Child Care: Funding and Spending under Federal Block Grants

CRS Report for Congress
Child Care: Funding and Spending
under Federal Block Grants
Updated March 19, 2002
Melinda Gish
Analyst in Social Legislation
Domestic Social Policy Division


Congressional Research Service ˜ The Library of Congress

Child Care: Funding and Spending
Under Federal Block Grants
Summary
The welfare reform law of 1996 (P.L. 104-193) sharply increased federal child
care funding for low-income families, with the expectation that new work
requirements for welfare parents (most of whom were single mothers) would increase
demand for child care services. This additional funding was accompanied by the
creation of a unified and expanded Child Care and Development Block Grant
(CCDBG) program, with the aim of serving low-income families, regardless of
welfare status. The expanded program is financed through two funding streams
commonly referred to in combination as the Child Care and Development Fund
(CCDF).
CCDF appropriations in FY2002 from the two funding streams total $4.8 billion:
$2.7 billion in mandatory funding and $2.2 billion in discretionary funds (Figure 1).
The two funding streams fall under separate committee jurisdictions, and carry with
them different rules regarding allocation, state matching requirements, and time limits
for obligating and spending money. A portion of the mandatory funding is
“guaranteed” to states and is based on states’ spending on child care prior to the 1996
welfare law. In order for a state to be eligible for its share of the remaining
mandatory funds, which require state matching, the state must first spend a designated
amount (also based on historical spending) of its own state funds. Discretionary
CCDF funding is 100% federal (i.e., requires no state match) and is allocated
according to a different formula than either portion of mandatory funds. Both the
mandatory and the discretionary funding streams expire at the end of FY2002 and are
due to be reauthorized this year, the mandatory funding as part of welfare (TANF)
reauthorization.
Although the CCDF is the only federal grant program dedicated solely for the
purpose of providing child care subsidies and activities for low-income families, states
also are using two other federal block grants for this purpose: TANF and the Social
Services Block Grant (SSBG). States have increasingly used TANF dollars for child
care services within their TANF programs ($2.2 billion in FY2000) in addition to
transferring TANF funds to the CCDF. The TANF transfers to CCDF in FY2000
($2.4 billion) exceeded the discretionary funds appropriated for any single year so far.
Overall, expenditure data show that in FY2000, states spent more than $9 billion in
federal and state funds associated with the CCDF and TANF – more than double the
amount spent on child care via these programs in FY1997. SSBG expenditure data
are not available for FY2000, but states are reported to have spent almost $400
million in SSBG funds in FY1999 to support child care services.
As Congress decides how much funding to make available for child care, it will
need to consider multiple programs, and the various funding streams within them. It
is unclear whether the current level of child care funding via TANF and SSBG will be
sustained if the recent economic downturn gives rise to needs perceived to be more
pressing.



Contents
Introduction ................................................... 1
Overview of Child Care Changes in 1996 .............................2
Welfare (AFDC) Child Care Programs........................2
CCDBG ............................................... 2
How the 1996 Welfare Law Expanded Child Care Funds..........3
The Child Care and Development Fund (CCDF)........................5
“CCDF” v. “CCDBG”: What’s in a name?........................5
CCDF Funding Streams.......................................5
Mandatory Funding......................................5
Discretionary Funding....................................5
Time Limits on States for Obligating and Spending CCDF Funds....7
Additional Funding Sources: TANF and SSBG.........................9
TANF ................................................ 9
SSBG ................................................ 10
Analysis of Child Care Expenditures................................11
Overview of Child Care Spending Trends.........................12
What is the “Big Picture”?................................12
Trends in CCDF Spending ...................................13
CCDF Spending in FY2000...............................14
TANF Child Care Spending...................................16
Role of the TANF MOE in Calculating Child Care Spending......16
Trends in TANF Child Care Spending.......................16
CCDF Trends..........................................17
TANF Trends..........................................17
A Closer Look at FY2000................................22
Filling In the Big Picture.....................................27
Funding Issues in Reauthorization..............................27
List of Figures
Figure 1. Components of Child Care System Prior to 1996 Welfare Law......3
Figure 2. Time Limits for Obligation and Expenditure of CCDF by
Funding Type...............................................9
Figure 3. “The Big Picture” Child Care Spending Trends FY1992-FY2000
CCDF, TANF, and Predecessor Programs Combined................13
Figure 4. Child Care Spending Trends FY1992-2000 by type of funding
source ................................................... 27



List of Tables
Table 1. CCDF Appropriations (Mandatory and Discretionary)
FY1997-FY2002 ............................................ 7
Table 2. SSBG Appropriations and TANF Transfers....................11
Table 3. Total CCDF Expenditures by Funding Source FY1992-FY2000 ....14
Table 4. CCDF Expenditures Made in FY2000 by Funding Type and
Year of Funding Source......................................15
Table 5. TANF Child Care Spending FY1997-FY2000..................17
Table 6. Total CCDF Expenditures by State: FY1992-FY2000...........18
Table 7. TANF Child Care Expenditures.............................20
Table 8. FY2000 CCDF Expenditures by Fund........................23
Table 9. Computation of "Excess" TANF MOE Child Care Expenditures in
FY2000 .................................................. 25
Appendix A. FY2002 CCDF Allotments, by Funding Type...............29
Appendix B. Transfers from TANF to CCDF, cumulatively
(FY1997-FY2000) and for FY2000, by state (with percentages of
cumulative grants and FY2000 TANF grant)......................31
Appendix C. Total CCDF and TANF Child Care Expenditures by Funding
Source: FY1992-FY2000.....................................33
Acknowledgement
Special thanks to Gene Falk of the Congressional Research Service (CRS) for
his valuable comments and technical contributions to this report. Additional thanks
to CRS colleagues Vee Burke, Christine Devere, Tom Gabe, Carmen Solomon-Fears,
Karen Spar, and Emilie Stoltzfus for their comments, and Angela Harris for her
production assistance.



Child Care: Funding and Spending
Under Federal Block Grants
Introduction
The welfare reform law of 1996 (P.L. 104-193) provided an increase in federal
child care funding for low-income families, with the expectation that newly
implemented work requirements for welfare recipients (many being single mothers)
would create a greater demand for child care services. This additional funding was
accompanied by the creation of a unified and expanded Child Care and Development
Block Grant (CCDBG) program, with the aim of serving low-income families,
regardless of welfare status. The expanded program is financed through two funding
streams: one discretionary (authorized by the CCDBG Act), and one mandatory
(appropriated under Section 418 of the Social Security Act). These two funding
streams are commonly referred to in combination as the Child Care and Development
Fund (CCDF).
Since passage of the welfare law, states have spent increasing amounts of both
federal and state money on child care. (As will be discussed later, a portion of federal
mandatory funding to states is contingent on states spending some of their own state
funds on child care.) Although the CCDF is considered the primary source of federal
funding for child care subsidies for low-income working and welfare families, two
other federal block grants are contributing significantly to the child care funding
picture: the Temporary Assistance for Needy Families (TANF) block grant, and the
Social Services Block Grant (SSBG).
States use all three of these sources to help finance child care assistance for
families, but only the CCDF is dedicated solely for this purpose. The CCDF supports
child care subsidies and activities, and nothing else, whereas TANF and SSBG
provide a wide range of assistance, including child care.
This report focuses on the financing structure of the CCDF, actual expenditures
made from it, and the role of TANF and the SSBG in child care funding and spending.
Authorization for the discretionary portion of the CCDF and appropriations for both
the CCDF mandatory funds, as well as the TANF block grant, are due to expire at the
end of FY2002. Therefore, Congress is expected to confront child care financing
issues this year as part of both the child care and welfare reauthorizations. Debates
over the level of funding necessary for child care are already percolating, and although
the 1996 law consolidated several components of federal child care funding, the
financing structure remains complicated, potentially leading to calls for simplification.
Multiple CCDF funding streams (with different state funding and spending rules) fall
under different congressional committee jurisdictions, and comprise only a portion of
a complex child care financing picture.



Seeing the full picture also requires focusing on the degree to which TANF funds
contribute to child care expenditures. Recent TANF expenditure data show that
states are spending increasing amounts of TANF funds for child care services within
the TANF program ($2.2 billion in FY2000); however, the extent to which this will
continue during an economic downturn is an unanswered question for TANF and
child care state administrators alike. States also have the authority to transfer up to
30% of their annual TANF block grant to the CCDF and/or the SSBG (at a maximum
of 10%) for use under those programs’ rules, and as this report will discuss, many
states have done so.
Before examining these three sources of child care funding in greater detail, the
next section provides an overview of how changes made as part of the 1996 welfare
law affected child care programs and funding. The report concludes with an analysis
of trends in child care expenditures, both nationally and by state, and the implications
of the recent spending trends for reauthorization.
Overview of Child Care Changes in 1996
The current structure of federal child care programs and funding is more easily
understood by tracing its evolution from the system that existed prior to 1996, when
the welfare law simultaneously repealed, created, and consolidated child care
programs described below.
Welfare (AFDC) Child Care Programs. Before 1996, four separate federal
programs specifically supported child care for low-income families. Three were
associated with the cash welfare system. Families on welfare (then Aid to Families
with Dependent Children (AFDC)) were entitled to free child care. Families who had
left the AFDC rolls with employment were entitled to 12 months of “transitional”
subsidized child care. The third AFDC-related child care program targeted families
who, without a child care subsidy, would be “at risk” of qualifying for AFDC. These
three programs operated under three separate sets of rules, and targeted three
separate populations. Critics argued that mothers navigating their way through the
welfare system faced unnecessary complexity that could be alleviated with a more
unified child care program.
All three of the AFDC-related child care programs were funded with mandatory
money, and fell under the same congressional committee jurisdiction (Ways and
Means Committee in the House, and the Finance Committee in the Senate). AFDC
Child Care and Transitional Child Care were both open-ended federal entitlements
(i.e., there was no limit on program funding), with the federal share of payments to
states based on the state’s Medicaid matching rate. The AFDC At-risk program, on
the other hand, was not open-ended, but was instead authorized as a “capped
entitlement” to the states at an annual level of $300 million.
CCDBG. The fourth pre-1996 child care program for low-income families was
the Child Care and Development Block Grant (CCDBG). Established in 1990, it
supported child care for low-income families not connected to the AFDC welfare
system. The block grant subsidized child care for children under age 13 whose



working family income did not exceed 75% of state median income (SMI), adjusted
for family size. In addition, it provided funds for activities to improve the overall
quality and supply of child care for families in general. Unlike the AFDC-related
programs, the CCDBG was funded with discretionary funds appropriated as part of
the annual appropriations process. Authorizing legislation fell under the jurisdiction
of the Education and Labor Committee in the House (later renamed the Committee
on Education and the Workforce) and the Labor and Human Resources Committee
in the Senate (later renamed the Committee on Health, Education, Labor and
Pensions).
Figure 1. Components of Child Care System
Prior to 1996 Welfare Law
How the 1996 Welfare Law Expanded Child Care Funds. The 1996
welfare reform law (P.L. 104-193) repealed AFDC and its three associated child care
programs. Like cash welfare, child care was no longer to be an individual entitlement
to welfare families. Instead of preserving three separate programs, the new law
created a consolidated block of mandatory funding under Section 418 of the Social
Security Act. Like the earlier three programs, this new block of funding was designed
to be largely targeted toward families on, leaving, or at risk of receiving welfare (now
Temporary Assistance for Needy Families (TANF)).1 However, unlike the three


1 Section 418 of the Social Security Act requires that states spend at least 70% of their
mandatory child care funds on families receiving TANF assistance, families attempting to
transition from TANF to work, or those “at-risk” of welfare dependency. However, because
the at-risk group is not defined as a distinct group from other working poor families (the
targeted group for CCDBG discretionary funds), the 70% target could, in practice, be met by
spending all funds on low-income working families with no connection to TANF (i.e., the
requirement could be met by spending all of the “earmarked” funds on “at-risk” families).
(continued...)

AFDC-related child care programs, each of which was administered under its own set
of rules, the 1996 law instructed that the new mandatory funding be transferred to
each state’s lead agency managing the CCDBG, and be administered according to
CCDBG rules. The law appropriated $13.9 billion for this new child care block grant
over 6 years (up $4 billion from spending estimated by CBO under old law).
Committee jurisdiction for the mandatory funds remained with the House Ways and
Means and Senate Finance Committees.
In addition to creating the new block of mandatory child care funding, the 1996
welfare law reauthorized and amended the CCDBG. The 1996 law authorized
discretionary funding levels at $1 billion annually (the authorized “such sums as
necessary” for FY1995 had led to an appropriation of $935 million), and modified the
program rules, including an expansion of program eligibility (from 75% of SMI to
85% of SMI). The discretionary funding and the CCDBG program rules remained
under the same committees’ jurisdiction as before.
This combination of new mandatory funding and expanded CCDBG
discretionary funding is commonly referred to as the Child Care and Development
Fund (CCDF) and makes up the largest source of federal program funding ($4.8
billion in FY2002) appropriated solely for child care subsidies and child care activities
for low-income families.2 (States are required to spend no less than 4% of their
combined mandatory and discretionary CCDF allotments on activities to improve the
quality and availability of child care.) A more detailed explanation of the CCDF, its
funding streams, rules, and appropriations, is provided below.


1 (...continued)
National data on CCDF subsidy receipt by TANF status are not available.
2 Other federal programs and tax provisions related to child care, but not discussed in this
report, include Head Start, the 21st Century Learning Center Program, the Child and Adult
Care Food Program, the Dependent Care Tax Credit, and the Dependent Care Assistance
Program. For a description of these programs and recent funding levels, see CRS Reportth
RL30944, Child Care Issues in the 107 Congress, by Melinda Gish.

The Child Care and Development Fund (CCDF)
“CCDF” v. “CCDBG”: What’s in a name?
The “Child Care and Development Fund” (or “CCDF”) is a term that emerged
from the aforementioned consolidation and expansion of child care programs that
took place in 1996. This term does not appear anywhere in statute, but rather was
coined by the Department of Health and Human Services (HHS) to refer to the
combination of mandatory and discretionary funding provided to states for their use
in administering child care programs governed by the rules and regulations of the
CCDBG. Readers should note that while the “CCDF” is in essence a funding term,
it is not unusual for it to be used interchangeably with “CCDBG.” Nevertheless, from
a financing perspective, there are technical distinctions between these two acronyms,
which are noted in the following discussion of the multiple funding streams that
comprise the CCDF.
CCDF Funding Streams
Mandatory Funding. The mandatory funding component of the CCDF is
sometimes referred to as “entitlement” funding. This refers to an entitlement to
states, not individuals. Although the individual entitlement to child care was
eliminated in 1996, states remain entitled to a portion of federal funds for child care.
From specified annual block-granted amounts appropriated in Section 418 of the
Social Security Act (for FY1997-FY2002) as part of the 1996 law, each state receives
a fixed amount. That fixed amount is guaranteed, and equal to the funding received
by each respective state under the three earlier AFDC-child care related programs in
FY1994, FY1995, or the average of FY1992-FY1994, whichever is greatest. In other
words, states are entitled to receive this portion of federal funding without having to
“match” those dollars with any child care spending from their own state funds.
In order for a state to be eligible for its share of the remaining funds (also known
as “matching funds”), that state must first meet a “maintenance-of-effort (MOE)
requirement.” Meeting the MOE requires that a state expend at least the same
amount of state funds for child care as it did under its AFDC-related child care
programs in FY1995 or FY1994 (whichever was higher). Once a state’s child care
spending has reached that MOE level in the given year, it may begin to access its
share of the year’s remaining federal mandatory funds. States’ matching fund
allotments are determined after setting aside the “guaranteed” mandatory portion
described above, and are based upon each state’s relative share of children under age
13. Every dollar of state child care expenditures above the MOE amount is matched
at the state’s Medicaid matching rate, to the extent provided for by the state’s
allotment of federal matching funds.3
Discretionary Funding. The discretionary portion of the CCDF is authorized
by the Child Care and Development Block Grant Act (as amended in 1996). Actual
funding amounts are determined in the annual appropriations process. This portion


3 A table of state CCDF allotments for FY2002, by funding type, is found in Appendix A.

has sometimes been singled out as “the CCDBG funding” when referring to funding
trends over time, because prior to 1996, the discretionary child care funding was the
sole source of CCDBG funding. However, since 1996, the distinction between
discretionary and mandatory funds has not been so relevant from the programmatic
angle (since all CCDF money is directed to CCDBG programs), but rather from the
standpoint of differences in rules regarding the time limits that states have for
obligating and expending the different funding streams (discussed below) and state
matching requirements on those funds.
Discretionary funds are allocated among states according to the formula
contained in the original CCDBG Act of 1990 and retained in the amended act of
1996. That formula is based on each state’s share of children under age 5, its share
of children receiving free or reduced-price lunches, and its per capita income. Half
of 1% of the appropriated funds is reserved for payments to the territories, and
between 1% and 2% is reserved
for Indian tribes and tribal
How are States’ CCDF Allotments Determined? organizations. (CCDF
$ Mandatory “Guaranteed” Fundsallotments for FY2002
Each state receives a fixed amount, based oncategorized by funding type (i.e.,
its historic levels of AFDC-related child caremandatory, matching, and
spending.discretionary) are found in
$ Mandatory Federal Matching FundsAppendix A.) Discretionaryfunds do not require a state
Each state’s allotment is based on its relative
share of children under age 13. (MOEmatch. The CCDBG Act
requirement must be met in order to becurrently authorizes funding
eligible for matching funds.)through FY2002 at $1 billion
annually; however, actual
$ Discretionary Fundsappropriations have surpassed
Each state’s allotment is based on threethat level (up to $2.1 billion in
factors:
<Its share of children under age 5FY2002).
<Its share of children receiving free or
reduced-price lunchesFunding made available for
<Per capita incomeboth the discretionary and
mandatory portions of the CCDF
for each of FY1997 through
FY2002 are shown in Table 1. The second and third columns of the table distinguish
between advance and same year appropriations, with the fourth column showing the
total discretionary funding amount available for the given fiscal year. Readers should
note that the total amount shown as appropriated does not reflect all funds ultimately
made available for CCDF expenditures. As mentioned earlier in this report, states
may transfer a portion of their TANF allotments to the CCDF for expenditure under
that program, and have chosen to do so in varying degrees.



Table 1. CCDF Appropriations (Mandatory and Discretionary)
FY1997-FY2002
($ in millions)
Discretionary Funding
MandatoryAdvance
Fiscal(“Entitlement”)appropriation Same year’sAll available
yearfundingTotal from prior yearappropriationfunds for FY

1997 0 a 19 a 19 a 1,967 1,986a


1998 937 66 1,003 2,067 3,070
1999 1,000 0 1,000 2,167 3,167
2000 1,183 0 1,183 2,367 3,550
2001 1,183 817 2,000 2,567 4,567
2002 0 2,100 2,100 2,717 4,817
Source: Table prepared by the Congressional Research Service (CRS) using annual Health and
Human Services (HHS), Administration for Children and Families budget justifications.
a What appears in the table to be limited discretionary CCDF funding in FY1997, and consequently,
in total funding, actually reflects a shift to advance appropriating of funds for the following
fiscal year. The FY1997 appropriation law provided $956 million for CCDBG, with only $19
million available immediately during FY1997, and the remainder available on October 1, 1997
(the first day of FY1998). In earlier years the funds appropriated for CCDBG became
available for obligation only in the last month of the given fiscal year, and therefore most of
the appropriation for a given year ($935 million in FY1996) was actually obligated in the
following fiscal year.
Time Limits on States for Obligating and Spending CCDF Funds.
Specific and different rules govern time limits for obligating and spending CCDF
money, depending on the funding stream (Figure 2). First, what does it mean for a
state to “obligate” funds? Essentially, obligated CCDF funds reflect money that states
have committed to spend from their CCDF grant awards.4 CCDF regulations impose
some restrictions on state definitions of “obligations,” but generally leave discretion
to the states in defining what constitutes an obligation. Examples of obligations may
involve states “subgranting” funds to programs that operate independent of state
agencies (i.e., state-supervised county-run programs or private contractors) or making
transactions that require future payment for services. When the state actually makes
a payment for the service, an expenditure is recorded.
CCDF Discretionary Funds. States have 2 years in which to obligate
discretionary funds appropriated in a given fiscal year. States have an additional year
to actually spend the money (in other words, a total of 3 fiscal years from the time of
appropriation). For example, CCDF discretionary funding appropriated for FY2001


4 Note that the rules being discussed here regarding obligations and expenditures apply to
states, not the federal government. From the perspective of the federal budget, an
“obligation” instead refers to the CCDF grants awarded to states.

is available for obligation through the end of FY2002. States then have until the end
of FY2003 to actually make payments on those obligations. (They can, however,
make expenditures at any point within the 3-year period.) If a state fails to make
expenditures for all its obligations within the 3-year limit, HHS will take back that
portion of the grant award that is not spent.
CCDF Mandatory Funds. The deadlines for states to obligate and expend
mandatory funds differ from those for discretionary funds. (Different rules apply to
Indian tribes.)
!Mandatory “guaranteed” CCDF funds must be obligated by the end of the
fiscal year in which they are awarded, only if the state intends to qualify for
matching funds. If a state does not intend to qualify for matching funds, there
is no deadline for obligating funds. Regardless, there is no deadline for states
to expend these funds. As explained earlier, in order for a state to qualify for
federal matching funds, it must first meet a maintenance-of-effort (MOE)
requirement.
!MOE state funds must be obligated and expended within the fiscal year of the
grant award if the state is to become eligible to receive its share of federal
matching funds for that year.
!Matching funds (both the federal and state share) must be obligated within
the fiscal year of the grant award. A state then has an additional year to make
expenditures. In the event a state fails to expend its share of matching CCDF
funds by the end of the second fiscal year, HHS will take back the unmatched
portion of the federal grant award.
Figure 2 provides a pictorial representation of the varying time frames that states
have for obligating and expending funds from the various CCDF funding streams.
States’ flexibility to obligate and spend funds across years is of particular relevance
when analyzing CCDF expenditures over time, and will be addressed in more detail
later in this report. However, before analyzing those expenditures, both nationally
and by state, the following sections describe the role that two other federal block
grants (TANF and SSBG) play as additional funding sources for child care.



Figure 2. Time Limits for Obligation
and Expenditure of CCDF by Funding Type
Source: Figure prepared by the Congressional Research Service (CRS).
Additional Funding Sources: TANF and SSBG
As noted earlier, child care for low-income families is also supported by funds
from TANF and the SSBG. Although states are not required to use these funds for
child care, expenditure data indicate that these block grants are indeed supplementing
funds appropriated directly through the CCDF.
TANF. The welfare reform law provides fixed block grants ($16.5 billion
annually through FY2002) for state-designed programs of time-limited and work-
conditioned aid to families with children.5 Since its implementation, increasing
amounts of TANF funding have been used for supporting child care, both through
transfers to the CCDF, and by funding child care within the TANF system itself. As
mentioned earlier, states are permitted to transfer a combined total of 30% of their
annual TANF allotments to the CCDF and the SSBG (with a maximum limit of 10%
to the SSBG). Once transferred, the funds must be administered according to the rules


5 For detailed information on the TANF block grant’s financing structure and the rules that
apply to it, see CRS Report 30723, Welfare Reform: Federal Grants and Financing Rules
Under TANF, by Gene Falk.

of the program that receives them. TANF rules apply to funds that remain within the
TANF program.6
Over the course of FY1997-FY2000, states transferred a total of $6 billion from
TANF to the CCDF, representing over 9% of their TANF allotments awarded over
the 4-year period. The $2.4 billion of that total that was transferred in FY2000
represents 14% of states’ FY2000 TANF allotment. In other words, the amount
transferred from TANF to CCDF in FY2000 ($2.4 billion) exceeds the amount that
was appropriated directly in discretionary CCDF funds for FY2002 ($2.1 billion), or
any single fiscal year so far. For a state-by-state table showing cumulative amounts
of TANF funds transferred to the CCDF in FY1997-FY2000, and transfers made from
FY2000 allotments in FY2000, see Appendix B of this report.
Transferring funds to the CCDF is not the only channel through which states may
use TANF funding to support child care services for low-income families. TANF
funding can be used directly to pay for a variety of services that support work, and
child care is a prime example. In FY2000, states reported spending a total of $2.2
billion of federal TANF and related state funds on child care.7 Note that this is in
addition to the aforementioned TANF funds transferred to the CCDF for expenditure
under that program. (An analysis of trends in expenditures from both these funding
sources begins on page 13.)
SSBG. The SSBG is a flexible source of federal funds that states may use to8
support a variety of social services, including child care. States are entitled to a
specified allotment of funds, based on population size, and there is no state match
required for receipt of these federal funds. States have complete discretion over how
these funds are distributed and to whom. Restrictions are placed only on any funds
states opt to transfer from their TANF allotment to the SSBG. States have the
authority (through FY2002) to transfer up to 10% of their TANF allotment to the
SSBG. Any of these transferred funds must be used only for expenditures to assist
children and families whose income is less than 200% of the federal poverty
guidelines.


6 Most TANF program requirements for a family or the state (i.e., work requirements, time
limits, child support assignment) are triggered when TANF money is spent on “assistance,”
as defined by HHS in regulation. Whether a supportive service such as child care is classified
as assistance depends on the situation. For example, child care for a working person is not
assistance and would not trigger TANF requirements. However, child care provided to a
nonworking person, such as a cash welfare recipient in a training program, would be
categorized as “assistance” and would therefore trigger TANF requirements.
7 Not included in the $2.2 billion figure are any expenditures made by the states to meet the
TANF MOE requirement that could also be counted toward meeting the CCDF MOE
requirement. The treatment of state child care expenditures under TANF and CCDF, and the
potential of “double counting” certain state expenditures is discussed in greater detail later
in this report.
8 For more information on the SSBG see CRS Report 94-953, Social Services Block Grant
(Title XX of the Social Security Act) by Melinda Gish.

Over FY1997-FY2000, states have cumulatively transferred $3.9 billion (or 6%
of their TANF awards for the period) to the SSBG. However, unlike TANF transfers
to CCDF, a transfer to the SSBG is not necessarily subsequently spent on child care.
Nor are the funds that are directly appropriated for the SSBG required to be used for
child care. States use (at their own discretion) only a portion of all SSBG funds to
support child care services. The most recent HHS analysis of state-reported SSBG
expenditures reveals that in FY1999, 43 states spent a total of $397 million for child9
day care services, accounting for 13% of all FY1999 SSBG expenditures. This
represents a greater percentage of all SSBG expenditures than that made in FY1998,
when 46 states applied just over 9% ($279 million) of all SSBG expenditures toward
child day care services.
As shown in Table 2, funding appropriated directly to the SSBG has been
decreasing since 1997, with additional transfers from TANF hovering around $1
billion. (The amount transferred in FY2001 is not yet available.) Appropriations for
FY2002 were $1.700 billion, a decrease of $25 million from the prior year. The extent
to which FY2000 and FY2001 SSBG funding, in addition to any funds transferred
from TANF, has and will be used for child care expenditures is not yet known.
Table 2. SSBG Appropriations and TANF Transfers
($ in billions)
Fiscal yearAppropriationTransferred from TANF
19962.381not applicable
19972.5000.6
19982.2991.2
19991.9091.0
20001.7751.1
20011.725not available
20021.700not available
Source: Table prepared by the Congressional Research Service (CRS).
Analysis of Child Care Expenditures
This report has thus far focused on sources of child care funding, emphasizing
the amounts made available each year through federal block grants, and the rules that
apply to states for obligating and spending those funds. The next sections focus on
the data that show what amounts states have actually spent from year to year.
Following is an analysis of trends in actual child care expenditures using data available


9 U.S. Department of Health and Human Services; Administration for Children and Families,
Office of Community Services. Social Services Block Grant Program: Annual Report on
Expenditures and Recipients 1999. Washington. GPO, 2001.

from the CCDF, TANF, and their predecessor programs. (The limited information
available regarding the SSBG’s role in funding child care expenditures has already
been discussed in the preceding section.)
In this report, expenditures for a given fiscal year reflect expenditures made
within that given fiscal year, regardless of the year in which the funding was provided.
However, for FY2000, a breakdown of spending by year of funding source is also
provided. (Recall that as described earlier, states are afforded different time frames
for spending money from different funding streams.) With multiple funding sources
available, expenditure data help in answering the questions of how much states are
spending on child care for low-income families, via which programs, and in what time
frame.
Overview of Child Care Spending Trends
The following sections look at components of child care spending by program
(CCDF and TANF), and more specifically, by funding stream within a given specified
program. However, before doing so, it is useful to focus on the “big picture.”
What is the “Big Picture”? Child care expenditures made through the
CCDF and TANF programs have been growing steadily since the passage of the 1996
welfare law, and build on levels that were already increasing prior to that time. The
most recent available data indicate that in FY2000, combined child care expenditures
made from these two programs totaled over $9 billion – more than double the level
of expenditures made for child care via these same two programs in FY1997.
Expenditures from the CCDF (made from funds provided either directly through
the CCDF or from TANF transfers to the CCDF) represent the largest portion of that
child care spending, reaching over $7 billion in FY2000. Supplementing this were
over $2 billion in additional child care spending within the TANF system. Figure 3
displays the growth in spending for child care, showing combined expenditures from
CCDF and TANF (both federal and state shares) for FY1997-FY2000. For FY1992-
FY1996, the figure reflects expenditures made for AFDC-related child care programs
(both federal and state shares) and the CCDBG. The chart does not indicate which
programs and funding streams comprise what portion of each year’s spending. A
discussion of those breakdowns follows, starting with an analysis of CCDF
expenditures.



Figure 3. “The Big Picture” Child Care Spending Trends FY1992-
FY2000 CCDF, TANF, and Predecessor Programs Combined
($ in billions– includes federal and state shares)
10
9
8
7
6
5
4
3
2
1Expenditures ($ in billions)
0
1992 1993 1994 1995 1996 1997 1998 1999 2000
Fiscal Year
Source: Figure prepared by the Congressional Research Service (CRS) based on data provided by
the Department of Health and Human Services (HHS).
Note: For a breakdown of these expenditures by funding source, see Appendix C.
Trends in CCDF Spending
As described earlier, CCDF funding comes in both mandatory and discretionary
amounts. One portion of mandatory money is “guaranteed”; another portion of the
mandatory money is only available to states if they first meet an MOE requirement
(with state funds) and then provide additional state matching funds. No match applies
to the discretionary fund. Therefore, expenditure data for CCDF can be broken down
into those same categories: mandatory and discretionary, distinguishing between
federal and state contributions.
Table 3 shows the breakdown of CCDF (and predecessor program) expenditures
for FY1992-FY2000, by funding source. For FY1992-FY1996, the amounts shown
as federal CCDF mandatory “guaranteed” spending actually reflect federal
expenditures for AFDC-related child care spending. Why? Because the “guaranteed”
funding amounts for the CCDF are based on AFDC child care spending during this
period. Likewise, the MOE requirements established for the CCDF are based on the
state spending from the AFDC era, and are therefore included in the MOE column.
The CCDF federal matching money essentially represents “new” mandatory funding,
which states can only access by spending the required share of their own state funds.
Expenditures made from federal funds are shown in the first three columns of
expenditures, and those made from state funds are in the fourth and fifth columns.
The final column shows total expenditures made from the CCDF and its predecessor
programs in each year. The trend in total CCDF spending mirrors that of “the big
picture.” That is, total CCDF expenditures have grown each year.



Table 3. Total CCDF Expenditures by Funding Source
FY1992-FY2000
($ in millions)
Federal CCDF fundsState CCDF funds
TotalMandatory MatchingMatching
Fiscal CCDFDiscretionarya “guaranteed”b federal state
year spendingfunds funds share MOE share
1992 332 801 — 616 — 1,749
1993 675 890 — 662 — 2,227
1994 835 1,055 — 798 — 2,688
1995 832 1,235 — 950 — 3,017
1996 850 1,280 — 994 — 3,125
1997 1,009 986 552 945 416 3,909
1998 1,486 1,169 867 1,031 715 5,268
1999 2,583 1,165 882 1,018 636 6,283
2000 3,064 1,127 1,095 1,049 887 7,222
Source: Table prepared by the Congressional Research Service (CRS) based on data provided by the
Department of Health and Human Services (HHS).
Notes: Child care expenditures in the territories are excluded. Totals may not add due to rounding.
a Discretionary fund expenditures include spending from TANF transfers to CCDF.
b Expenditures made in FY1992-FY1996 from the federal share of AFDC-related child care
matching funds are included in the same column as the mandatory CCDF expenditures
because these expenditures were the basis for determining mandatory “guaranteed” funding
levels for the CCDF. Similarly, the FY1992-FY1996 expenditures made from the state share
of AFDC-related child care matching funds appear in the same column showing CCDF MOE
expenditures (for FY1997-FY2000) because they formed the basis of determining the MOE
requirement level.
CCDF Spending in FY2000. As Table 3 shows, in FY2000, a total of $7.2
billion was spent from the CCDF. Over $3 billion of the $7.2 billion total reflect
expenditures made from federal CCDF discretionary funds. Approximately $2.2
billion in CCDF expenditures were made from “guaranteed” mandatory funding and
the federal share of matching funds. Why do the federal expenditures made from the
CCDF in FY2000 (discretionary + mandatory + federal share of matching = $5.3
billion) significantly exceed the FY2000 CCDF funding level (see Table 1) of $3.5
billion? First, the expenditure numbers shown in Table 3 reflect spending by states in
FY2000, and, as explained in the discussion of time limits for obligation and
expenditure of funds, states may make expenditures from not just the current year’s10
funding, but also from funds provided in earlier years. Moreover, when states


10 For those interested in how states have responded to the obligation and expenditure time
(continued...)

transfer funds from TANF to the CCDF, those transfers ultimately show up as CCDF
expenditures (included in the discretionary column).
Table 4 provides a breakdown of CCDF expenditures made in FY2000, showing
the source of those expenditures both by type (i.e., discretionary, mandatory,
matching) and the year the funding was actually appropriated. For example, the first
column of expenditures shows that a cumulative total of almost $3.1 billion in
expenditures from CCDF discretionary funds were made in FY2000. Of that amount,
over $1.2 billion can be attributed to discretionary funding appropriated in FY1998
and FY1999, and $1.8 billion was expended from funds appropriated in FY2000.
States were able to spend more in discretionary funds than were actually appropriated
in FY2000, in part because expenditures from transferred TANF funds are included
as discretionary.
Table 4. CCDF Expenditures Made in FY2000 by Funding Type
and Year of Funding Source
($ in millions)
FY2000
`FY2000state funding
federal funding expendituresexpenditures
Year of
funding a Mandatory
source TotalDiscretionary “guaranteed” Matching MOE Matching
FY1998 244 24 NA c NA b NA c 273
FY1999 1,018 120 149 NA b 121 1,392
FY2000 1,801 983 946 1,049 765 5,574
FY98-00
cumulative 3,064 1,127 1,095 1,049 887 7,222
Source: Table prepared by the Congressional Research Service (CRS) based on data provided by
the Department of Health and Human Services (HHS).
a Included in the discretionary totals are any expenditures made from funds transferred from TANF
to CCDF in the given year.


10 (...continued)
frames, the end of FY2000 marked the time limit for states to have spent all available CCDF
discretionary funds originally provided in FY1998. Expenditure data indicate that nine states
failed to obligate a total of $296,000 by the 2-year obligation deadline. An additional
$305,000 in discretionary funds that were obligated (by four states) were not actually
expended by the time limit (i.e., end of FY2000). In other words, of all FY1998 discretionary
funds made available (and TANF funds transferred in FY1998), states had obligated and
expended all but 0.03% by the end of FY2000. Of FY1998 matching funds, only three states
failed to obligate all available funds, and all obligated funds (by all states) were spent by the
deadline. Similarly, all but 0.2% of FY1998 mandatory funding, which has no deadline for
expenditure by the states, had been spent by the end of FY2000.

b States must make expenditures for meeting the MOE requirement within the given year, and
therefore FY1998 and FY1999 MOE expenditures were made in each of those respective years,
and applied to the MOE requirement for those years.c
Federal and state shares of CCDF matching funds must be expended by states by the end of the
fiscal year following the year of appropriation. Therefore, FY1998 matching funds had to have
been expended by the end of FY1999, and could not be a source of FY2000 expenditures.
TANF Child Care Spending
TANF contributes to the big picture of child care spending in two ways:
expenditures made from funds transferred to CCDF (discussed above) and
expenditures made directly within the TANF system. Of the expenditures made
directly within TANF, some are made from federal funds, while others are made from
state funds associated with the TANF maintenance-of-effort (MOE) requirement.
TANF, like the CCDF, has its own MOE requirement, which states must meet if they
are to be eligible for their full TANF allotment. The TANF MOE requires states to
expend on TANF-eligible families an amount equal to their “historic” spending level
(generally in FY1994-1995) on TANF predecessor programs: AFDC, Emergency
Assistance, Job Opportunities and Basic Skills, and AFDC-related child care. Why
is this important to the calculation of TANF’s contribution to child care spending?
Role of the TANF MOE in Calculating Child Care Spending. Within
the rules for applying state child care expenditures toward TANF and CCDF MOE
levels, states may “double count” many expenditures toward both programs’
requirements. In other words, as long as a child care expenditure is for a TANF-
eligible family, it may be applied toward both the TANF’s MOE level and the CCDF
MOE. States are not required to explain in either their TANF or CCDF expenditure
report whether any, all, or none of their MOE spending overlaps. As a result, if MOE
expenditures from the CCDF and TANF expenditure forms were to be added
together, the resulting total might overstate the level of MOE child care spending
actually made by the states. Therefore, for this analysis of TANF child care
expenditures, only TANF MOE spending that exceeds the level of CCDF MOE
expenditures made by a state will be counted (recognizing that this method results in
the most conservative estimate). A step-by-step look at the process of reaching
“unduplicated” TANF MOE expenditure amounts is provided later in the report,
where TANF expenditures are analyzed on a state-by-state basis.
Trends in TANF Child Care Spending. TANF expenditure data reveal that
states as a group are spending increasing amounts of TANF funds on child care
services. Table 5 shows that the combined total of federal TANF funding and the
“excess” (or “unduplicated”) child care expenditures made from state funds has grown
from over $133 million in FY1997 to almost $2.2 billion in FY2000.



Table 5. TANF Child Care Spending FY1997-FY2000
($ in millions)
Expenditure TypeFY 1997FY1998FY1999FY2000
TANF Federal funds13.5259.3604.41,411.2
TANF state funds (“excess”
child care MOE)119.9195.3464.6773.9
Total 133.4 454.6 1,069 2,185.2
Source: Table prepared by the Congressional Research Service (CRS) based on data provided by
the Department of Health and Human Services (HHS).
Note: Child care expenditures in the territories are excluded.
State-by-State CCDF and TANF Spending
CCDF Trends. Earlier tables provide the spending picture from a national
perspective, but do not reveal trends in individual state spending. Table 6 shows
total CCDF (and predecessor program) spending made by each state over the same
FY1992-FY2000 period shown for the nation as a whole in Table 3. The final
column of Table 6 reveals the percentage change that occurred in total CCDF
expenditures made by each state between FY1996 (the last year before the unified
CCDF was implemented) and FY2000.
TANF Trends. As expressed in the discussion of funding sources, states are
not required to spend any given amount of their TANF funds on child care. States
have the flexibility to spend their TANF funding on a variety of services, in addition
to cash assistance, and therefore it is useful to look not only at national trends
regarding the use of TANF funding for child care, but also at state-by-state trends.
Table 7 provides the same breakdown of TANF child care expenditures by year and
type (federal or state) as that shown in Table 5, but on a state-by-state basis. Table
7 shows that all but 13 states have reported spending some level of TANF funds for
child care over the 4 year period.



Table 6. Total CCDF Expenditures by State: FY1992-FY2000
($ in millions)
Percentage
change:
FY1996-
State 1992 1993 1994 1995 1996 1997 1998 1999 2000 FY2000
Alabama 31.9 39.8 40.8 47.0 48.6 52.4 60.7 74.4 103.6 113.0
Alaska 6.6 7.6 7.5 10.0 7.2 13.1 17.3 31.7 27.0 273.2
Arizona 32.6 35.8 41.0 47.1 53.9 61.2 81.9 107.9 105.6 95.9
Arkansas 8.1 14.1 13.7 13.8 17.0 23.2 16.5 34.2 44.1 159.9
California 206.5 152.3 335.2 285.1 330.8 368.8 586.1 796.8 956.6 189.2
Colorado 16.6 26.1 33.2 32.7 27.2 32.9 51.2 66.7 53.0 95.1
Connecticut 23.1 27.5 30.6 49.5 59.0 58.7 72.2 143.2 158.5 168.5
Delaware 6.7 8.7 10.3 12.3 12.2 17.5 24.4 24.7 34.1 180.6
Dist. of8.59.19.410.910.613.620.227.645.1327.3
iki/CRS-RL31274Columbia Florida 98.7 104.0 109.0 129.1 147.4 157.3 232.7 350.0 327.5 122.2
g/w
s.orGeorgia 58.2 73.6 82.8 88.2 105.2 132.4 162.1 145.5 177.9 69.1
leakHawaii 2.1 6.1 9.3 13.1 12.8 20.5 30.6 34.6 25.2 97.2
Idaho 4.1 7.2 12.4 6.1 6.0 9.1 16.1 24.6 25.7 330.7
://wikiIllinois 51.6 90.4 105.4 164.7 191.9 236.0 300.8 354.8 387.8 102.1
httpIndiana 6.3 27.9 50.3 63.2 66.9 78.3 138.6 92.2 146.7 119.5
Iowa 17.5 17.7 16.6 23.0 21.5 20.1 49.3 47.2 86.2 300.5
Kansas 27.6 21.6 27.8 25.2 28.6 35.1 45.7 49.9 61.1 113.3
Kentucky 22.9 42.7 39.8 41.7 43.6 51.6 60.6 62.8 75.2 72.5
Louisiana 13.0 31.7 33.8 39.6 40.5 47.4 62.3 120.1 134.0 230.6
Maine 3.1 9.3 8.0 5.7 12.3 15.4 19.0 24.7 23.4 90.2
Maryland 44.4 52.7 61.2 60.4 58.6 58.4 104.8 101.3 147.9 152.3
Massachusetts 69.2 80.6 91.8 93.6 116.8 243.1 216.5 244.1 227.9 95.2
Michigan 48.9 75.3 66.0 86.8 65.1 122.0 295.7 178.9 94.4 45.0
Minnesota 35.4 44.8 51.2 56.8 62.4 69.6 68.9 91.0 127.0 103.4
Mississippi 7.7 5.6 36.4 11.4 17.8 48.4 32.5 43.3 65.3 266.8
Missouri 37.5 48.2 52.4 59.4 62.8 79.9 89.3 114.6 133.2 112.0
Montana 4.7 5.7 7.3 7.1 8.4 8.3 14.1 18.9 20.2 140.4
Nebraska 19.2 17.1 28.9 21.6 19.3 27.3 40.9 51.6 60.9 215.7



Percentage
change:
FY1996-
State 1992 1993 1994 1995 1996 1997 1998 1999 2000 FY2000
Nevada 4.9 8.1 7.3 9.4 8.7 13.0 18.4 20.3 22.1 153.9
New Hampshire9.39.88.814.111.116.220.518.924.4118.9
New Jersey61.855.777.3111.2114.3108.7134.086.3218.090.7
New Mexico9.118.323.114.321.528.839.546.652.8145.6
New York137.3193.7188.5261.5201.4236.2393.1502.2608.1201.9
North Carolina43.593.7141.1136.3100.1169.5224.5274.1250.0149.7
North Dakota4.36.35.85.34.17.55.410.19.1123.4
Ohio 83.8 119.7 120.6 143.4 144.8 191.3 226.8 219.2 317.0 119.0
Oklahoma 41.7 42.8 46.3 50.5 52.8 57.6 71.5 110.5 92.6 75.4
Oregon 21.7 34.0 39.9 41.6 51.7 53.3 56.3 60.2 64.0 23.8
Pennsylvania 79.3 95.4 112.2 134.1 139.8 192.8 170.3 281.3 297.3 112.7
Rhode Island9.711.313.314.615.318.725.833.852.7245.3
South Carolina11.519.718.831.538.228.567.059.559.756.3
iki/CRS-RL31274South Dakota3.04.65.66.02.86.310.711.713.2366.1
g/wTennessee 26.0 45.1 67.8 77.5 82.8 107.9 136.7 155.6 170.6 106.0
s.orTexas 125.0 172.5 167.8 192.0 198.6 218.0 274.7 356.0 421.4 112.2
leakUtah 17.5 18.0 30.9 25.8 29.7 28.4 39.6 46.2 44.3 49.1
://wikiVermont 5.5 6.5 9.0 10.6 10.6 15.5 17.5 19.1 19.8 87.7
httpVirginia 37.5 55.5 41.9 56.5 55.8 85.6 79.2 136.3 134.0 140.0
Washington 57.1 66.1 81.2 95.1 100.8 116.6 172.4 216.3 283.9 181.7
West Virginia7.715.218.517.715.924.141.117.244.2178.6
Wisconsin 35.1 46.5 44.2 56.9 63.3 76.9 123.7 137.3 139.0 119.7
Wyoming 4.1 5.3 5.6 6.2 6.0 5.7 8.1 7.6 7.8 29.0
Total 1,749.0 2,227.0 2,687.7 3,017.1 3,124.6 3,908.8 5,268.0 6,283.5 7,221.2 131.1
Source: Table prepared by the Congressional Research Service (CRS) based on data provided by the Health and Human Service (HHS).
Note: Included in these amounts are any expenditures made from funds transferred from TANF.



Table 7. TANF Child Care Expenditures
($ in thousands)
FY1997 FY1998 FY1999 FY2000
TANF TANF Total TANF TANF Total TANF TANF Total TANF TANF Total
State federal state TANF federal state TANF federal state TANF federal state TANF
Alabama 0 0 0 7,199 0 7,199 7,547 0 7,547 1,924 0 1,924
Alaska 0 0 0 0 0 0 2,125 0 2,125 7,596 0 7,596
Arizona 0 0 0 0 0 0 2,295 0 2,295 27,285 0 27,285
Arkansas 0 0 0 0 2,665 2,665 0 3,242 3,242 5,468 3,391 8,859
California 0 0 0 71,530 57,015 128,545 171,332 154,654 325,987 504,977 185,677 690,654
Colorado 0 407 407 0 1,400 1,400 0 1,775 1,775 1,251 0 1,251
Connecticut 0 43,322 43,322 0 67,412 67,412 35,764 0 35,764 21,158 0 21,158
Delaware 0 385 385 0 0 0 0 0 0 0 4 4
Dist. of Columbia05,2795,2795,0007,81412,814011,40811,40812,43611,41723,853
Florida 0 0 0 71,139 976 72,115 0 946 946 132,190 428 132,618
Georgia 0 17,836 17,836 7,000 0 7,000 0 13,046 13,046 1,000 0 1,000
Hawaii 0 0 0 0 0 0 0 0 0 0 0 0
iki/CRS-RL31274Idaho 0 0 0 0 0 0 0 0 0 0 2,662 2,662Illinois 0 0 0 0 0 0 35,208 24,906 60,114 23,034 182,365 205,399
g/wIndiana 0 0 0 0 0 0 0 0 0 111,106 2 111,108
s.orIowa 0 2,861 2,861 0 0 0 0 1,001 1,001 10 0 10
leakKansas 0 0 0 0 0 0 0 0 0 0 0 0
://wikiKentucky 0 0 0 0 0 0 10,363 0 10,363 10,958 0 10,958Louisiana 0 0 0 0 0 0 0 0 0 0 0 0
httpMaine 0 0 0 0 3,019 3,019 0 5,347 5,347 3,443 2,458 5,901
Maryland 43 0 43 9 138 147 2,475 302 2,777 28,906 1 28,907
Massachusetts 0 0 0 0 1,679 1,679 37,507 4,467 41,973 104,733 18,802 123,535
Michigan 11,537 49,769 61,306 81,753 26,580 108,333 211,176 72,916 284,092 151,240 215,229 366,469
Minnesota 0 0 0 0 0 0 0 30,691 30,691 0 42,255 42,255
Mississippi 6 0 6 6 0 6 0 0 0 6,101 0 6,101
Missouri 0 0 0 0 18,779 18,779 0 26,584 26,584 0 41,853 41,853
Montana 0 0 0 0 0 0 0 0 0 0 0 0
Nebraska 0 0 0 0 0 0 0 0 0 0 0 0
Nevada 0 0 0 0 0 0 0 0 0 567 0 567
New Hampshire000000000000
New Jersey00000021,545021,545000
New Mexico000000000000
New York000000080,00080,000026,34926,349
North Carolina00015701571,08901,08915,40827,46942,877
North Dakota0000000009790979
Ohio 0 0 0 0 6,447 6,447 19,361 4,032 23,393 79,008 0 79,008



FY1997 FY1998 FY1999 FY2000
TANF TANF Total TANF TANF Total TANF TANF Total TANF TANF Total
State federal state TANF federal state TANF federal state TANF federal state TANF
Oklahoma 0 0 0 3,600 0 3,600 10,462 6,300 16,762 21,178 0 21,178
Oregon 0 0 0 5,631 0 5,631 5,727 2,421 8,148 15,797 3,941 19,737
Pennsylvania 0 0 0 0 0 0 0 0 0 13,933 0 13,933
Rhode Island000000000000
South Carolina000000000000
South Dakota000000000000
Tennessee 0 0 0 0 0 0 4,674 0 4,674 7,625 456 8,082
Texas 0 0 0 0 0 0 0 0 0 0 0 0
Utah 0 0 0 4,451 0 4,451 0 0 0 1,242 128 1,369
Vermont 483 0 483 460 356 816 988 744 1,732 2,695 1,499 4,195
Virginia 220 0 220 1,391 318 1,710 569 0 569 5 0 5
Washington 0 0 0 0 0 0 0 0 0 760 0 760
West Virginia0000000006,72006,720
Wisconsin 1,194 7 1,201 0 0 0 24,193 19,832 44,026 90,513 7,556 98,069
Wyoming 0 0 0 0 710 710 0 0 0 0 0 0
iki/CRS-RL31274Totals 13,484 119,867 133,351 259,327 195,309 454,636 604,400 464,614 1,069,014 1,411,248 773,943 2,185,191
g/wSource: Table prepared by the Congressional Research Service (CRS) based on data provided by the Department of Health and Human Services
s.or(HHS).
leak
Note: These amounts do NOT include expenditures made from funds transferred from TANF to the Child Care and Development Fund (CCDF).


://wiki
http

A Closer Look at FY2000. Table 8 provides a detailed breakdown of CCDF
and TANF child care expenditures made by each state, showing spending amounts by
funding source. The final column of the table reflects the calculation of “excess” child
care TANF MOE expenditures, which are explained in more detail below.
Calculating “Excess” TANF MOE Child Care Expenditures. Table
9 includes the expenditure data used to make the “excess” TANF MOE expenditure
calculations for FY2000. The “excess”expenditure amount is defined here as any
amount that remains after the total reported CCDF MOE expenditures are subtracted
from the TANF child care MOE reported amount. If the subtraction yields a negative
amount, or zero, then there is no excess amount to report as a state-funded TANF
expenditure. If the reported TANF MOE child care spending amount is greater than
the amount reported toward the CCDF MOE, then the positive difference is counted
in Table 9 as the excess amount.
For example, as shown in the first column of numbers in Table 9, Alabama was
required to make $6.896 million in child care expenditures from state funds to meet
its annual CCDF MOE requirement. According to Alabama’s reporting form for
FY2000 CCDF expenditures, they spent precisely that amount in FY2000. The third
column shows the level of child care expenditures reported on the TANF expenditure
form toward the TANF MOE: $4.409 million. Because the TANF MOE
expenditures do not exceed the CCDF MOE expenditures, and all $4.409 million
could already potentially be accounted for as part of the $6.896 million reported as
CCDF MOE spending, no expenditures are counted toward state TANF child care
spending. (In other words $4.4 million minus $6.8 million yields a negative number.)
In other cases (Arkansas, for example), Table 9 shows that the reported TANF
MOE child care expenditures ($5.278 billion) exceed those reported toward the
CCDF MOE ($1.887 billion). Therefore, the excess (rounded to $3.4 billion in this
case) is the amount that appears in Table 8 under TANF child care MOE.
Table 9 also reveals the extent to which states reported expenditures above the
required MOE level. According to FY2000 expenditure reports, 12 states reported
CCDF expenditures above the level required for meeting the CCDF MOE.



Table 8. FY2000 CCDF Expenditures by Fund
CCDF federal fundsCCDF state fundsTANF funds
“Excess”
MandatoryFederalchild care
StateDiscretionary“guaranteed”MatchingMOEMatchingfundsMOE funds
Alabama 63.3 16.0 12.1 6.9 5.3 1.9 0.0
Alaska 14.3 3.5 2.9 3.5 2.7 7.6 0.0
Arizona 54.4 19.8 13.2 10.0 8.1 27.3 0.0
Arkansas 22.1 3.9 11.8 1.9 4.4 5.5 3.4
California 501.0 78.0 151.6 85.6 140.4 505.0 185.7
Colorado 9.1 14.3 9.5 9.0 11.2 1.3 0.0
Connecticut 8.3 18.7 13.2 105.1 13.2 21.2 0.0
Delaware 5.8 5.5 2.9 17.0 2.9 0.0 0.0
District of Columbia32.24.61.84.62.012.411.4
Florida 147.5 43.0 58.6 33.4 45.0 132.2 0.4
iki/CRS-RL31274Georgia 54.4 34.0 33.4 33.7 22.4 1.0 0.0
g/wHawaii 5.5 5.0 5.0 5.0 4.8 0.0 0.0
s.orIdaho 13.7 2.9 5.5 1.2 2.4 0.0 2.7
leakIllinois 168.4 56.9 52.8 56.9 52.8 23.0 182.4
://wikiIndiana 77.6 14.0 24.6 15.4 15.2 111.1 0.0
httpIowa 45.5 9.7 15.1 5.7 10.2 0.0 0.0
Kansas 26.0 9.8 11.1 6.7 7.4 0.0 0.0
Kentucky 28.2 17.6 15.7 7.3 6.5 11.0 0.0
Louisiana 98.7 3.5 18.7 5.2 7.9 0.0 0.0
Maine 11.1 3.0 4.6 4.0 0.8 3.4 2.5
Maryland 50.4 23.3 25.5 23.3 25.5 28.9 0.0
Massachusetts 102.8 35.0 22.5 45.0 22.5 104.7 18.8
Michigan 37.9 32.1 0.0 24.4 0.0 151.2 215.2
Minnesota 58.5 12.3 17.6 19.7 18.9 0.0 42.3
Mississippi 40.0 6.1 13.4 1.7 4.1 6.1 0.0
Missouri 54.6 24.7 22.6 16.5 14.8 0.0 41.9
Montana 11.6 3.2 2.9 1.3 1.1 0.0 0.0
Nebraska 14.6 10.6 7.1 24.1 4.5 0.0 0.0
Nevada 5.7 3.3 5.3 2.6 5.3 0.6 0.0



CCDF federal fundsCCDF state fundsTANF funds
“Excess”
MandatoryFederalchild care
StateDiscretionary“guaranteed”MatchingMOEMatchingfundsMOE funds
New Hampshire5.24.64.85.04.80.00.0
New Jersey68.925.248.226.449.30.00.0
New Mexico30.58.38.12.93.00.00.0
New York252.1113.852.4102.087.90.026.3
North Carolina91.769.431.937.919.115.427.5
North Dakota1.72.82.51.01.11.00.0
Ohio 116.4 70.1 45.4 53.1 32.0 79.0 0.0
Oklahoma 22.9 24.9 24.3 10.6 9.9 21.2 0.0
Oregon 10.7 19.5 13.3 11.7 8.8 15.8 3.9
Pennsylvania 86.4 69.9 43.0 46.6 51.5 13.9 0.0
Rhode Island15.56.63.923.43.30.00.0
South Carolina22.59.916.24.17.00.00.0
iki/CRS-RL31274South Dakota6.11.73.10.81.40.00.0
g/w
s.orTennessee 79.4 37.7 21.7 19.0 12.7 7.6 0.5
leakTexas 191.8 27.0 103.6 34.7 64.2 0.0 0.0
Utah 11.6 12.6 11.2 4.5 4.5 1.2 0.1
://wikiVermont 9.7 3.9 2.2 2.7 1.3 2.7 1.5
httpVirginia 45.6 21.3 23.6 21.3 22.1 0.0 0.0
Washington 152.7 41.9 23.8 43.4 22.1 0.8 0.0
West Virginia15.515.47.73.02.66.70.0
Wisconsin 62.1 24.5 21.1 16.4 14.8 90.5 7.6
Wyoming 1.9 1.5 1.8 1.6 1.0 0.0 0.0
Totals 3,064.2 1,126.9 1,094.8 1,048.6 886.7 1,411.2 773.9
Source: Table prepared by the Congressional Research Service (CRS) based on data provided by Health and Human Services (HHS).



Table 9. Computation of "Excess" TANF MOE Child Care
Expenditures in FY2000
($ in thousands)
Excess TANF MOE
CCDF TANF child carechild care
expendituresexpendituresexpenditures (more
reported towardreported towardthan reported for
CCDF MOECCDF MOEthe TANF MOECCDF MOE
State requirement requirement requirement requirement)
Alabama 6,896 6,896 4,409 —
Alaska 3,545 3,545 2,996 —
Arizona 10,033 10,033 10,033 —
Arkansas 1,887 1,887 5,278 3,391
California 85,593 85,593 271,270 185,677
Colorado 8,986 8,986 1,271 —
Connecticut 18,738 105,064 97,866 —
Delaware 5,17916,95716,9614
District of Columbia4,5674,56715,98411,417
Florida 33,416 33,416 33,844 428
Georgia 22,183 33,698 33,698 —
Hawaii 4,972 4,972 — —
Idaho1,1761,1763,838 2,662
Illinois56,87456,874239,239 182,365
Indiana15,35715,35715,359 2
Iowa 5,079 5,712 5,712 —
Kansas 6,673 6,732 6,674 —
Kentucky 7,275 7,275 — —
Louisiana 5,219 5,220 5,219 —
Maine1,7504,0136,471 2,458
Maryland23,30123,30123,302 1
Massachusetts44,97344,97363,775 18,802
Michigan24,41124,411239,640 215,229
Minnesota19,69019,69061,945 42,255
Mississippi1,7151,7151,715 __
Missouri16,54916,54958,401 41,853
Montana 1,314 1,314 1,314 —
Nebraska 6,499 24,073 6,499 —
Nevada 2,580 2,580 2,303 —
New Hampshire4,5824,9734,582—
New Jersey26,37426,374——
New Mexico2,8952,8952,895—
New York101,984101,984128,333 26,349
North Carolina37,92737,92765,397 27,469
North Dakota 1,017 1,017 1,017 —
Ohio 45,404 53,067 45,404 —
Oklahoma 10,630 10,630 10,630 —



Excess TANF MOE
CCDF TANF child carechild care
expendituresexpendituresexpenditures (more
reported towardreported towardthan reported for
CCDF MOECCDF MOEthe TANF MOECCDF MOE
State requirement requirement requirement requirement)
Oregon 11,715 11,715 15,656 3,941
Pennsylvania 46,629 46,629 46,629 —
Rhode Island 5,321 23,413 23,413 —
South Carolina 4,085 4,085 4,085 —
South Dakota 803 803 803 —
Tennessee 18,976 18,976 19,432 456
Texas 34,681 34,681 34,681 —
Utah 4,475 4,475 4,603 128
Vermont 2,666 2,666 4,166 1,499
Virginia 21,329 21,329 21,329 —
Washington 38,708 43,400 34,016 —
West Virginia 2,971 2,971 2,971 —
Wisconsin 16,449 16,449 24,005 7,556
Wyoming 1,554 1,554 1,554 —
Totals 887,607 1,048,593 1,730,620 773,943
Source: Table prepared by the Congressional Research Service (CRS) based on data provided by the
Department of Health and Human Services (HHS).



Filling In the Big Picture
Figure 4 “fills in” the big picture with a more detailed breakdown of the overall
spending trends presented in Figure 3. The supporting table of data can be found in
Appendix C.
Figure 4. Child Care Spending Trends FY1992-2000
by type of funding source
(dollars in billions)
Source: Figure prepared by the Congressional Research Service (CRS) based on data provided by
the Department of Health and Human Services (HHS).
Funding Issues in Reauthorization
Congress is expected to address child care financing issues as part of
reauthorizing child care and welfare legislation. The issue of how much funding to
make available for child care will likely be at the forefront, but is complicated by the
fact that child care is supported by multiple funding sources. As policymakers
consider funding levels for child care, the following questions might be asked with
respect to each potential funding source:
!Are funds from this source specifically dedicated for child care?
!How are funds from this source allocated to states? (What is the distribution
formula?)
!Are states required to match funds from this source with their own state funds?



!Can funds from this source be transferred to other programs?
!How long do states have to obligate and spend funds from this source?
The answers to these questions highlight the varying implications of providing
child care funding through different sources. For instance, funds provided through
CCDF are the only funds dedicated solely for child care, but nevertheless, expenditure
data (through FY2000) reveal that TANF has also played a significant role in funding
child care, both through transfers to CCDF and directly within TANF. Therefore,
should CCDF funding levels be set with the presumption that states will continue to
use the same amount of TANF funds for child care? A lesser or greater amount?
Likewise, what are the implications of the CCDF funding decision on setting the
overall TANF funding level? Will an economic downturn prompt states to make
different decisions as to how they allocate their TANF funds? Greater child care
expenditures have been fueled by reduced cash welfare caseloads through FY2000;
will these spending trends continue if cash welfare caseloads level off or rise? To
what extent are CCDF funds used to serve welfare (TANF) families?
Even with respect to the funds targeted specifically for child care (i.e., the
CCDF) the implications for states differ depending on whether funds are provided via
the mandatory or discretionary stream. As described earlier, the mandatory and
discretionary portions of the CCDF are currently allocated among states according
to different formulas, based on different factors. Consequently, the same amount of
funding will translate into different allocation amounts for states, depending on the
funding stream from which the money is allocated. Furthermore, mandatory funds
bring with them state matching requirements (for the non-“guaranteed” portion). Of
course, whether states actually spend state funds in order to access the available
federal mandatory funds depends on each state’s individual decision to participate in
the matching program. For example, Michigan has not always opted to access its full
matching grant, but has instead applied state child care expenditures toward meeting
its TANF MOE requirement.
Discretionary and mandatory CCDF funds also carry with them different time
limits for states to obligate and spend the money. Policymakers will be faced with
deciding: What portion of CCDF funding should be delivered via discretionary money
versus mandatory money? Should the formulas for allocating those funds remain as
they are? Should states’ historical spending levels from the early 1990s continue to
serve as the basis for the fixed amount of “guaranteed” mandatory funding? Should
matching requirements remain the same? How long should states have for obligating
and spending the funds?
Decisions regarding states’ authority to transfer funds between block grants (i.e.,
TANF funds to CCDF and SSBG) are also expected as part of the reauthorization
process. In addition to the allowable level of transfer, some critics of the status quo
argue that states should be allowed to transfer TANF funds remaining from prior
years, rather than only current year funds. Of course, just as an economic downturn
could prove to affect states’ decisions to use TANF funds directly for child care, so
too could it affect their decisions to transfer funds.



Appendix A. FY2002 CCDF Allotments, by Funding Type
($ in millions)
Matching
Mandatory (federal
State Discretionary “guaranteed” share) Totals
Alabama 42.9 16.4 22.8 82.2
Alaska 4.1 3.5 3.8 11.5
Arizona 43.5 19.8 28.4 91.7
Arkansas 25.6 5.3 13.7 44.6
California 243.6 85.6 192.5 521.7
Colorado 23.2 10.2 22.5 55.9
Connecticut 15.5 18.7 17.4 51.7
Delaware 4.4 5.2 4.0 13.6
District of Columbia3.64.62.410.6
Florida 105.5 43.0 74.3 222.8
Georgia 69.9 36.5 44.7 151.2
Hawaii 8.0 5.0 6.1 19.1
Idaho 11.6 2.9 7.4 21.8
Illinois 78.6 56.9 66.7 202.2
Indiana 39.6 26.2 32.2 98.0
Iowa 18.9 8.5 14.7 42.1
Kansas 19.0 9.8 14.4 43.2
Kentucky 37.3 16.7 20.3 74.3
Louisiana 51.7 13.9 24.3 89.9
Maine 8.0 3.0 5.9 16.9
Maryland 27.9 23.3 27.9 79.0
Massachusetts 28.6 45.0 30.9 104.5
Michigan 60.7 32.1 53.1 145.8
Minnesota 27.0 23.4 25.8 76.2
Mississippi 34.9 6.3 15.6 56.8
Missouri 38.9 24.7 28.8 92.3
Montana 6.4 3.2 4.5 14.1
Nebraska 11.7 10.6 9.0 31.3
Nevada 10.9 2.6 10.8 24.2
New Hampshire5.34.66.316.2
New Jersey39.726.443.4109.5
New Mexico19.38.310.137.7
New York117.1102.096.4315.6
North Carolina59.869.640.8170.3
North Dakota4.62.53.110.3
Ohio 69.3 70.1 58.6 198.1
Oklahoma 32.5 24.9 17.9 75.3
Oregon 21.7 19.4 17.1 58.2
Pennsylvania 65.7 55.3 58.9 180.0
Puerto Rico47.40.00.047.4
Rhode Island5.66.65.117.3



Matching
Mandatory (federal
State Discretionary “guaranteed” share) Totals
South Carolina38.49.920.668.8
South Dakota6.21.74.011.9
Tennessee 44.2 37.7 28.7 110.6
Texas 202.6 59.8 120.6 383.0
Utah 21.4 12.6 14.7 48.7
Vermont 3.5 3.9 2.9 10.3
Virginia 40.9 21.3 35.6 97.8
Washington 35.0 41.9 30.7 107.6
West Virginia15.18.78.031.8
Wisconsin 31.0 24.5 27.3 82.8
Wyoming 3.3 2.8 2.5 8.6
Territories and Tribes
America Samoa2.70.00.02.7
Guam 4.0 0.0 0.0 4.0
N. Mariana Islands1.60.00.01.6
Virgin Islands2.20.00.02.2
Tribes 42.054.30.096.3
Total 2,083.7 1,231.9 1,478.3 4,793.9
Source: Table prepared by the Congressional Research Service (CRS).



Appendix B. Transfers from TANF to CCDF, cumulatively
(FY1997-FY2000) and for FY2000, by state (with percentages of
cumulative grants and FY2000 TANF grant)
Percent of
TotalCumulativePercent ofFY2000
cumulativeTANF grantscumulativeFY2000TANF
TANF grants(FY1997-TANFTANF grantsgrant
awardedFY2000)grantstransferred totransferred
FY1997-transferred to(FY1997-CCDF into CCDF in
State FY2000 CCDF FY2000) FY2000 FY2000
Alabama 418,753,15473,248,63217.5%20,306,31917%
Alaska 214,505,299 33,375,162 15.6% 13,134,900 20%
Arizona 937,872,629 102,214,710 10.9% 51,734,178 20%
Arkansas 199,270,696 5,000,000 2.5% 5,000,000 8%
California 14,458,958,043 877,615,000 6.1% 520,315,000 14%
Colorado 469,438,21865,194,15013.9%29,221,458 20%
Connecticut1,069,529,232 -0.0%-0%
Delaware 118,424,438 5,849,500 4.9% 4,849,500 14%
D.C. 382,790,488 48,043,926 12.6% 18,521,963 16%
Florida 2,344,950,569 264,631,372 11.3% 117,613,943 19%
Georgia 1,307,877,397 95,750,125 7.3% 51,700,000 14%
Hawaii 325,524,819 20,213,506 6.2% 915,000 1%
Idaho 111,118,34513,235,03911.9%6,624,94720%
Illinois 1,985,575,708 242,337,170 12.2% 125,325,778 20%
Indiana 835,988,658195,476,82223.4%41,359,82219%
Iowa 497,634,166 42,034,454 8.4% 26,404,972 20%
Kansas 407,724,244 28,490,335 7.0% 15,336,680 15%
Kentucky 713,081,419 115,760,032 16.2% 36,240,000 20%
Louisiana 653,707,831 156,210,354 23.9% 54,106,043 30%
Maine 306,839,541 23,190,837 7.6% 7,336,003 9%
Maryland 877,685,860 137,458,818 15.7% 45,819,606 20%
Massachusetts 1,868,046,687 383,787,077 20.5% 91,874,224 20%
Michigan 3,143,942,863 281,798,590 9.0% 9,363,210 1%
Minnesota 915,479,748 72,292,367 7.9% 17,098,100 6%
Mississippi 360,344,979 42,645,514 11.8% 18,691,998 20%
Missouri 838,993,744 64,123,032 7.6% 20,712,684 10%
Montana 169,642,404 25,769,908 15.2% 7,612,239 17%
Nebraska 223,426,590 9,000,000 4.0% 4,000,000 7%
Nevada 175,273,137 - 0.0% - 0%



Percent of
TotalCumulativePercent ofFY2000
cumulativeTANF grantscumulativeFY2000TANF
TANF grants(FY1997-TANFTANF grantsgrant
awardedFY2000)grantstransferred totransferred
FY1997-transferred to(FY1997-CCDF into CCDF in
State FY2000 CCDF FY2000) FY2000 FY2000
New 154,085,043 - 0.0% - 0%
Hampshire
New Jersey1,514,263,411301,852,68319.9%79,795,98920%
New Mexico455,187,41846,521,34210.2%19,528,22715%
New York9,319,061,424761,600,0008.2%437,000,00018%
North Carolina1,180,040,646157,833,79813.4%65,880,42620%
North Dakota 88,876,489500,0000.6%500,0002%
Ohio 2,911,873,040 77,453,492 2.7% 77,453,492 11%
Oklahoma 594,451,025 118,890,206 20.0% 30,199,871 20%
Oregon 668,204,335 - 0.0% - 0%
Pennsylvania 2,629,891,350 194,091,000 7.4% 67,122,000 9%
Rhode Island334,962,82817,730,2615.3%4,085,0574%
South Carolina394,967,25910,175,2622.6%1,046,6301%
South Dakota82,536,5265,963,3617.2%4,363,36120%
Tennessee 804,213,896133,444,17716.6%50,402,09124%
Texas 2,005,877,272 168,653,815 8.4% 38,292,192 7%
Utah 322,686,833 3,740,480 1.2% - 0%
Vermont 189,412,724 25,889,490 13.7% 7,729,551 16%
Virginia 592,469,414 88,984,715 15.0% 27,699,905 17%
Washington 1,510,874,418 250,005,775 16.5% 100,037,747 24%
West Virginia415,166,58815,353,6553.7%–0%
Wisconsin 1,270,217,409176,429,52013.9%63,500,00020%
Wyoming 82,230,508 9,100,000 11.1% - 0%
Total 63,853,950,762 5,988,959,464 9.4% 2,435,855,106 14%
Source: Table prepared by the Congressional Research Service (CRS) based on data provided by
HHS.



Appendix C. Total CCDF and TANF Child Care Expenditures by Funding Source:
FY1992-FY2000
($ in million)
Federal CCDF fundsState CCDF fundsTANF
TANF
“excess”
childTotal
Matching Maintenance Matching Total TANF care child
FiscalaMandatorybfederalof effortstateCCDFfederalMOETotalcare
year Discretionary “guaranteed” share (MOE) share spending funds funds TANF spending
1992 332 801 616 1,749 1,749
1993 675 890 662 2,227 2,227
1994 835 1,055 798 2,688 2,688
1995 832 1,235 950 3,017 3,017
1996 850 1,280 994 3,125 3,125
iki/CRS-RL312741997 1,009 986 552 945 416 3,909 13 120 133 4,042
g/w
s.or1998 1,486 1,169 867 1,031 715 5,268 259 195 455 5,723
leak1999 2,583 1,165 882 1,018 636 6,283 604 465 1,069 7,352
://wiki2000 3,064 1,127 1,095 1,049 887 7,221 1,411 774 2,185 9,406
http
Source: Table prepared by the Congressional Research Service (CRS) based on data provided by the Department of Health and Human
Services (HHS).
Note: Child care expenditures in the territories are excluded.
a Discretionary fund expenditures include spending from TANF transfers to CCDF.
b Expenditures made in FY1992-FY1996 from the federal share of AFDC-related child care matching funds are included in the same column as
the mandatory CCDF expenditures because these expenditures were the basis for determining mandatory “guaranteed” funding levels for
the CCDF. Similarly, the FY1992-FY1996 expenditures made from the state share of AFDC-related child care matching funds appear in
the same column showing CCDF MOE expenditures (for FY1997-FY2000) because they formed the basis of determining the MOE
requirement level.