Biden Administration Releases $39 Billion from American Rescue Plan to Address Child Care Crisis

The Biden Administration has recognized that the availability of affordable child care is the essential grease to the economy’s gears. The White House has issued a fact sheet detailing $39 billion in American Rescue Plan funding to states “to rescue the child care industry so the economy can recover”© Karen Rubin/news-photos-features.com

The Biden Administration has recognized that the availability of affordable child care is the essential grease to the economy’s gears. The White House has issued a fact sheet detailing $39 billion in American Rescue Plan funding “to rescue the child care industry so the economy can recover”:

Today, the Biden Administration is announcing the release of $39 billion of American Rescue Plan funds to states, territories, and tribes to address the child care crisis caused by COVID-19. These funds will help early childhood educators and family child care providers keep their doors open. These providers have been on the frontlines caring for the children of essential workers and support parents, especially mothers, who want to get back to work. These funds are a critical step to pave the way for a strong economic recovery and a more equitable future.

Over the past 40 years, as more women entered the labor force and brought home larger paychecks, they have driven 91 percent of the income gains experienced by middle-class families. But, since the start of the COVID-19 public health emergency, roughly 2 million women have left the labor force, disproportionately due to caregiving needs and undoing decades of progress improving women’s labor force participation rate. Even as many fathers have returned to work, mothers, especially those without a four-year college degree, have not done so at similar rates. As a result, the gender earnings gap is predicted to increase by 5 percentage points in this recession, hurting our families and economy. As women work to regain employment, families with young children, and especially families of color where mothers are more likely to be sole or primary breadwinners, may face financial burdens for years to come. Parents need access to safe, quality child care to get back to work.

Source: Pandemic pushes mothers of young children out of the labor force | Federal Reserve Bank of Minneapolis (minneapolisfed.org)

 
At the same time, early childhood and child care providers – nearly all small businesses, overwhelmingly owned by women and disproportionately owned by people of color – have been hit hard by the pandemic and are struggling to continue to provide essential services. Providers have faced decreasing revenues due to lower enrollment while also shouldering higher expenses – 47 percent higher by one estimate – for personal protective equipment (PPE), sanitation, additional staff, and other needs to operate safely. They were already operating on extremely thin margins before the pandemic. According to one survey, as of December, about one in four child care providers open at the start of the pandemic were closed, hindering access to care, especially for families of color. These closures exacerbated access challenges that existed before the pandemic when half of all Americans lived in a child care desert. Child care providers who have stayed open have gone to enormous lengths to do so: two in five providers report taking on debt for their programs using personal credit cards to pay for increased costs and three in five work in programs that have reduced expenses through layoffs, furloughs, or pay cuts. One in six child care jobs, generally held by women of color, still haven’t come back – much more than the one in twenty jobs that have been lost throughout the economy. 

That is why President Biden prioritized addressing the child care crisis caused by COVID-19 as part of the American Rescue Plan. Today’s $39 billion funding release will provide a lifeline to hundreds of thousands of childcare providers and early childhood educators, provide a safe and healthy learning environment for more than 5 million children, and help parents, especially mothers, get back to work. States, tribes, and territories can use these funds to:

  • Help hundreds of thousands child care centers and family child care providers, which are mostly very small businesses, stay open or reopen including by making rent or mortgage payments, helping with utility or insurance bills, maintaining or improving facilities, and paying off debt incurred during the pandemic.
  • Support providers with funds to enable safe and healthy learning environments for more than 5 million of children, including by purchasing masks, implementing physical distancing, improving ventilation, and cleaning consistently, so both centers and family providers can comply with CDC’s Guidance for Operating Child Care Programs during COVID-19. This funding complements the President’s efforts to prioritize early childhood educators for vaccination – child care workers remain eligible for vaccinations and nearly 80 percent of the educators who work with children from birth to 12th grade received at least their first shot of a COVID-19 vaccine during the month of March. Providers can also use these funds to support the mental health of both children and early educators so that they can meet any social and emotional needs exacerbated by the pandemic as centers reopen and parents go back to work.
  • Keep child care workers, disproportionately women of color and immigrants, on the payroll and rehire those who have been laid off. Child care workers are essential to meeting the child care needs of families and providing quality are to children, but providers have been forced to lay off, furlough, or reduce pay of workers to survive – exacerbating issues faced by a workforce that has long faced low pay and high turnover. Providers can use these funds to keep workers on payroll, rehire laid off workers and recruit new workers, and increase the pay and benefits of child care workers and family child care providers.
  • Provide families with the greatest need access to affordable care. States, tribes, and territories can provide direct subsidies to more than 800,000 hard-pressed families earning below 85% state median income and families performing essential work, to help cover the cost of care.
  • Start to lay the foundation for a stronger child care system, so families can access the high-quality care they need. As states, tribes, and territories address the immediate crisis, they can also make a down payment on President Biden’s commitment to a stronger, more equitable early childhood education system. For example, states, tribes, and territories can set reimbursement rates at a level that will help children receive high-quality care and can increase access to care, including on the evenings and weekends when many essential workers need care. 

The American Rescue Plan also included an historic increase in support for child care through the tax code, helping millions of working families afford needed care. Last year, a family claiming a Child and Dependent Care Tax Credit (CDCTC) got less than $700 on average towards the cost of care, and many low-income working families often got nothing. Thanks to the historic expansion of the CDCTC in the American Recovery Plan, a median income family with two kids under age 13 will receive up to $8,000 towards their child care expenses when they file taxes for 2021, compared with a maximum of $1,200 previously.

  • In 2020, the CDCTC provides a tax credit typically capped at $600 for one child, for families with at least $3,000 in eligible expenses, and capped at $1,200 for two children or more for families with at least $6,000 in child care expenses.
  • Under the American Rescue Plan’s expansion of the CDCTC, all families with incomes below $125,000 will save up to half the cost of their eligible child care expenses, getting back up to $4,000 for one child and $8,000 for two or more children, when they file taxes for 2021. And, families making between $125,000 and $438,000 can receive a partial credit.
  • And for the first time, the CDCTC will be fully refundable, making the credit fairer by allowing low-income working families to receive the full value of the credit towards their eligible child care expenses regardless of how much they owe on their 2021 taxes.

In the coming weeks, the administration will release:

  • Guidance to states, tribes, and territories, while also providing technical assistance like webinars and peer-to-peer learning opportunities, to support states, tribes, and territories as they make historic investments in saving and rebuilding their child care systems, provide high-quality care to children, and get families back to work.
  • Frequently Asked Questions on the Child and Dependent Care Tax Credit to equip parents with the information they need to claim the credit next year.

Help from the American Rescue Plan is coming to states, territories, and tribes. The $39 billion will be provided through two funds: (1) $24 billion in child care stabilization funding for child care providers to reopen or stay open, provide safe and healthy learning environmentskeep workers on payroll, and provide mental health supports for educators and children, and (2) $15 billion in more flexible funding for states to make child care more affordable for more families, increase access to high-quality care for families receiving subsidies, increase compensation for early childhood workers, and meet other care needs in their states. A breakdown by state, tribe and territory is below.
 

 Child Care Development Fund Flexible FundingChild Care Stabilization FundingTotal
TOTAL            14,960,830,000                 23,975,000,000       38,935,830,000
STATES
Alabama                 281,637,028              451,360,337            732,997,365
Alaska                   28,288,483                45,336,010              73,624,493
Arizona                 372,151,615              596,421,853            968,573,468
Arkansas                 178,509,626              286,085,126            464,594,752
California              1,443,355,294           2,313,166,479         3,756,521,773
Colorado                 178,553,958              286,156,175           464,710,133
Connecticut                 106,000,358              169,879,499            275,879,857
Delaware                   41,652,009                66,752,817            108,404,826
District of Columbia                   24,860,559                39,842,313              64,702,872
Florida                 950,379,359           1,523,107,778         2,473,487,137
Georgia                 604,180,514              968,278,648         1,572,459,162
Hawaii                   49,850,222                79,891,531            129,741,753
Idaho                   86,458,222              138,560,660            225,018,882
Illinois                 496,853,094              796,272,357         1,293,125,451
Indiana                 337,076,458              540,209,308            877,285,766
Iowa                 141,985,752              227,550,820            369,536,572
Kansas                 133,466,378              213,897,405            347,363,783
Kentucky                 293,307,790              470,064,268            763,372,058
Louisiana                 296,835,564              475,717,989            772,553,553
Maine                   45,660,198                73,176,466            118,836,664
Maryland                 192,855,570              309,076,387            501,931,957
Massachusetts                 196,164,566              314,379,488           510,544,054
Michigan                 437,223,904              700,708,746         1,137,932,650
Minnesota                 202,291,045              324,197,976            526,489,021
Mississippi                 199,344,951              319,476,474            518,821,425
Missouri                 277,132,195              444,140,749            721,272,944
Montana                   42,477,481                68,075,745            110,553,226
Nebraska                   89,286,484              143,093,320            232,379,804
Nevada                 138,787,492              222,425,189            361,212,681
New Hampshire                   29,736,767                47,657,076              77,393,843
New Jersey                 266,779,051              427,548,476            694,327,527
New Mexico                 122,970,798              197,076,859            320,047,657
New York                 701,659,170           1,124,501,000         1,826,160,170
North Carolina                 502,777,789              805,767,459         1,308,545,248
North Dakota                   29,109,192                46,651,304              75,760,496
Ohio                 499,067,750              799,821,634         1,298,889,384
Oklahoma                 226,430,561              362,884,723            589,315,284
Oregon                 155,312,363              248,908,466            404,220,829
Pennsylvania                 454,791,980              728,863,896         1,183,655,876
Rhode Island                   35,723,344                57,251,352              92,974,696
South Carolina                 272,416,120              436,582,621            708,998,741
South Dakota                   38,618,949                61,891,939            100,510,888
Tennessee                 345,950,731              554,431,495            900,382,226
Texas              1,699,934,795           2,724,368,837         4,424,303,632
Utah                 163,100,176              261,389,459            424,489,635
Vermont                   18,302,749                29,332,561              47,635,310
Virginia                 304,876,959              488,605,381            793,482,340
Washington                 243,089,298              389,582,536            632,671,834
West Virginia                 100,070,363              160,375,904            260,446,267
Wisconsin                 222,761,422              357,004,444            579,765,866
Wyoming                   18,285,260                29,304,530              47,589,790
Totals for States 14,318,391,756 22,947,103,865 37,265,495,621
TERRITORIES
 Child Care Development Fund Flexible FundingChild Care Stabilization FundingTotal
American Samoa                   19,083,903                30,522,786              49,606,689
Guam                   27,498,602                43,981,253              71,479,855
Northern Mariana Islands                   13,934,049                22,286,113              36,220,162
Puerto Rico                 117,788,244              188,771,135            306,559,379
Virgin Islands                   14,433,446                23,084,848              37,518,294
Totals for Territories                 192,738,244 308,646,135 501,384,379
TRIBES


 
Child Care Development Fund Flexible FundingChild Care Stabilization FundingTotal
Tribes                 449,700,000               719,250,000         1,168,950,000
Totals for Tribes                 449,700,000              719,250,000         1,168,950,000