Guidance on $15 billion in Supplemental Child Care Funding released, including opportunities to increase staff wages

On June 11, the Office of Child Care (OCC) released the long-awaited guidance for the $15 billion of American Rescue Plan (ARP) Act CCDF Discretionary Supplemental funds. The guidance comes about one month after earlier guidance on the ARP’s $24 billion Stabilization Grant Funds. States received their funds for both funding streams, a total of $39 billion in April 2021.

The CCDF Supplemental Fund guidance notes that, “Together with the ARP Act stabilization grants, this is an important opportunity for states, territories, and tribes to address the child care crisis and rebuild toward a stronger system that allows parents equal access to high quality child care, supports the developmental and learning needs of children, meets parents’ employment needs and child care preferences, and supports a professionalized workforce that is fairly and appropriately compensated for the essential skilled work that they do.”

The funds are allowable for any use under regular CCDF law with additional flexibility because they are not subject to the set asides on quality spending or direct services (although the 5 percent administrative cap across all CCDF funds does still apply). However, the OCC guidance places particular emphasis on increased provider payment rates as a key to meeting the law’s goals on equal access, staff wages that attract and retain the professionals to drive quality, and increasing supply in low-resourced areas. CCDF Supplemental funds must be obligated by September 30, 2023, and liquidated by September 30, 2024.

We hope the school-age field, including afterschool and summer providers, will recognize the opportunity these funds offer to ensure parents of school-age children have available, accessible, high- quality options for their children, equal to the opportunities of higher income parents in their area.

Please reach out to your state administrative agency and work with your statewide afterschool network to ensure your needs are recognized as these funds are dispersed. You do not have to be an expert in the guidance or the legislation. Your knowledge of the needs of programs, staff, families, and youth is enough.

Below are major categories of the guidance and details of the recommendations that may be of particular interest to school-age providers in regards to uses of these funds.

• Provider Payment Rates:
  • Market Rate Surveys: The guidance asks states to look at their market rate survey (MRS) data. The recommended MRS reimbursement rate for providers is 75 percent. However, the memo reported that a majority of states do not currently meet that standard. Low reimbursement rates suggest that children eligible for vouchers most likely cannot access even a meaningful percentage of the care providers in their communities that medium or higher income families would be able to afford.
  • Cost of Quality Calculators: Moreover, the memo recognizes that MRS is only a reflection of what parents are currently paying in the market, but not the true cost of quality child care. A better tool for assessing provider reimbursement rates, the guidance recommends, would be cost of quality calculators.
  • The Administration states it will be looking carefully at plans to ensure that the provision of equal access (which ensures a family with a voucher has care options similar to other families in the area) is met.
• Increasing wages for childcare providers:
  • Living Wage: The guidance recommends lead agencies “develop a wage ladder that sets a floor for a living wage of at least $15 per hour with increasing pay for additional experience and credentials. In addition, lead agencies are encouraged to improve access to benefits such as health insurance (p.8).” Statistics referenced in the memo show that half of all childcare workers earn below the poverty line for a family of four. Additionally, low paid staff results in worker stress, high staff turnover, and unfilled positions. This is not only a challenge for programs, but also families who as a result don’t have sufficient supply in their area. It is also an additional strain on the children served who need consistent, highly qualified caregivers to help them develop.
• Funding Stability:
  • OCC encourages that states, in addition to voucher programs, consider more use of grants and contracts which can provide more funding stability, and increase supply for underserved populations. They can also be designed with terms to ensure providers use some of the grant funds towards higher staff pay.
  • Relatedly, the document strongly recommends paying programs based on enrollment rather than attendance so programs can plan for the fixed costs of space and staffing.
• Building the Supply of Child Care:
  • Support license-exempt programs: The guidance specifically mentions the importance of recognizing the unique needs of school-age programs. “Some lead agencies do not license all types of child care, including small family child care homes and school-age programs in school facilities. These programs may be high-quality and play a critical role in meeting the needs of working families. Lead agencies should ensure that any legally-operating license-exempt programs are supported to meet health and safety and quality standards and are encouraged to expand licensing opportunities with the supplemental funds (p. 9).”
  • Support underserved populations: This section includes a focus on offering programs for children and youth during non-traditional hours, and helping programs by providing the staff training and minor physical renovations that can make them more accessible to and able to serve children with special needs.
• Expanding Access to Child Care Assistance:
  • Nationally, recent data (2017) found 1.9 million children were receiving subsidy, while 13.5 million could be eligible under federal rules. The data also showed that while 55 percent of eligible 3 year olds with family incomes below the poverty line were receiving subsidy, only 25 percent of 6-9 year olds were, and 15 percent of 10-12 year olds. With the influx of funds, the guidance mentions states can focus on expanding access. This includes considering access for those that lost their jobs during the pandemic, considering waiving family co-payments and supporting providers to make up any loss from co-payment income, expanding the income eligibility threshold, establishing an inclusive definition of essential workers, and permitting those searching for employment to qualify.
• Updating Data Systems
  • Establishing access to quality programs for all age ranges and eligible families is rooted in understanding data. The guidance mentions that “modernizing and maintaining systems are allowable uses of the ARP supplemental funds, and do not count against the limit on administrative expenditures” (p. 11).
• Supporting the mental health of children, youth and staff
  • After a traumatic year, where high numbers of youth and staff are citing mental health as among their top concerns, the memo reminds states that mental health supports are an allowable and encouraged use of funds. These can include social and emotional learning, trauma informed care, staff training, and on-site services for children and staff.
• Outreach on the Availability of Child Care Assistance
  • Expenditures can include providing funds to community organizations and partners that can act as trusted messengers to families to help them connect with available programs and places for child care, including in multiple languages.
• Support for COVID-19 vaccinations
  • This includes policies to support staff vaccines such as transportation to vaccine sites and paid time off for the vaccine and any recovery. It also includes considering that parents may need additional hours of care as they receive or recover from the vaccine.

Finally, the guidance mentions a few technical considerations on implementation. First, state plans are the foundation for stating how states will use funds. For programs and policies beginning implementation after October 1, 2021, states can include any uses in their CCDF 2022-2024 state plans due July 1, 2021. For substantial policy changes (eligibility rates, copays, etc.) from their current 2019-2021 CCDF plan to be implemented before October 1, states can file a plan amendment within 60 days of making a policy change. If they need a waiver for extraordinary circumstances (OCC FAQ Q:13) that asks for additional flexibility beyond the areas of the CCDF law under the state jurisdiction, the state may file a waiver with the Office of Child Care. Additionally, states must still adhere to supplement not supplant requirements and therefore should not have made any administrative or legislative reduction to federal, state or local child care funds as a result of the influx of funds from the March 11, American Rescue Plan legislation which provided the CCDF supplemental funding.

Prior to this year, the federal investment of discretionary child care dollars was just under $6 billion. The combined, $15 billion in CCDF supplemental funds, $24 billion in stabilization funds, and $10 billion from the December legislation (CRRSA) represents a major opportunity for the field to begin making long delayed challenges that help families, providers, staff and communities. We look forward to tracking and sharing innovations across states and hope the continuum of child care from birth through school-age becomes a model of a thoughtful, effective, supportive system for youth development and economic prosperity. See our School-Age Child Care page for more information.