Child Care: State Programs Under the Child Care and Development Fund
Released: 2002-10-08T00:00:00

Summary:
The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 ( P.L. 104-193 , PRWORA) restructured the major federal-state child care programs. It repealed three welfare-relatedchild care programs and initiated a new set of federal rules referred to as the Child Care andDevelopment Fund (CCDF). The CCDF combines funds provided under Section 418 of the SocialSecurity Act established by PRWORA with funds provided under the Child Care and DevelopmentBlock Grant (CCDBG). Both streams of funding are authorized through FY2002. Funds aredistributed as grants to states for their use in subsidizing child care services to low-income familieswith children.
Federal law defines eligible children as those under age 13 residing with a family whose income does not exceed 85% of the State Median Income (SMI), taking into account family size. Thefederal eligibility rules are maximum income limits for states in designing their CCDF programs. States may adopt income eligibility limits below that maximum, and currently, all but nine stateshave indeed set a lower eligibility limit. Regardless of the established limits, because CCDF is notan entitlement for individuals, states are not required to aid families even if their incomes fall belowstate-determined eligibility thresholds.
Although states are not required to guarantee child care for welfare families, states may give special treatment to families receiving assistance from the Temporary Assistance for Needy Families(TANF) program, recognizing that under TANF, both states and individuals are now subject to workrequirements. Generally, TANF families continue to have some special status in states' CCDFprograms. In some states, TANF families are categorically eligible for services, although they maynot actually receive service because funding may not always be available. TANF families are notresponsible for a co-payment for child care services in 22 states.
Federal law requires states to assure that payment rates to child care providers ensure that CCDF-eligible children receive equal access to care comparable to that available to children noteligible for subsidies. States generally set payment rates based on prevailing market rates for childcare. The most recent state plans indicate that 45 states (or territories) based their current paymentrates on market rate surveys conducted in 2000 or 2001; and rates of the remaining seven states werebased on surveys conducted in or prior to 1999.
Federal law also requires that states use not less than 4% of federal child care funds made available for each fiscal year to administer activities designed to improve the quality of child care. Prior to 1996, the CCDBG Act included a list of activities for which the quality improvement fundswere to be spent; however, those categories are no longer itemized in law. Nevertheless, as part ofthe CCDF plan, states indicate whether they will spend any of their child care quality funds onactivities that fall into those categories authorized under prior law (and any others).

subsections: section_title: Appendix A
paragraphs: In their CCDF state plans, states are required to describe their treatment ofTANF families, transitioning families, and families at risk of welfare dependencewith respect to CCDF subsidy receipt. State responses to this CCDF plan provisionvaried in detail and structure. Appendix A reflects the language used by states intheir CCDF plans, with minor editing for consistency and clarity. Although all statesprovide responses to this provision, it is unclear for some states whether these threegroups receive priority relative to other families eligible for subsidies, or in whatorder these families will be served. For example, in New Hampshire, TANFfamilies, transitioning families, and at-risk families are described as having priorityover other families (with the exception of families that already have a child receivinga subsidy and need care for an additional child); however, there is no indication ofhow these three groups of families receive priority relative to each other . In addition,the information provided by a few states did not specifically address how thesegroups of families are treated by the state. In these cases, the table entry reads "noinformation."
 Appendix A1. State Descriptions of Treatment of TANF-relatedGroups Under CCDF
Source : Table prepared by the Congressional Research Service (CRS) based on information from CCDF state plans submitted by the states to theDepartment of Health and Human Services (HHS).