GAO, Child Care: Selected States Are Taking Steps to Sustain Program Changes Implemented with Covid-19 Funding (GAO-24-106258) (2024-03)
Summary
GAO-24-106258, a GAO report to congressional committees dated March 4, 2024, titled Child Care: Selected States Are Taking Steps to Sustain Program Changes Implemented with Covid-19 Funding. It examines how selected states used supplemental Child Care and Development Fund (CCDF) money for long-term changes and how the Office of Child Care supported them. GAO interviewed CCDF administrators from five states: Michigan, Nevada, New Mexico, New York, and Tennessee. The report states that Congress appropriated more than $52 billion in supplemental CCDF funding in 2020 and 2021, compared with $8.2 billion in fiscal year 2019 CCDF appropriations. State officials reported expanding subsidy eligibility, lowering family co-pays and raising provider payment rates.
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CHILD CARE
Selected States Are
Taking Steps to
Sustain Program
Changes
Implemented with
Covid19 Funding
Accessible Version
Report to Congressional Committees
March 2024
GAO-24-106258
United States Government Accountability Office
GAO Highlights
View GAO-24-106258. For more information, contact Kathy A. Larin at (202) 512-7215 or
larink@gao.gov.
Highlights of GAO-24-106258, a report to congressional committees
March 2024
CHILD CARE
Selected States Are Taking Steps to Sustain Program
Changes Implemented with Covid-19 Funding
Why GAO Did This Study
The COVID-19 pandemic caused significant disruptions to the country’s
child care sector, exacerbating preexisting challenges for families and
providers. In response, in fiscal years 2020–2021 Congress appropriated
more than $52 billion in supplemental funding to CCDF, which supports
states’ efforts to assist low-income working families with obtaining child
care. The remaining funds must be expended by September 30, 2024.
House Appropriations Committee Report No. 117-96 includes a provision
for GAO to study the state use of COVID-19 relief funding for long-term
strategies to improve and support the child care sector. This report
examines (1) how selected states used supplemental funding to
implement long-term strategies that help address preexisting challenges
for families and providers, and (2) how OCC supported states’ efforts to
address challenges for families and providers using pandemic-related
funds.
GAO interviewed CCDF administrators from five states (Michigan,
Nevada, New Mexico, New York, and Tennessee) about their
experiences implementing long-term program changes with COVID-19
funds and the support they received from the Office of Child Care. GAO
selected states to represent diversity in child care funding amounts and
geographic region. The information from the states is not generalizable,
but provides perspectives. GAO also interviewed agency officials and
organizations knowledgeable of child care issues; and reviewed related
reports, literature, federal laws and regulations, and Office of Child Care
guidance.
Page i GAO-24-106258 Child Care
What GAO Found
In all five selected states, child care officials reported using supplemental
funding to make investments and program changes to address
preexisting challenges facing families and child care providers.
Preexisting challenges included the affordability and availability of child
care for families, and financial viability and staffing for child care
providers. These state officials reported making one-time investments,
such as updating technology systems and creating targeted grants that
could have long-term positive impacts (see figure). They also changed
their Child Care and Development Fund (CCDF) programs to enhance
families’ access to child care and improve providers’ financial viability. For
families, they expanded eligibility for subsidies and lowered family co-
pays. For providers, they focused on payment rates, compensation,
workforce development, and quality improvement. States planned to use various
strategies to sustain program changes that were made using supplemental funding,
such as establishing a new state trust fund or increasing state child care budgets.
State officials said that their ability to secure ongoing funding would affect
their ability to maintain certain program changes.
Example of New York State (NYS) Child Care Grant Opportunity Notice
The Department of Health and Human Services’ Office of Child Care
supported states’ efforts to address challenges for families and providers
with supplemental funding by encouraging specific uses for funds and
offering technical assistance. After COVID-19 relief laws were enacted,
the agency published guidance that encouraged states to make CCDF
Page ii GAO-24-106258 Child Care
program changes. These included increasing provider payment rates
based on new cost modelling and increasing family income eligibility
limits. The Office of Child Care also provided technical assistance to help
states explore options to enhance their CCDF programs and continues to
support states’ efforts to determine which of their recent program changes
can be sustained beyond the expiration of the supplemental funding. For
example, it has helped states develop strategic plans, facilitated
opportunities for states to learn from their peers, and referred states to its
technical assistance partners for specialized assistance.
Page iii GAO-24-106258 Child Care
Contents
GAO Highlights i
Why GAO Did This Study i
What GAO Found ii
Letter 1
Background 4
Selected States Reported Making Investments and Program
Changes to Address Child Care Challenges, and Plan to
Sustain Some Changes Using Federal and State Funding 9
OCC Encouraged States to Use Supplemental Funding to Expand
Eligibility and Increase Provider Pay and Is Supporting State
Efforts to Sustain Some Changes 18
Agency Comments 24
Appendix I: Stabilization Grants 26
Appendix II: GAO Contact and Staff Acknowledgments 28
Figures
Example of New York State (NYS) Child Care Grant Opportunity
Notice ii
Figure 1: Annual and Supplemental Appropriations to the Child
Care and Development Fund, Including COVID-19-
Related Appropriations, Fiscal Years 2019–2023 8
Accessible data table for Figure 1: Annual and Supplemental
Appropriations to the Child Care and Development Fund,
Including COVID-19-Related Appropriations, Fiscal Years
2019–2023 (amounts in billions of dollars) 8
Figure 2: Example of New York State (NYS) Child Care Grant
Opportunity Notice 12
Figure 3: Example of New Mexico Child Care Eligibility Expansion
Notice 14
Page iv GAO-24-106258 Child Care
Abbreviations
ARPA American Rescue Plan Act of 2021
BLS Bureau of Labor Statistics
CCDF Child Care and Development Fund
CPI Consumer Price Index
CCAoA Child Care Aware of America
CRRSA Coronavirus Response and Relief Supplemental
Appropriations Act
FPG federal poverty guidelines
HHS Department of Health and Human Services
OCC Office of Child Care
NCSIA National Center on Subsidy Innovation and Accountability
SMI state median income
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Page v GAO-24-106258 Child Care
441 G St. N.W.
Washington, DC 20548
Letter
March 4, 2024
The Honorable Tammy Baldwin
Chair
The Honorable Shelley Moore Capito
Ranking Member
Subcommittee on Labor, Health and Human Services, Education, and
Related Agencies
Committee on Appropriations
United States Senate
The Honorable Robert B. Aderholt
Chair
The Honorable Rosa DeLauro
Ranking Member
Subcommittee on Labor, Health and Human Services, Education, and
Related Agencies
Committee on Appropriations
House of Representatives
The COVID-19 pandemic caused significant disruptions to the country’s
child care sector. The supply of available child care fell following
mandatory facility closures, and demand for care also fell when parents
lost jobs and no longer sought or could afford child care. At the same
time, the costs of providing child care increased due to added expenses,
such as personal protective equipment. These sector-wide disruptions
highlighted the critical role child care plays in supporting children,
families, and the overall economy, as well as the sector’s fragility. They
also exacerbated preexisting challenges such as the affordability and
availability of child care for families, and financial viability and staffing for
providers. As the overall economy started to re-open after the pandemic,
many of these challenges have persisted.
The Child Care and Development Fund (CCDF) is the largest federal
child care program. It provides funding to states aimed at improving the
affordability, availability, and quality of child care. In fiscal year 2019,
CCDF subsidies helped about 1.4 million eligible children and their
Page 1 GAO-24-106258 Child Care
Letter
families obtain affordable, quality child care each month, on average.1 In
2020 and 2021, Congress appropriated more than $52 billion in
supplemental funding for CCDF to help states respond to the COVID-19
pandemic.2 This was a substantial increase from the fiscal year 2019
CCDF appropriations of $8.2 billion.3 This influx of funds was intended to
stabilize the child care sector and promote access to affordable child care
for low-income families. It was also intended to allow states to invest in
quality improvements that benefit all children—including those who do not
receive subsidies. States had discretion in how to spend most of these
funds—$28.5 billion—while states awarded the remaining $24 billion in
stabilization grants directly to child care providers. Each supplemental
funding source has specific spending rules and deadlines for states to
obligate and expend funds.
House Appropriations Committee Report No. 117-96 includes a provision
for us to study states’ use of COVID-relief funding to identify long-term
strategies for improving the child care sector and supporting child care
businesses.4 This report examines (1) how selected states used
supplemental funding to implement long-term strategies that help address
preexisting challenges for families and providers, and (2) how the
Department of Health and Human Services’ (HHS) Office of Child Care
1These data are as of fiscal year 2019, the most recent year for which final data are
available from the Department of Health and Human Services (HHS). The 1.4 million
eligible children served are out of the estimated 8.7 million children eligible for child care
subsidies under state rules and the estimated 12.5 million children eligible for child care
subsidies under federal rule. A total of 2 million children were served on average each
month through all federal and state funding streams. Based on preliminary data, HHS has
noted that compared to 2019, the average monthly number of children served in 2020 with
CCDF funded subsidies increased modestly to an estimated 1.49 million children in an
average month.
2A supplemental appropriation is an act appropriating funds in addition to those already
provided in an annual appropriation act. Supplemental appropriations provide additional
budget authority usually in cases where the need for funds is considered too urgent to be
postponed until enactment of the next regular annual appropriation bill.
3Congress appropriated $52.5 billion in supplemental CCDF funds through the CARES
Act, enacted in 2020, the Coronavirus Response and Relief Supplemental Appropriations
(CRRSA) Act, 2021, and the American Rescue Plan Act (ARPA) of 2021. States had until
September 30, 2022, to obligate the $13.5 billion in CARES Act and CRRSA funding for
child care and had until September 30, 2023, to expend them. ARPA funding included $24
billion in child care stabilization funds and $15 billion in supplemental CCDF funds. States
had until September 30, 2022, to obligate the stabilization funds and had until September
30, 2023, to expend them. States had until September 30, 2023, to obligate the
supplemental CCDF funds and have until September 30, 2024, to expend them.
4H.R. Rep. No. 117-96, at 217 (2021).
Page 2 GAO-24-106258 Child Care
Letter
(OCC) supported states’ efforts to address challenges for families and
providers using pandemic-related funds.
To address these questions, we reviewed pertinent documentation and
conducted interviews. Specifically, we reviewed relevant federal laws,
policies, and guidance from OCC. Additionally, we reviewed selected
publications from two literature searches we conducted. One literature
search focused on preexisting challenges in the child care sector and the
other focused on states’ use of supplemental funding.5 We also
interviewed HHS officials and representatives from four organizations with
in-depth knowledge of the child care sector.6
We further conducted semistructured interviews with CCDF
administrators in a nongeneralizable selection of five states: Michigan,
Nevada, New Mexico, New York, and Tennessee. In these interviews we
asked questions about states’ experiences implementing long-term
program changes with COVID-19 funds and support they received from
OCC. We selected states that represented a variety of state
characteristics, including the states’ diversity in child care funding
amounts and geographic region. For the state selections, we further
considered information we gathered from national reports and interviews
with organizations with knowledge of child care issues, and searches of
information on states’ plans to implement long-term child care program
changes. For each selected state, we interviewed one or more
stakeholder organizations involved in the individual state’s use of
supplemental funding, as well as the OCC regional office officials that
provide support to the state.
We conducted this performance audit from September 2022 to March
2024 in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit to
obtain sufficient, appropriate evidence to provide a reasonable basis for
our findings and conclusions based on our audit objectives. We believe
5To identify existing scholarly, grey, and trade literature, we conducted searches of
various databases, such as Scopus, EBSCOhost, and ProQuest. From these searches,
we identified 29 relevant studies related to preexisting challenges in the child care sector
and states’ use of COVID-19 child care funding published between 2013 and 2023. We
performed these searches from April 2023 to June 2023.
6We interviewed HHS officials in the Office of Child Care, including regional office officials,
and the Office of the Assistant Secretary for Planning and Evaluation. We also interviewed
representatives from organizations that have published work on child care: the American
Public Human Services Association, the Center for American Progress, the Center for the
Study of Child Care Employment, and Child Care Aware of America (CCAoA).
Page 3 GAO-24-106258 Child Care
Letter
that the evidence obtained provides a reasonable basis for our findings
and conclusions based on our audit objectives.
Background
Preexisting Challenges in the Child Care Sector for
Families and Providers
Families
Affordability. HHS established a recommended benchmark indicating
that co-payments for families participating in CCDF, which vary based on
income and family size, should not exceed an upper threshold of 7
percent of a household’s income.7 The Department of Labor’s National
Database of Child Care Prices show that in 2018, median child care
prices for one child ranged from $4,810 to $15,417 annually depending
on provider type, child’s age, and county population size.8 These price
ranges are equivalent to between 8 to 19.3 percent of median family
income.9 Additionally, data from the Bureau of Labor Statistics (BLS)
show that child care has generally become more expensive for families
over time, outpacing inflation since 1992.10
7HHS established the 7 percent federal benchmark for affordable family co-payments in
the preamble to a final rule published in September 2016. Child Care and Development
Fund (CCDF) Program, 81 Fed. Reg. 67,438, 67,440 (Sept. 30, 2016). On July 13, 2023,
HHS’s Administration for Children and Families published a Notice of Proposed
Rulemaking that proposes to cap family co-payments for subsidized child care at 7
percent of a family’s income, among other changes. Improving Child Care Access,
Affordability, and Stability in the Child Care and Development Fund (CCDF), 88 Fed. Reg.
45,002, 45,027 (July 13, 2023).
8Liana Christin Landivar, Nikki L. Graf, and Giorleny Altamirano Rayo, Childcare Prices in
Local Areas: Initial Findings from the National Database of Childcare Prices, Women’s
Bureau Issue Brief (Washington, D.C.: U.S. Department of Labor, January 2023).
Adjusted to 2022 dollars, the annual median child care prices for one child ranged from
$5,357 to $17,171.
9Liana Christin Landivar, Nikki L. Graf, and Giorleny Altamirano Rayo, Childcare Prices in
Local Areas: Initial Findings from the National Database of Childcare Prices.
10Bureau of Labor Statistics, Consumer Price Index for All Urban Consumers: day care
and preschool, U.S. city average compared to all items in U.S. city average, seasonally
adjusted, accessed October 31, 2023,
https://beta.bls.gov/dataViewer/view/timeseries/CUSR0000SEEB03.
Page 4 GAO-24-106258 Child Care
Letter
Availability. According to a 2018 analysis by the Center for American
Progress, 51 percent of people in the U.S. live in an area with an
insufficient supply of licensed child care, referred to as a child care
desert.11 These data show that child care availability is especially low for
certain populations, including Hispanic or Latino families, rural families,
and those seeking care for infants or toddlers and during nontraditional
hours.12 While limited child care availability is more common in rural
areas, it also affects cities.
Providers
Financial viability. According to a 2021 Treasury Department report,
most child care providers operate on narrow profit margins. The report
notes that even 1 or 2 months without full enrollment can erase profits for
some child care providers, making it difficult for them to withstand
enrollment fluctuations.13 Monthly enrollment fluctuations can challenge
providers’ ability to pay fixed costs necessary to stay in business, like rent
or mortgage payments. The report also notes that a large share of the
typical facility’s costs goes toward paying child care workers’ wages—
which, as discussed below, sometimes do not reflect the labor-intensive
work of caring for young children. A recent report from the National
Center on Subsidy Innovation and Accountability (NCSIA) found that
personnel expenses typically made up 70 to 80 percent of the overall cost
of care.14 According to OCC officials, providers are often unable to charge
families for the true cost of providing quality care because many families
cannot afford it.
11R. Malik et al., America’s Child Care Deserts in 2018, (Washington, D.C.: Center for
American Progress, December 2018). For purposes of its analysis, the Center for
American Progress defined a child care desert as a census tract with more than 50
children under age 5 that contained either no child care providers or so few options that
there were more than three times as many children as licensed child care slots. Officials
from stakeholder organizations and state and federal child care officials we interviewed
often used this term when describing challenges with child care availability.
12R. Malik et al., America’s Child Care Deserts in 2018.
13Department of the Treasury, The Economics of Child Care Supply in the United States
(Washington, D.C.: September 2021).
14The National Center on Subsidy Innovation and Accountability, Guidance on Estimating
and Reporting the Costs of Child Care (Rockville, MD: June 2023). NCSIA provides
technical assistance to Child Care and Development Fund programs in developing child
care subsidy systems that are child focused, family friendly, and fair to providers.
Page 5 GAO-24-106258 Child Care
Letter
Workforce. Child care workers tend to receive low wages. The Center for
the Study of Child Care Employment found that in 2019, prior to the start
of the COVID-19 pandemic, child care workers were one of the lowest-
paid occupations nationwide.15 According to its analysis, the median
hourly wage for child care workers was less than $12 in 2019. According
to the recent Treasury Department report, low compensation led many
child care workers to rely on public benefits to meet their economic
needs.16 Low wages have also been found to contribute to high rates of
turnover in the child care sector.17 Each of the five state CCDF
administrators we interviewed cited workforce issues, including
recruitment and retention, as key challenges that were exacerbated by
the COVID-19 pandemic.
Child Care and Development Fund
CCDF is the largest federal child care program, providing grants to states
which are used to subsidize the child care expenses of low-income
families with children under age 13.18 In addition to subsidizing child care,
states use CCDF grants for activities intended to improve the overall
quality and supply of child care for all families. HHS’s Office of Child Care
administers CCDF at the federal level and provides guidance and
technical assistance to states on how to operate their subsidy programs.
Under CCDF, states have substantial flexibility in the design and
operation of their child care programs. Although states must abide by
certain federal parameters, they have broad authority to set income
eligibility limits and provider payment rates, determine whether providers
are reimbursed based on child enrollment or attendance, and set family
co-payment amounts, among other policies.
As we have previously reported, a long-standing gap exists between the
number of low-income working families who could benefit from child care
15Center for the Study of Child Care Employment, University of California, Berkeley, Early
Childhood Workforce Index – 2020 (Berkeley, CA: 2021).
16Department of the Treasury, The Economics of Child Care Supply in the United States.
17Department of the Treasury, The Economics of Child Care Supply in the United States.
18In addition to states, CCDF provides grants, including COVID-19 supplemental funding,
to territories and tribes. For purposes of this report, we focused on states.
Page 6 GAO-24-106258 Child Care
Letter
subsidies, and the number who actually receive them.19 Most recently, we
found that in fiscal year 2019, 2 million of the estimated 12.5 million
children eligible under federal rules and estimated 8.7 million eligible
under their state’s rules received subsidies on average each month. This
represents 16 percent of children eligible under federal rules and 23
percent eligible under their state’s rules.20
In fiscal years 2020 and 2021, Congress appropriated over $52 billion for
CCDF to help states prevent, prepare for, and respond to the COVID-19
pandemic. Each new funding source—the CARES Act, the Coronavirus
Response and Relief Supplemental Appropriations (CRRSA) Act of 2021,
and the American Rescue Plan Act (ARPA) of 2021—came with its own
rules and deadlines for states to obligate and expend funds. Each law
also provided states with additional programmatic flexibilities. Over half of
the funding, $28.5 billion, was provided to states to use as supplemental
CCDF funding, while $24 billion was provided to states to award directly
to providers as stabilization grants.21 Apart from supplemental CCDF
funding, annual CCDF appropriations increased 42 percent from fiscal
year 2019 to fiscal year 2023, from approximately $8.18 billion to $11.57
billion (see fig. 1).22
19GAO, Child Care: Subsidy Eligibility and Receipt, and Wait Lists, GAO-21-245R
(Washington, D.C.: February 2021); Child Care and Development Fund: Subsidy Receipt
and Plans for New Funds, GAO-19-222R (Washington, D.C.: February 2019); and Child
Care: Access to Subsidies and Strategies to Manage Demand Vary Across States,
GAO-17-60 (Washington, D.C.: December 2016).
20GAO, Child Care: Subsidy Eligibility and Use in Fiscal Year 2019 and State Program
Changes During the Pandemic, GAO-23-106073 (Washington, D.C.: March 2023).
21States could use up to 10 percent of stabilization grant funding to: administer subgrants,
provide technical assistance and support for applying for and accessing the subgrant
opportunity, publicize the availability of the subgrants, carry out activities to increase the
supply of child care, and provide technical assistance to help child care providers
implement policies. For more information on state and provider experiences with
administering these grants, see app. 1.
22CCDF is composed of two funding streams: discretionary funding authorized under the
Child Care and Development Block Grant Act of 1990, as amended, that is allocated to
states based on a statutory formula (42 U.S.C. § 9858m); and mandatory and matching
funding authorized under the Social Security Act (42 U.S.C. § 618). Additional sources of
federal funding for child care subsidies include Temporary Assistance for Needy Families
and the Social Services Block Grant. Discretionary funds must be obligated within 2 fiscal
years of being appropriated and spent within 3. Federal and state mandatory and
matching funds must be obligated within the fiscal year they were appropriated but do not
all have to be spent that same year.
Page 7 GAO-24-106258 Child Care
Letter
Figure 1: Annual and Supplemental Appropriations to the Child Care and
Development Fund, Including COVID-19-Related Appropriations, Fiscal Years 2019–
2023
Accessible data table for Figure 1: Annual and Supplemental Appropriations to the
Child Care and Development Fund, Including COVID-19-Related Appropriations,
Fiscal Years 2019–2023 (amounts in billions of dollars)
Fiscal year Child Care and Supplemental CCDF Stabilization Grant
Development Fund (CCDF) Funding Funding
2019 8.2 0.03
2020 8.7 3.5
2021 9.4 25 24
2022 9.7
2023 11.6 0.1
Source: Congressional Research Service. | GAO-24-106258
Notes: Supplemental CCDF funding includes $3.5 billion through the CARES Act, enacted in 2020;
$10 billion through the Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act
of 2021; and $15 billion through the American Rescue Plan Act (ARPA) of 2021. ARPA also included
$24 billion in stabilization grant funding that was allocated to states to award directly to child care
providers. This graphic shows the year that funds were appropriated to CCDF, but not the year they
were spent.
The supplemental funds were intended to stabilize the sector and
promote access to affordable child care for low-income families. Recent
data show that the child care sector has recovered somewhat since the
pandemic began. For example, BLS data showed that, as of November
2023, child care sector employment was about 3 percent below February
Page 8 GAO-24-106258 Child Care
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2020 employment levels, much higher than its low in April 2020.23
Because states still have time to expend a portion of their funds and
because of data reporting lags generally, a comprehensive accounting of
states’ spending and related outcomes will likely not be available until
2025 or 2026.24
Selected States Reported Making Investments
and Program Changes to Address Child Care
Challenges, and Plan to Sustain Some
Changes Using Federal and State Funding
Selected States Made Investments and Program
Changes to Expand Families’ Access and Enhance
Supports to Providers
State child care administrators in all five of our selected states reported
using supplemental funding to make investments and program changes
aimed at addressing challenges facing families and providers in a lasting
way. They also noted that not all changes would be sustainable without
additional funding.
Investments. State child care administrators reported spending
supplemental funding on a range of investments to enhance supports for
providers. These investments were generally directed at developing the
child care workforce, improving the quality of care, improving or
implementing information technology systems, and increasing the
available supply of child care slots.
· Developing the workforce. State administrators from some states we
interviewed used supplemental funding to invest in training and other
workforce development strategies. For example, New Mexico officials
reported providing stipends to college students studying early
childhood education and funded an online professional development
23BLS data for November 2023 were preliminary at the time of the analysis. In April 2020,
BLS data showed child care sector employment was 36 percent below February 2020
levels.
24The spending deadline for CARES, CRRSA, and ARPA stabilization grants was
September 30, 2023. States have until September 30, 2024, to expend ARPA
supplemental funds, which total $15 billion.
Page 9 GAO-24-106258 Child Care
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program for providers. Nevada established shared child care service
centers to offer providers supports, such as meeting space, according
to state officials. The Nevada officials, in partnership with public and
private stakeholders, also used funds to develop a written framework
intended to serve as a plan of action to support sustained investments
in Nevada’s early care and education workforce. One goal of the
framework was to create a pipeline to recruit and retain child care
workers by offering better pay, benefits, and career growth. Officials
described the framework as a step toward improving child care in
Nevada, with next steps including developing policy proposals and
expanding public awareness.
· Improving quality. State administrators we interviewed reported using
supplemental funding to improve the quality of the child care offered
by providers. For example, Nevada officials described developing
additional training for providers on its quality rating system, which is
used to assess and improve the quality of early childhood programs.
This training could improve individual child care programs and the
general quality of care across the state.25 Administrators in New York
and Tennessee also reported implementing projects intended to
improve the quality of care in their states. For example, in 2021, New
York allocated $35 million in ARPA funds, over 3 years, to enhance
QUALITYstarsNY, its rating and improvement system for early
childhood programs. To support program quality throughout the state,
QUALITYstarsNY informs guidance and direction provided to early
childhood programs and providers, classroom materials and
furnishings, and professional development opportunities.
· Improving technology. State administrators we interviewed reported
investing in projects to modernize and improve the technology
systems used by parents, providers, and state child care officials. For
example, New Mexico officials reported using some of the
supplemental funding for data system enhancements that allow
parents to apply for child care subsidies online. Tennessee officials
reported launching a project to improve providers’ access to
technology and technological literacy by offering training and
equipment. The state’s CCDF administrator said such improvements
could reduce their administrative burden by more efficiently
processing families’ subsidy applications. In addition, OCC regional
25A growing number of states use CCDF quality funds to create or support quality rating
and improvement systems. A quality rating and improvement system can be used to rate
providers against a set of measures selected to determine program quality, and higher
quality ratings can result in higher payment rates to providers.
Page 10 GAO-24-106258 Child Care
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office officials described efforts in Michigan and New York to explore
or implement major data system upgrades.
· Increasing supply. Each of the five selected states reported taking
steps to increase the number of available child care slots. New
Mexico state officials said they used supplemental funds to offer child
care supply building grants. The grants, which prioritized providers in
rural areas and other child care deserts, helped grantees make minor
facility renovations to expand the number of children they could
accommodate in areas that officials said would otherwise remain
underserved. Michigan used some supplemental funds to establish
the Caring for MI Future initiative in 2022. This initiative is a statewide
effort to help entrepreneurs interested in the child care industry open
new or expand existing child care programs in the state by the end of
2024.26 The initiative helps entrepreneurs find and upgrade space,
obtain startup funding, recruit staff, and create a business plan.
Officials reported that staff in Tennessee and Nevada partnered with
entities, such as state agencies or community development financial
institutions, to enhance child care providers’ access to financial support.
They said this support helped providers pay for capital improvements to
their businesses while complying with federal regulations that did not
allow CCDF funding to be used for certain purposes.27 A New York state
official said some of their state’s supplemental funding went toward
completing smaller initiatives, such as grant projects, to increase the
supply of child care slots (see fig. 2).
26Michigan’s state child care administrator reported that activities that fall under this
initiative may not continue due to lack of funding going forward. However, according to a
November 2023 update on the state agency’s website, Michigan opened 1,089 child care
programs since May 2022, surpassing its goal of opening 1,000 programs.
27According to CCDF regulations, states may not expend funds for the purchase,
construction, or permanent improvement of any building or facility. However, funds may be
expended for minor remodeling, and for upgrading child care facilities to ensure that
providers meet state and local child care standards, including applicable health and safety
requirements. 45 C.F.R. § 98.56(b)(1).
Page 11 GAO-24-106258 Child Care
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Figure 2: Example of New York State (NYS) Child Care Grant Opportunity Notice
Program changes for families. Child care administrators in our selected
states reported using supplemental funding to support changes to their
state CCDF programs’ rules and requirements. According to officials,
Page 12 GAO-24-106258 Child Care
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program changes targeted at families focused on expanding eligibility for
child care subsidies and limiting family co-payments. Specifically:
· Nevada officials reported increasing the maximum allowable income
level from 75 percent to 85 percent of state median income (SMI)—
the federal maximum.28
· Michigan increased families’ income eligibility for child care subsidies
by adjusting the maximum allowable income level from 160 percent of
the federal poverty guidelines (FPG) to 185 percent, then to 200
percent, according to a state official.29
· New Mexico increased the maximum allowable income level from 200
percent to 400 percent of FPG.30 The state also capped family co-
pays at 5 percent of family income, reducing this expense for families
receiving subsidies (see fig. 3). According to OCC officials, New
Mexico uses non-CCDF state dollars to pay subsidies for families
above 85 percent of state median income.
28Under federal law, for a child to be eligible to receive subsidies, their family income must
be at or below 85 percent of the state median income (SMI) and family assets cannot
exceed $1 million. State child care agencies have the flexibility to set the maximum
income for eligibility as long as it does not exceed 85 percent of SMI.
29According to a Michigan state official, the Governor’s budget proposed keeping the 200
percent FPG in place moving forward. HHS uses the official poverty thresholds to update
the “federal poverty guidelines” (FPG) each year, which are the basis for determining
financial eligibility or funding distribution for certain federal programs. For 2023, the FPG
for a family of three was $24,860.
30This recent increase in income eligibility to 400 percent of the FPG covered over 80
percent of people in the state, according to New Mexico officials.
Page 13 GAO-24-106258 Child Care
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Figure 3: Example of New Mexico Child Care Eligibility Expansion Notice
· New York increased the maximum allowable income level from 200 to
300 percent of FPG, then to 85 percent SMI (up to approximately 360
Page 14 GAO-24-106258 Child Care
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percent of FPG), and capped family co-pays at 1 percent of family
income above the poverty threshold.31
Program changes for providers. Child care administrators in all of our
selected states reported making program changes to address low wages
for child care workers and profitability challenges for child care providers.
Specifically:
· A Michigan official said that on four separate occasions the state
increased the CCDF reimbursement rate it pays providers to care for
children receiving subsidies (i.e., the state’s provider payment rate).
The Governor’s 2024 budget proposes maintaining payment rates at
the highest level, according to the official.
· Nevada officials reported that the state started reimbursing providers
an amount equal to or greater than the 95th percentile of the amount
determined by its market rate survey.32 The state previously
reimbursed providers at the 75th percentile, according to state
officials.
· New Mexico officials reported moving away from using a market rate
survey toward using a cost estimation model to set its provider
payment rates. According to state officials, this would increase overall
payment rates, and thus help providers continue paying workers their
current compensation rates, which had recently increased.33
31Stakeholders in New York reported that in the state, certain policies, such as parent co-
pays, were previously set by each individual county. This system, however, was modified
to establish a statewide standard. Counties still have discretion in certain eligibility areas,
but recent efforts have aimed to make the system more uniform across the state.
32States are required to conduct a market rate survey or an approved alternative
methodology when setting provider payment rates. 42 U.S.C. § 9858c(c)(4)(B). A market
rate survey examines fees that child care providers typically charge and that parents
typically pay. According to HHS, states conducting a market rate survey must conduct a
narrow cost analysis of the estimated cost of care in two areas: the cost of child care
providers’ implementation of health, safety, quality, and staffing requirements and the cost
of higher quality care as defined by the lead agency using a quality rating and
improvement system or other system of quality indicators, at each level of quality.
33A cost estimation model can be used to analyze and understand the costs for providers
to deliver care at different levels of quality for different ages of children. According to OCC,
the market rate (i.e., what private-pay families pay) is relatively low and does not reflect
the true cost of care because it is based on what providers determine families can afford.
Page 15 GAO-24-106258 Child Care
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· New York raised its provider payment rates from the 69th to the 80th
percentile of current child care market rates.34
· Tennessee officials reported raising the state’s provider payment
rates by nearly 20 percent across-the-board in July 2022.35
Child care administrators in some of the selected states also reported
supporting providers by making policies around absences of CCDF-
supported children more flexible. Specifically, officials in Michigan and
Nevada reported that they began paying providers based on the number
of children receiving CCDF subsidies who were enrolled in the provider’s
care. These states previously paid providers based on each child’s daily
attendance, according to officials, meaning that a provider would not be
paid for a child who was absent on any given day.36 New York state
regulations allow the state to pay a provider for up to 80 absences
annually, which state officials said effectively pays providers based on
enrollment rather than daily attendance.37
34The preamble to the final CCDF rule published in September 2016 reaffirmed the
agency’s longstanding position that setting payment rates at the 75th percentile of a
recent market rate survey remains an important benchmark for gauging equal access to
child care. (That is, HHS recommends that states set their payment rate ceiling at a level
that, on average, equals or exceeds the rate charged by three out of every four providers
who responded to the local market rate survey.) See Child Care and Development Fund
(CCDF) Program, 81 Fed. Reg. 67,438, 67,440 (Sept. 30, 2016). States must establish
provider payment rates for child care services that are sufficient to ensure equal access
for eligible children to comparable child care services provided to children whose families
are not eligible for subsidies. 42 U.S.C. § 9858c(c)(4)(A).
35Tennessee officials reported that this program change was supported by regular, annual
CCDF funding.
36Under existing CCDF regulations, lead agencies may pay CCDF subsidies based on a
child’s enrollment in a program rather than attendance. 45 C.F.R. § 98.45(l)(2)(i). Lead
agencies are required to support the fixed costs of providing child care services by
delinking subsidy payments from an eligible child’s occasional absences due to holidays
or unforeseen circumstances such as illness, to the extent practicable. 42 U.S.C. §
9858c(c)(2)(S)(ii).
37Typically, states pay providers based on how many days children receiving subsidies
attend their child care program. Conversely, private-paying families—those who do not
use subsidies—typically pay for care based on their child’s enrollment in a program,
including for days their children do not attend. We previously reported that selected state
administrators said that paying subsidy providers based on enrollment was critical in
helping to stabilize the child care sector, as it kept some providers from closing during
periods of fluctuating or low attendance. See GAO, Child Care: Subsidy Eligibility and Use
in Fiscal Year 2019 and State Program Changes During the Pandemic, GAO-23-106073
(Washington, D.C.: Mar. 29, 2023).
Page 16 GAO-24-106258 Child Care
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Selected States Plan to Sustain Some of Their Changes
Using State and Federal Funding
State child care administrators from the five selected states we
interviewed sought to be strategic in how they used the supplemental
CCDF funds to implement lasting changes. Officials generally said that
they would like to sustain program changes made during the pandemic,
and that sustainability was a key factor in their decision-making. However,
they noted that their ability to secure ongoing funding would affect the
degree to which they were able to maintain certain program changes
following the September 2024 expiration of the supplemental funding.
As of May 2023, officials in the five selected states are at varying stages
in securing ongoing funding for their changes. For example, Nevada
officials said that they would like to sustain expanded eligibility for families
and higher subsidy reimbursement rates for providers. They also said that
the state’s ability to sustain those approaches in the long-term remained
uncertain given its reliance on federal funding to support child care.
Tennessee officials, meanwhile, described focusing supplemental funding
on one-time investments (such as technology and training) and on pilot
programs that they could stop, if necessary, without causing disruptions in
care for families or providers. Conversely, in November 2022, New
Mexico residents voted in favor of a state constitutional amendment to
direct a portion of money in the state’s Land Grant Permanent Fund—
billions of dollars the state generates from fees it makes from oil and gas
development on the public land it holds in trust—to early care and
education. This funding is not a one-time infusion, but rather a steady,
long-term funding source for child care in the state. In New York, the
governor has announced a commitment to spend over $7 billion on child
care over 4 years to help maintain some program changes. A state official
in Michigan, meanwhile, reported that its state budget proposed using the
most recent increase in annual CCDF funding to maintain some of the
state’s program changes.38
State officials noted that the combination of supplemental funding and
strong state leadership commitment enabled them to take meaningful
steps toward addressing preexisting child care sector challenges. In
addition, state officials and stakeholders said that pandemic-funded
programs helped increase public awareness about the importance of child
38As mentioned above, annual CCDF appropriations increased 42 percent from fiscal year
2019 to fiscal year 2023, from approximately $8.18 billion to $11.57 billion.
Page 17 GAO-24-106258 Child Care
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care and informed what is possible with a larger public investment. While
acknowledging that the expiration of supplemental funding would impact
their ability to maintain program changes, officials reported increasing
their dialogue with policymakers in an attempt to maintain robust public
investment in child care in the future.
OCC Encouraged States to Use Supplemental
Funding to Expand Eligibility and Increase
Provider Pay and Is Supporting State Efforts to
Sustain Some Changes
OCC Encouraged States to Make Program Changes,
Such as Expanding Subsidy Eligibility and Increasing
Provider Payment Rates to Address Preexisting
Challenges
After each of the COVID-19 relief laws was enacted, OCC issued
guidance to states on how they could use the supplemental CCDF
funding to address challenges in the child care sector.39 Through its
guidance, OCC strongly encouraged states to obligate supplemental
funding deliberately, but also quickly, to address immediate needs and
meet statutory spending deadlines. In particular, OCC strongly
encouraged states to defray child care costs for families and provide
timely financial relief to child care providers.
Families. OCC encouraged states to support families by addressing the
high cost of care and other barriers to access. OCC recommended that
states increase families’ income ceilings to expand eligibility for child care
subsidies and reduce families’ co-pay amounts. OCC further encouraged
states to broaden their definition of “qualifying activities”—which a child’s
parents must engage in to receive subsidies—to include parents who are
looking for work.40 For example, Tennessee recently added job seekers to
their list of those eligible for CCDF subsidies, according to state officials.
OCC also strongly encouraged states to use funds to reach out to families
39States design and operate their CCDF programs at their discretion, within federal
guidelines.
40Qualifying activities also include parents working or participating in an education or
training program.
Page 18 GAO-24-106258 Child Care
Letter
that had not previously participated in the child care subsidy program,
focusing specifically on underserved populations. For example, New York
shared information on billboards, radio, and social media about the state
program’s increased income ceiling that made more families eligible for
child care subsidies, according to state officials.
OCC also strongly encouraged states to use supplemental funds to build
the supply of child care slots for underserved populations, which can help
address child care deserts by
· funding staffed family child care networks,41
· providing grants to cover startup costs for new child care providers,
and
· offering bonuses to providers in underserved areas.
Providers. In addition to direct financial support to providers through
stabilization grants, OCC encouraged states to adjust their programs to
address child care providers’ long-standing challenges, including low
wages for workers and financial instability. For example:
· Increasing CCDF provider payment rates and worker wages. OCC
strongly recommended that states increase provider payment rates,
noting that most states are not paying rates that cover the true cost of
providing quality care.42 OCC also encouraged states to increase child
care worker wages. To increase CCDF provider payment rates and
worker wages, OCC officials provided information to states on
calculating CCDF provider payment rates using a cost-model method
instead of using the more common market-rate survey method.
According to OCC, cost-models estimate providers’ costs to set
41According to the Administration for Children and Families, family child care networks are
community-based programs that offer professional development and administrative
support to family child care providers and can help states maintain or augment the supply
of high-quality child care. States can support these networks through CCDF funding
dedicating to child care quality improvement. For more information on family child care
networks, see GAO, Family Child Care Networks: Actions Needed to Better Assess
Quality Improvement Efforts, GAO-23-105640 (Washington, D.C.: May 2023).
42OCC warned states that it would be difficult for most states to meet the Child Care and
Development Block Grant Act’s equal access requirement without significant increases to
their payment rates. OCC stated that as of September 2020, the vast majority of states
had provider payment rates that fell below the 75th percentile of their market rate survey.
Page 19 GAO-24-106258 Child Care
Letter
payment rates that reflect the “true cost of care.”43 Worker wages are
an important input into cost-models, given that wages are typically the
largest cost for providers. Therefore, states could help increase
wages for child care workers by setting a certain wage in their cost-
models. For example, New Mexico officials reported incorporating a
$15 per hour wage into the state child care program’s cost-model and
increasing its CCDF provider payment rates accordingly. However,
OCC noted a number of factors and challenges states have reported
weighing when considering moving to a cost-model method, including
increased costs. Our prior work has shown that if available funding for
CCDF remains the same, states may face challenges increasing, or
even maintaining, provider payment rates without decreasing the
number of children receiving subsidies.44
· Using grants and contracts. OCC strongly encouraged states to use a
portion of the supplemental CCDF funds to award grants to, and
contract directly with, providers for child care slots, rather than
exclusively using a voucher system. In a state’s voucher system, the
state gives CCDF funds directly to an eligible family (i.e., a voucher)
who can use the subsidy voucher at the provider of their choice.
According to OCC, direct CCDF grants and contracts can give
providers a more predictable funding stream, which can help maintain
the stability of the child care sector. OCC also highlighted that grants
and contracts could help increase the supply of child care slots for
underserved populations when the state uses CCDF to fund a few
slots or a whole classroom for this type of care.45 OCC also advised
states that they could increase child care worker’s wages using the
43OCC encourages states to move away from market rate surveys as part of their overall
strategy to set payment rates that reflect what they describe as the true cost of care.
According to OCC, the market rate (i.e., what private-pay families pay) does not reflect the
true cost of care because it is based on what providers determine families can afford.
OCC offers a “Provider Cost of Quality Calculator” to help states determine their cost-
model inputs.
44For more information, see GAO, Child Care: Multiple Factors Could Have Contributed to
the Recent Decline in the Number of Children Whose Families Receive Subsidies,
GAO-10-344 (Washington, D.C.: May 2010).
45According to OCC, these underserved populations include care for infants and toddlers,
and for parents who need care for their child during nontraditional hours, among others.
Page 20 GAO-24-106258 Child Care
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CCDF grants and contracts by stipulating a minimum wage in the
terms and conditions of their contracts.46
· Paying subsidies based on enrollment. OCC encouraged states to
pay providers based on a child’s enrollment in a child care program
rather than their attendance. As we noted earlier, some selected
states began basing their subsidy payments on enrollment during the
pandemic. According to OCC, an enrollment payment policy helps
ensure states’ CCDF payments to providers compensate providers for
fixed costs, such as staffing and facilities expenses, thus enhancing
their revenue stability. Two OCC regional offices conducted a webinar
for states to discuss this policy change and offered advice on program
integrity considerations (see text box).
46OCC encouraged states to increase the wages of child care workers to at least $15 per
hour and improve access to benefits such as health insurance. Additionally, OCC advised
states they could use the supplemental funding to provide direct bonuses and wage
supplements to providers.
Page 21 GAO-24-106258 Child Care
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Child Care and Development Fund (CCDF) Program Integrity
The substantial influx of funding for CCDF in response to the COVID-19 pandemic
heightened the need to ensure funding is used for its intended purposes. The Office of
Child Care (OCC) and states share responsibility for overseeing and protecting the
financial integrity of the CCDF program. Prior to the pandemic, we recommended that
OCC strengthen its oversight and monitoring of CCDF program integrity risks, including
those resulting in fraud and improper payments (see GAO-20-227). OCC agreed with
our recommendations and has addressed eight of nine recommendations to date. CCDF
has been designated as a program that is susceptible to significant improper payments,
as defined by the Office of Management and Budget. According to HHS officials, in fiscal
year 2023, the improper payment rate for CCDF was approximately 3.5 percent.
According to OCC officials, states have primarily used existing processes to monitor
program integrity risks for supplemental funding. In addition, OCC revised an existing
financial reporting form for states to submit data on their use of supplemental funds, and
officials stated that the annual CCDF improper payment rate would include both regular
and supplemental funding. OCC also partnered with the National Center on Subsidy
Innovation and Accountability (NCSIA) to conduct several webinars to help states
strengthen their program integrity practices. For example, in January 2023 OCC and
NCSIA conducted a webinar focused on creating a family friendly CCDF application
while maintaining program integrity. OCC also conducts site visits to collaborate with
states who need assistance addressing the root causes of improper payments.
The American Rescue Plan Act of 2021 allocated nearly $24 billion to support child care
providers through stabilization grants. These grants were a new type of funding for
providers and were available to providers that have not previously participated in the
CCDF subsidy system. Administrators in states we interviewed reported developing
ways to ensure providers were eligible for stabilization grant funding, such by as
comparing applicant information to their database of licensed providers. State
administrators also reported working to ensure that grants were spent on allowable
uses, such as rent and wages.
Selected state officials also reported plans to audit a sample of providers who received
stabilization grants. For example, New Mexico officials reported plans to audit 10
percent of stabilization grant recipients throughout the state. The results of those state-
led audits of providers who received stabilization grants are forthcoming.
Source: GAO. | GAO-24-106258
In addition to recommending that states take certain actions, OCC offered
technical assistance and facilitated information sharing among states.47
According to OCC officials, OCC did so in part to help states implement
OCC-recommended program changes made possible by the influx of
supplemental funding. OCC regional office officials we interviewed
47OCC funds and manages the Child Care Technical Assistance Network (CCTAN).
According to the CCTAN website (https://childcareta.acf.hhs.gov/), this system brings
together resources from OCC, the Office of Head Start, child care, and health partners to
build early childhood program capacity and promote consistent practices.
Page 22 GAO-24-106258 Child Care
Letter
described speaking with state officials during regular monthly calls to help
them address challenges as they arose. They also described hosting
quarterly meetings with all the states in their region to facilitate
information sharing. OCC further supported states by offering technical
assistance through various webinars.
OCC officials we interviewed said states used technical assistance
resources more extensively throughout the pandemic. According to OCC
officials, states most commonly sought help navigating the various
requirements associated with the funding provided by each COVID-19
relief law, including differences in allowable uses. For example, according
to officials, OCC informed states about the option to use CRRSA funding
to waive parent co-payments because of the law’s unique flexibilities.
However, according to OCC, many of the program changes made by
states were allowable under existing CCDF program flexibilities, which
would enable them to be continued after the supplemental funding
expires.
Selected states we interviewed reported that in general, OCC’s guidance
and technical assistance have helped them use supplemental funding to
address challenges in the child care sector. For example, state officials
we interviewed said OCC’s regional offices helped their states improve
their subsidy and stabilization grant application processes. However,
officials in one state reported process delays because they needed to ask
OCC for additional policy guidance and wait for a response. Officials in
another state said they would like for OCC to have a greater focus on
sustainability and create a list of strategies other states have used that
have been successful. According to OCC officials, they provided
examples of promising practices to states in response to their specific
requests for technical assistance.
OCC Is Supporting State Efforts to Sustain Some
Program Changes After Supplemental Funding Expires
OCC officials acknowledged that the upcoming deadline for states to
expend the remaining supplemental funding would have implications for
the sustainability of certain state program changes. To help states sustain
some of their efforts, OCC officials told us they were supporting states
with strategic planning, networking opportunities, and technical
assistance.
Page 23 GAO-24-106258 Child Care
Letter
Strategic planning. OCC reported helping some states develop strategic
plans to guide their long-term efforts. This included helping states select
which program changes, precipitated by the influx of supplemental
funding, would be sustained. For example, OCC officials from one
regional office described helping states in their region assess their
various initiatives so they could determine which program changes, if any,
could be sustained when supplemental funding expires. OCC also
reported helping states sustain their recent program changes by advising
on policy around what was allowable with regular CCDF funds, what
could be supported by general state funds, and where flexibilities existed
within CCDF regulations.
Networking opportunities. OCC also reported setting up networking
opportunities for states to share information with each other about
strategies to sustain program changes and increase the supply of child
care. For example, officials from one OCC regional office reported that
during their monthly call with states, OCC officials shared how Tennessee
awarded a grant to a company to help build an onsite child care facility to
serve its employees. OCC officials described how state officials from
Tennessee held an informational fair to help the company’s employees
determine their eligibility for CCDF subsidies. Regional office officials said
they would support other states developing similar initiatives across their
region.
Technical assistance referrals. OCC officials told us they were referring
states to its partners within their Technical Assistance Network to help
states manage their programs and sustain recent changes. For example,
NCSIA maintains a tool that states can use to determine sustainable
provider payment rates given anticipated funding levels. OCC also
reported working with NCSIA to assist a state with adding child care
workers to its list of essential workers, allowing them easier access to
child care subsidies.
Agency Comments
We provided a draft of this report to HHS for review and comment. HHS
provided technical comments, which we incorporated as appropriate.
Page 24 GAO-24-106258 Child Care
Letter
We are sending copies of this report to the appropriate congressional
committees, the Secretary of HHS, and other interested parties. In
addition, the report is available at no charge on the GAO website at
http://www.gao.gov.
If you or your staff have any questions about this report, please contact
me at (202) 512-7215 or larink@gao.gov. Contact points for our Offices of
Congressional Relations and Public Affairs may be found on the last page
of this report. GAO staff who made key contributions to this report are
listed in appendix II.
Kathryn A. Larin, Director
Education, Workforce, and Income Security Issues
Page 25 GAO-24-106258 Child Care
Appendix I: Stabilization Grants
Appendix I: Stabilization Grants
Nearly half of the supplemental COVID-19 funding for child care
(approximately $24 billion) was allocated to states by the American
Rescue Plan Act of 2021 to award directly to child care providers. The
purpose of these grants was to support the stability of the child care
sector during and after the COVID-19 pandemic. Providers had wide
discretion to determine how best to use these funds, including on
personnel costs; rent or mortgage payments; insurance; facility
maintenance and improvements; training and professional development
related to health and safety practices; and mental health supports for
children and early educators. These grants were crucial to keeping the
child care sector afloat during a particularly difficult time, according to
federal Office of Child Care officials. States had until September 30,
2022, to obligate the stabilization funds and had until September 30,
2023, to expend them.
State discretion in designing stabilization grant programs led to variation
in stabilization grant application processes, according to officials from
Child Care Aware of America (CCAoA). These officials said some states
did a better job than others at issuing grants to a wide variety of child care
providers. For example, some states did not initially consider that family-
based child care providers may not have the same level of business
acumen, language ability, and access to information as center-based
providers. This led to fewer family-based child care providers in these
states applying for and receiving stabilization grants. CCAoA officials also
said that some states recognized that they had not done a good job of
reaching family-based child care providers in earlier rounds of grants and
began providing technical assistance specifically to these providers to
help them apply for funding.
State officials we interviewed in selected states said creating applications,
vetting providers, and distributing stabilization grants in a timely manner
was difficult. Officials in all five states described working with outside
organizations during the stabilization grant process. For example, two
states worked with outside organizations to ensure their process for
distributing stabilization grants was equitable. Officials from one of these
outside organizations we interviewed described working in partnership
with state officials to develop a formula to determine how much money
providers would receive with an eye toward equity. These organization
officials also described taking actions to increase the number of providers
Page 26 GAO-24-106258 Child Care
Appendix I: Stabilization Grants
applying for stabilization grants and to communicate with providers about
the tax implications of receiving grants. Specifically, one of the
organizations reported using an accountant who specialized in early
childhood to create informational materials for providers that would help
prepare them for the potential tax implications of receiving a grant.
All five selected states we interviewed described issuing grants in multiple
rounds, and one state official we interviewed said their state streamlined
its application after the first round. Specifically, one state official described
issuing three rounds of funding, using a different application process for
providers each time. State officials described the first round as a
competitive grant application, in which providers submitted their business
and marketing plans, and a committee reviewed and graded the
applications based on a rubric. For later rounds, state officials said they
streamlined the grant application process.
A representative of one provider we interviewed who received a
stabilization grant described the grant amount as significant, and said the
grant was the most flexible the provider had ever received. The
representative said that the provider used the grant to give raises to
workers, add a shade structure to the playground, purchase additional
kitchen equipment, and pay for professional development conferences for
staff. The provider representative said that despite the grant, the center
still had fewer child care slots available than prior to the pandemic.
Page 27 GAO-24-106258 Child Care
Appendix II: GAO Contact and Staff
Acknowledgments
Appendix II: GAO Contact and
Staff Acknowledgments
GAO Contact
Kathy A. Larin, (202) 512-7215 or LarinK@gao.gov
Staff Acknowledgments
In addition to the contact named above, the following staff members
made key contributions to this report: Danielle Giese (Assistant Director),
Lauren Mosteller (Analyst in Charge), Kelly Snow, and Colson
Sutherland. Also contributing to this report were MacKenzie Cooper, Holly
Dye, Kelsey Kreider, Lydie Loth, Dan Luo, James Rebbe, Ronni
Schwartz, Lindsay Shapray, Amber Sinclair, Almeta Spencer, and Curtia
Taylor.
Page 28 GAO-24-106258 Child Care
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Washington, DC 20548
File and source
- File
- child-care-selected-states-are-taking-steps-to-sustain-program-changes-implement.pdf
- Size
- 1,686,387 bytes
- SHA-256
- 24e1b45a8e08316b00e97a6baf7daf233bf8c31c75da00e19a369a9e57ff6650
- Original
- www.gao.gov