Technical Analysis of CARES ACT: Relief for Child Care Providers, Families and Individuals

In addition to the proven benefits to a child’s healthy development, quality child care is an essential pillar of America’s labor market and economy, allowing millions of parents to go to work or attend school each day. Under normal circumstances, child care providers already operate on razor-thin margins. The global COVID-19 crisis has hit the child care industry especially hard, causing widespread layoffs as a result of catastrophic drops in enrollment and mandatory closures. Extended closures during this time could put a substantial percentage of providers out of business permanently, exacerbating the prevalence of child care deserts. The devastating impact of these closures on families and the ripple effect for the economy cannot be overstated. At the same time, many child care facilities are being asked to remain open, operating on only a fraction of their income, in order to provide care in this time of incredible need and uncertainty.

As part of the relief provided to America’s families, small businesses, and major industries as they struggle with the effects of the COVID-19 crisis, federal stimulus efforts thus far have recognized the unique position of child care and has included assistance to young children, their families, and child care providers who care for them. Congress has passed three legislative packages in response to COVID-19, the focus of this document is on the largest package, “Phase III”. Specifically, this document pulls out provisions aimed at supporting young children, their families, and child care providers. As Congress considers additional steps to ensure America’s economic recovery, lawmakers must continue to include robust support for the child care industry that makes it possible for millions of parents to go to work each day.

Phase I – Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020

This $8.3 billion legislation included $20 million in additional Small Business Administration (SBA) Disaster Loans. Additionally, this legislation provided immediate funding for the domestic and global response to COVID-19.

Phase II – Families First Coronavirus Response Act

The Families First Coronavirus Response Act requires employers with fewer than 500 employees to provide paid sick and family leave. In return, employers and self-employed individuals are eligible for a refundable tax credit to offset the costs of such leave. The Act also expanded unemployment benefits and food assistance, including increased funding for the Special Supplemental Nutrition Program for Women, Infants, and Children program and offered greater flexibility for distributing food under the Child and Adult Care Food Program.

Phase III – Coronavirus Aid, Relief, and Economic Security Act or CARES Act

A $2.2 trillion economic stimulus bill that passed with near unanimous, bipartisan support in the House and Senate and was signed into law on March 27, 2020. The CARES Act is the primary focus of this resource.

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