COVID-19: Child Care and Development Block Grant (CCDBG) Supplemental Appropriations in the CARES Act
Released: 2020-04-24T00:00:00

Introduction

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law ( P.L. 116-136 ). The CARES Act includes $3.5 billion in supplemental appropriations for the Child Care and Development Block Grant (CCDBG). This report provides an overview of the CCDBG provisions in the CARES Act. Among other things, these provisions address allowable uses and flexibilities of the supplemental funds. The report also includes allocations for the additional $3.5 billion in CCDBG appropriations.

The CCDBG Act (42 U.S.C. Â§Â§9858 et seq.) is the main federal law supporting child care programs for low-income working families. The CCDBG is administered by the U.S. Department of Health and Human Services (HHS). HHS allocates CCDBG funds to states, territories, and tribes according to a statutory formula. In addition, certain funds may be reserved for other activities, such as technical assistance and research. State, territory, and tribal lead agencies submit CCDBG plans to HHS every three years describing how their child care programs will operate. CCDBG funds are used to subsidize the cost of child care for eligible children of low-income working parents. Funds are also used to support activities to improve the quality of child care and for certain other costs.

CCDBG Provisions in the CARES Act

The CARES Act appropriates $3.5 billion in FY2020 emergency supplemental funds to the CCDBG. The funds are to be used to "prevent, prepare for, and respond to coronavirus." The CARES Act funds are provided in addition to FY2020 annual appropriations of $5.8 billion (see P.L. 116-94 ). The additional $3.5 billion represents a 60% increase in total appropriations to the CCDBG in FY2020. The additional funds are to remain available for obligation by HHS through September 30, 2021 (i.e., the end of FY2021). The CARES Act includes a number of provisions that clarify allowable uses and, in some cases, waive certain underlying requirements of the CCDBG Act. Below is a brief discussion of key provisions.

Continued Assistance to Child Care Providers

Under the CCDBG Act, lead agencies subsidize the cost of child care for eligible children. Lead agencies commonly provide subsidy payments directly to child care providers. In some cases, lead agencies may provide additional CCDBG funds to eligible providers for other purposes, such as supporting professional development or helping build the supply of quality child care.

The CARES Act specifies that CCDBG funds appropriated in the act may be used to provide continued payments and assistance to child care providers

in cases of decreased enrollment or closures related to coronavirus, and to ensure that providers are able to remain open or reopen as appropriate and applicable.

The CCDBG Act generally encourages (but does not require) lead agencies to make payments to child care providers based on enrollment rather than attendance. Specifically, the law states that lead agencies should "to the extent practicable" delink provider reimbursements from an eligible child's occasional absences due to holidays or unforeseen circumstances such as illness. This provision of the law is intended to support the fixed costs incurred by providers.

Eligible Child Care Providers

The CARES Act specifies that CCDBG funds appropriated in the act shall be available to eligible child care providers under the CCDBG Act for the purposes of cleaning and sanitation, and other activities necessary to maintain or resume the operation of programs. The act clarifies that this provision applies to eligible child care providers even if those providers were not receiving CCDBG assistance prior to the public health emergency resulting from coronavirus.

Under the CCDBG Act, eligible child care providers generally must

be licensed, regulated, or registered by the state (though states may exempt certain providers from this requirement); and meet certain minimum health and safety standards.

An exception to these requirements is made in cases of child care providers caring only for relatives. However, such providers must comply with requirements applicable to relative caregivers.

Continued Pay for Child Care Staff

The CARES Act encourages states, territories, and tribes to place conditions on payments to child care providers aimed at ensuring providers use a portion of the funds to continue to pay staff salaries and wages. Payment of salaries and wages is not explicitly addressed in the CCDBG Act, though presumably it is typical for some share of CCDBG provider payments to support these expenses. According to national estimates from the Bureau of Labor Statistics (BLS), the mean hourly wage for child care workers was $12.27 in May 2019. BLS estimated the mean annual wage for child care workers at $25,510 nationally.

Support for Essential Workers

The CARES Act specifies that states, territories, and tribes are authorized to use CCDBG funds appropriated in the act to provide child care assistance to

health care sector employees, emergency responders, sanitation workers, and other workers deemed essential during the response to coronavirus by public officials.

Further, the act specifies that such workers may receive CCDBG assistance without regard to the typical income eligibility requirements under the CCDBG Act.

The CCDBG Act generally stipulates that eligible children must

be under age 13 (children may be older in limited circumstances ); reside with a parent who is working or attending job training (unless the child is receiving or needs to receive protective services); have family income no greater than 85% of state median income (SMI), or lower depending on state policy; and have no more than $1 million in family assets.

While the CARES Act waives income requirements for essential workers as noted above, it does not waive other eligibility requirements (e.g., those related to the child's age or the parent's work status).

State Plan Amendments

The CARES Act requires HHS to remind states that CCDBG state plans do not need to be amended prior to using "existing authorities in the CCDBG Act for the purposes provided" in the CARES Act. Typically, if a state intends to make a substantial change to policies laid out in its CCDBG plan (e.g., a change in eligibility rules, provider payment rates, family copayments), the state would submit a state plan amendment to HHS for approval. Under regulations, a plan amendment must be submitted within 60 days of the effective date of the requirement (i.e., the state may execute the policy change before submitting the amendment). HHS has 90 days to approve or deny a plan amendment.

In the current circumstances, there are several reasons states might want to amend their plans. For instance, the CARES Act authorizes HHS to provide child care assistance to essential workers regardless of income. This is a substantial change, as federal law and state policies generally condition eligibility on family income.

Spending Flexibilities and Other Technical Provisions

The CARES Act effectively waives or adjusts certain requirements related to the obligation and expenditure of the CCDBG funds appropriated in the act.

Quality Spending

The CCDBG Act generally requires lead agencies to spend at least 9% of their FY2020 allotments on quality activities, plus an additional 3% on activities to improve the quality of care for infants and toddlers. All told, these quality set-asides are intended to account for at least 12% of spending from FY2020 allotments. The CARES Act effectively waives these quality spending minimums for funds provided in the act, offering lead agencies greater flexibility in how funds may be spent.

Direct Spending

The CCDBG Act includes requirements related to minimum spending on direct services. (The term direct services generally refers to child care assistance provided to families and is often, but not always, provided in the form of a voucher.) For instance, after lead agencies set aside funds to meet minimum quality spending requirements and for spending on administrative costs (capped at 5% for states and territories ), they must use at least 70% of remaining CCDBG funds for direct services. The CARES Act effectively waives direct spending requirements in the CCDBG Act, again offering lead agencies greater flexibility in how funds may be spent.

Supplement, Not Supplant

The CARES Act specifies that funds provided via the CCDBG are to be used to supplement, not supplant , state, territory, and tribal general revenue funding for child care assistance for low-income families (i.e., the funds provided under the act should not be used to replace existing state, territory, or tribal spending on such activities). CCDBG provisions in annual appropriations acts typically include similar provisions.

Past guidance from HHS suggests that this requirement would likely be considered satisfied if a state, territory, or tribe does not make any administrative or legislative changes to reduce general revenue spending after the enactment of a new CCDBG appropriation. An action occurring after this date could potentially be considered a violation of the non-supplantation requirement, unless the lead agency demonstrates that the reduction was not due to increased federal CCDBG funds.

Use of Funds for Prior Obligations

The CARES Act specifies that the CCDBG funds it appropriates may be made available to restore amounts, either directly or through reimbursement, for obligations incurred prior to enactment. These amounts may only be restored with CARES Act funds if they were used to prevent, prepare for, and respond to coronavirus.

Obligation Deadline for Lead Agencies (or Other Recipients)

The CARES Act states that payments made by HHS may be obligated by the state, territory, tribe, or other recipient in the current fiscal year or the succeeding two fiscal years. Effectively, this means that lead agencies have through FY2022 to obligate funds they receive under the CARES Act. The CCDBG Act typically gives states or other recipients two fiscal years, rather than three, to obligate funds.

Allocation of CCDBG Funds

CCDBG funds are generally allocated according to a formula set in statute. Under the CCDBG Act formula, HHS is to reserve up to 0.5% for territories and not less than 2% for tribes and tribal organizations. The formula also includes set-asides for technical assistance (up to 0.5%); research, demonstrations, and evaluation (0.5%); and a national toll-free hotline and website (up to $1.5 million). After all reservations have been made, the remaining funds go to states. Funds are allocated to states according to a formula based on their share of children under age five, their share of children receiving free- or reduced-price lunches, and state per capita income.

Table 1 presents FY2020 CCDBG allocations released by HHS. The table includes allocations from FY2020 annual appropriations ( P.L. 116-94 ), as well as the CARES Act ( P.L. 116-136 ).