Biden administration proposes making child care more affordable for working families

By Tami Luhby, CNN
Tue July 11, 2023

CNN —

The Biden administration unveiled Tuesday a series of proposed measures to make child care more affordable for certain working families.

The proposal, which stems from an executive order President Joe Biden signed in April, would make adjustments to the federal Child Care & Development Block Grant program, which provides states with funding to help low-income, working households pay for care.

It would cap child care copays at no more than 7% of a family’s income and encourage states to waive copays for families at or below 150% of the federal poverty level, or about $37,300 for a family of three in 2023.

The measure also aims to make it easier for families to apply for aid by encouraging states to accept online enrollment applications and to make siblings of children who receive the subsidy presumptively eligible for benefits.

Plus, it would help child care providers by ensuring they are paid when services are provided, as opposed to weeks later, and basing their payments on program enrollment rather than attendance. This will encourage more providers to participate in the grant program, according to the administration.

Nearly 80,000 families would pay less for child care, thanks to the 7% cap, according to the administration. Also, nearly 200,000 providers would get paid earlier, and more than 100,000 providers would start getting paid based on enrollment so their payments aren’t adjusted downward if children miss days.

The block grant supports 900,000 families and 1.5 million children. However, federal funding falls short of allowing every eligible family to be served.

Low-income families often spend one-third of their yearly income on child care, more than on rent or their mortgage, Vice President Kamala Harris told reporters on a press call.

“No family should have to choose between high-quality care for their child or to give up their career or put food on the table,” Harris said.
Covid-19 pandemic relief funds expiring soon

The Biden administration’s announcement comes as billions of dollars in Covid-19 pandemic relief funds for the child care industry is set to expire at the end of September.

The American Rescue Plan Act, which congressional Democrats passed in early 2021, provided about $24 billion in child care stabilization grants and about $15 billion to help families afford care.

Some 3.2 million children are expected to lose their slots when the stabilization funding ends this fall, according to a recent report from The Century Foundation.

More than 70,000 child care programs will likely close, the report found. The industry is projected lose 232,000 jobs.

In Washington, DC, and five states – Arkansas, Montana, Utah, Virginia and West Virginia – at least half of licensed child care programs could be cut. In another 14 states, one-third of centers could close their doors.

The local economies would also take a hit. Millions of parents may have to quit their jobs or reduce their hours, costing them $9 billion a year in lost earnings, the foundation found. The loss in tax and business revenue could cost states $10.6 billion in economic activity annually.

Relief funds helped centers stay open

The child care stabilization program assisted more than 220,000 child care providers, which helped as many as 9.6 million children as of the end of 2022, according to a Department of Health and Human Services report. More than 8 in 10 licensed child care centers received funding.

The average award to child care centers was about $140,000, and providers most commonly used the funds to pay for workers. They could also use the money for rent, utilities, program materials and cleaning.

Family child care providers received awards of about $23,000, on average, which they often used to help with rent, utilities and mortgage payments.

Separately, states also received $15 billion to expand child care aid to families so they can pay for the programs. That funding will continue through September 2024.

Nationally, child care cost an average of nearly $11,000 a year in 2022, according to Child Care Aware of America. But the price tag can vary widely by location.