NEW REPORT: The Positive Impact of Public Investment on Child Care and Beyond

The Center for American Progress (CAP) recently released a report on the impact of relief funding on early care and education programs and highlighted the importance of these investments.

Pandemic-Era Funding for Early Learning Programs Showcases One of the Most Important Investments the United States Can Make echoed the decades of research that shows how affordable, high-quality child care supports family well-being, financial stability, workforce participation, and children’s early social, emotional, and cognitive development.

Funds from the American Rescue Plan Act (ARPA) served as a lifeline for providers during the pandemic and demonstrated the power of public investment in the sector. The influx of temporary investments allowed states to make strides in expanding eligibility, increasing provider payment rates, improving educator compensation, and reducing waitlists. However, with the expiration of pandemic relief dollars, some states’  early care and education systems have returned to the instability of years past. ARPA funding showed what the sector can accomplish with sufficient resources. More than 80% of licensed providers received these funds in 2023, serving more than 225,000 programs and 9.6 million children. Many states used the money to address access and affordability. Efforts included: 

• Expanded Eligibility Limits
  • Georgia, Illinois, Indiana, Kansas, Michigan, New Hampshire, New Mexico, Virginia: Increased income eligibility for families or waived copayments, which lowered costs for over 700,000 children.
• Invested in Compensation
  • Connecticut and Nevada: Increased early educator wages
  • Alabama, Delaware, Georgia, Illinois, Kansas, Maine, Michigan, Montana, New Jersey, Oregon, Tennessee, and more: Provided recruitment/retention bonuses and employee benefits 
  • Overall these grants helped increase compensation for over 650,000 child care workers
• Streamlined Administrative Processes
  • New York, New Jersey, and several others: Adjusted payment rates
  • Tennessee: Provided digital hardware and technical assistance 
  • Maine and Utah: Facilitated licensure by providing grants for facilities improvements and fees
• Invested in Supply-Building Efforts
  • Kentucky: Provided startup grants for child care
  • Texas: Offered awards for opening programs in child care deserts
  • Pennsylvania: Created incentives for offering nontraditional-hour care
  • ARPA investments created an estimated 300,000 new child care slots. These investments in supply were especially beneficial for families who need the flexibility and affordability of home-based care.

While some states have made investments to sustain these policies, others have not dedicated increased funding towards their child care systems and are struggling to  meet the needs of families and providers. Federal policymakers must recognize that the child care system cannot right itself as the needs continue to outpace investment. CAP’s recommendations include addressing the limitations of and making sustained investments in existing programs, like CCDBG, and examining longer-term solutions that lower costs, support the workforce, build supply, reduce administrative burden, and invest in quality. 

While many states have made promising progress in recent years, without federal assistance the burden of maintaining child care sectors will fall to the states – this could lead to drastic variations across the country.