream of funding. Fewer than 15 states have made no announcements on how they will use either stream of the ARP Act funds yet. In some cases, this may be due to the requirement for state legislatures to approve the spend of federal funding but are hindered by legislative sessions that are adjourned until January 2022.
For more information on how all state announcements to date, check out the tracking tool on Child Care Aware® of America’s (CCAoA) American Rescue Plan Act hub page.
Stabilization Grants ($24 billion)
The Administration for Children and Families (ACF) continues to regularly update its stabilization grant map to share available information on availability of applications in each state. Significant progress has seen made since the summer months regarding how many states have launched their applications. As of late October, 32 states and one territory have uploaded an application for their stabilization grant funds. Among these launches, great examples have emerged of how states, many in partnership with child care resource and referral agencies (CCR&Rs), are applying best practices to ensure the stabilization granting process is equitable, efficient, and transparent.
To achieve a more equitable distribution, Hawaii, Louisiana and North Dakota are providing additional tiers of support for under-served communities, such as for programs that serve infants and toddlers, children during non-traditional hours, or children who speak English as a second language. Other states are requiring providers who receive stabilization funds to support staff compensation. Maine is requiring providers to use a portion of the funds to pay $200 monthly bonuses to staff. Connecticut’s stabilization grant allows programs to opt-in for an additional fourth payment, of which at least 25% must be used toward staff compensation. Massachusetts’ formula uses an equity adjustment for programs located in historically marginalized communities or providing services to significant numbers of low-income children. States such as Louisiana, North Carolina, and Tennessee are using the Social Vulnerability Index to help determine base award amounts, among other factors.
To further assist with reaching as many providers as possible, most states are making applications available in multiple languages and are awarding applications on a rolling basis. In Hawaii, providers can apply for stabilization grants on mobile devices and have the ability save and return to drafts to complete later. Oklahoma is allowing paper applications to be submitted in addition to online applications.
Many states are working hard to ensure grant application and distribution is executed with efficiency. Hawaii, New Mexico, and New York are distributing funds through direct deposit to get funding in provider accounts as quickly as possible (though mailable checks are available in New Mexico and New York as well). Illinois allowed programs who have already received previous rounds of stabilization grants to renew by a simple opt-in process. Indiana is streamlining its application experiences for providers by pre-populating available state data within the application, allowing providers to confirm or change as needed. Upon award, grant funds will be deposited into providers’ bank accounts within three weeks of grant approval. Montana offers different sample applications based upon program setting for providers to view before applying. To simplify the application process, an online application and tutorial will be emailed to providers in Vermont.
In an effort to be transparent, New York is updating weekly its Stabilization Grant Data Dashboard. The dashboard shares a breakdown of total approved grants, the amount disbursed, and funding distribution by ethnicity, gender, race, program setting, and county.
For more ideas on how you can ensure the stabilization granting process in your state is equitable, efficient, and transparent, check out CCAoA’s Relief Funding Best Practices: Checklist for Child Care Advocates.
Supplemental CCDF Discretionary Funding ($15 billion)
States also continue to make announcements on how they will use the supplemental CCDF discretionary funding. These funds may be used to support any activities allowable under the Child Care & Development Block Grant Act (CCDBG) and CCDF regulations and are not restricted to responding to COVID-19.
Overall, states are continuing policies they first implemented with CARES Act funding to support families and child care providers. This is good news to provide some continuity for families and providers and provides a strong argument for why longer-term investments are needed to extend these policies. This has included but is not limited to raising eligibility thresholds, increasing compensation and benefits for providers, improving provider payment policies, and eliminating family copays. CCAoA has a list of policy recommendations for states to consider when determining how to best use federal relief dollars on allowable CCDF activities that can lead to long-term change.
Some states are overlapping their December relief funds allocated under the Coronavirus Response and Relief Supplemental Appropriations (CRRSA) with their ARP Act funds to sustain programs that were first implemented in 2020. Without directly asking a state agency, it can be difficult to determine when CRRSA funds end and when ARP Act funds begin to be used.
Since CCAoA’s summer update, more states have announced how they will use the ARP Act funds to expand eligibility for state subsidy programs so more families are able to participate. Georgia announced it will use funds to expand its subsidy program to serve an additional 10,000 children by increasing the initial threshold from 50% of State Median Income (SMI) to 85% SMI – the highest income threshold allowed under current law. Michigan will increase initial eligibility for subsidy from 150% of Federal Poverty Level (FPL) to 185% FPL through 2023. Kansas will use its funds to expand child care subsidy eligibility to working caregivers who make up to 250% FPL and is expanding initial eligibility for subsidy from six months to a twelve-month period. Beginning in October, parents in Illinois who are unemployed and actively seeking employment were made eligible for three months of subsidy assistance if they met the standard eligibility requirements. Over the last few weeks, Kansas, Michigan, New Jersey, Oregon, and Pennsylvania have all made announcements that they will use funds to significantly reduce or eliminate family copayments.
States are also making changes to the ways it reimburses providers. As of October, Tennessee is increasing reimbursement rates by 10% across all program types, along with additional increases for programs who serve children with disabilities. Michigan will increase provider reimbursement rates by 30% through 2021. Until October 2024, Georgia is increasing its existing tiered bonus payments, which are based on quality ratings, by 15 percentage points per level. Beginning in November, Minnesota plans to raise reimbursement rates from the 25th percentile to the 40th percentile for infants and toddlers and the 30th percentile for preschool and school-age programs, while Pennsylvania is moving its reimbursement rates from the 40th percentile to the 60th percentile. Both Pennsylvania and New Jersey are offering financial incentives for providers that offer care during non-traditional hours. Georgia and Michigan will continue basing reimbursement on enrollment and capacity instead of attendance.
States are also using the funds to support the child care workforce through increased compensation, trainings, and technical assistance. Illinois established a Child Care Workforce Bonus program, in which providers can apply to receive bonus payments for eligible staff up to $1,000. Georgia will provide two additional payments of $1,000 to all eligible providers and New Jersey will begin $1,000 bonuses this winter to help with recruitment and retention efforts. Michigan is allocating funds to continue providing mental health consultation to child care providers through 2023. Minnesota is funding multiple programs to support the child care workforce, including job skill straining for economically challenged individuals, career counseling and job placement assistance, retention efforts, and higher education scholarships. All of these grant programs will be administered by Child Care Aware of Minnesota.
Next steps
While we are just under a year away from the first deadlines for states to obligate some relief funds, it’s important for advocates to continue monitoring state progress to ensure funds are distributed efficiently, transparently, and equitably. Some states have struggled to move funds because it has been a huge undertaking for state agencies to take on grant administration due to the sheer size of the funding and long-standing challenges with understaffed state agencies. As a solution, when states partner with community-trusted intermediaries, like CCR&Rs, in even just one aspect of grant administration, they can maximize the use of these investments and make sure funds get to where they are needed most in an efficient manner. To further urge states to begin spending their ARP Act funds, ACF released a Dear Colleague letter in October that advises states to take bold actions now, especially around investments to address the current early childhood workforce shortage.
Are you working to support the implementation of ARP Act funds and need technical assistance or support? Contact us at takeaction@usa.childcareaware.org.
For more information on how states are using their ARP Act dollars, check out the tracking tool on CCAoA’s American Rescue Plan Act hub page.