HHS FACT SHEET
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
FOR IMMEDIATE RELEASE:
Thursday, November 12, 1998
Contact: Michael Kharfen, (202) 401-9215
STATE SPENDING UNDER THE CHILD CARE BLOCK GRANT
Overview: Under the new welfare law, the
Personal Responsibility and Work Opportunity Reconciliation Act
of 1996, Congress streamlined the several funding programs for
child care into the Child Care and Development Block Grant. The
block grant continues the flexibility for states in how services
are provided to families, applies health and safety standards
for all federally subsidized care, reduces the administrative
burden for states, requires state maintenance of effort and match
spending, and supports both families moving from welfare to work
and poor working families. States are required to submit quarterly
reports to HHS detailing how they are spending federal funds.
This fact sheet covers FY 1997, the first full year of state financial
reporting.
Child care is universally recognized as critical to support
working families. In FY 1997, states made significant investments
in child care services for families in response to this great
need. States served an average of 1.25 million children per month,
an increase from the 1 million children served in FY 1996. All
states met the maintenance of effort and matching spending requirements
for federal dollars. Of both state and federal dollars, states
spent $4.2 billion, a 35 percent increase over the FY 1996 level
of $3.1 billion. Overall, states obligated over 99 percent of
federal funds. In addition, nine states transferred over $187
million of their welfare block grant funds to the child care block
grant.
Yet, even with these substantial investments, there are still
gaps in meeting the needs of working families. Many states still
maintain long waiting lists for services. States are far from
reaching all the children eligible for support. In a report released
earlier this year on state child care programs, it was found that
nearly all states set their eligibility levels below the federal
ceiling. As states concentrate on moving families on welfare to
work, many working families are not able to meet the eligibility
for support. For example, in 10 states, families of three with
an income of $28,000 cannot count on support either. As states
struggle to reach as many families as they can by spending the
vast majority of funds on direct services, states in FY 1997 spent
the minimum 4 percent of their block grant, or $98 million, on
quality improvements such as teacher training programs and health
and safety improvements.
FY 1997 Highlights
Children Served. Under the child care block grant in FY
1997, states served an average 1,247,856 children per month, a
25 percent increase from the estimated 1 million children served
in FY 1996. The additional funds included in the new welfare law
enabled states to serve more children. However, the need remains
great. States still report long waiting lists and they are far
from reaching the 10 million children eligible for support under
the block grant. (For a state by state listing see table on Average
Number of Children Served Per Month by States and Territories.)
Maintenance of Effort. The new welfare reform law requires
states to continue to spend state funds for child care at a level
equal to the greater of their FY 1994 or FY 1995 historic spending
levels in the former Title IV-A (Aid to Families with Dependent
Children) child care programs. All states reported that they spent
their own funds at the required FY 1997 level.
Transferring TANF funds. The new welfare law gives states
the authority to transfer up to 30 percent of their TANF (Temporary
Assistance for Needy Families) grant to either the child care
block grant or the Social Services Block Grant. Nine states transferred
TANF funds for child care, ranging from $3.2 million to $109 million.
One state, Massachusetts, nearly reached the limit in transferring
24% of its welfare funds. The total of $187 million increased
the total federal funds for child care by almost 10 percent.
Total Spending. In FY 1997, states spent in federal and
state funds a total of $4.2 billion, an increase of 35 percent
over FY 1996. Under the single federal Child Care and Development
Block Grant, states spent $1.952 billion in mandatory, matching
funds and discretionary funds and $818 million in discretionary
dollars from a pre-FY 1997 allocation. States spent $1.459 billion
of their own funds.
Direct Services. States spent the vast majority of funds
on providing services to families. In FY 1997, states used $2.1
billion, or 85 percent of both federal and state dollars, directly
on child care services. States have flexibility on how services
are provided to children. Most parents receive certificates or
vouchers which they present to child care providers which include
family day care, centers or caregivers in the family's home. Some
states reimburse providers directly through contracts in addition
to offering certificates to families.
Quality Services. Under the block grant, states must spend
a minimum 4 percent of funds for quality services. States expended
almost $98 million on improving the quality of child care services.
States did spend additional funds on quality from the pre-FY 1997
allocation, but were not required to report those amounts for
the FY 1997 financial reports. However, states report that because
of their need to use most of their block grant funds for direct
services, they are limiting their spending on quality to the minimum
4 percent.
Administrative Costs. States spent $60 million to administer
their child care programs. This amount -- 2.4 percent of total
federal and state funds -- is well below the maximum limit of
5 percent. States are again expecting more from the people who
run programs in order to provide as much funding as possible to
serve families.
Non-Direct Services. Separate from administrative expenses,
states spent a total of $213 million on non-direct services. States
spent $9 million on child care computer systems, $83 million on
costs to provide certificates to families, and $121 million on
determining which families can receive child care support and
other related activities.
Unobligated Balances. States can carry over from a year
unspent funds for a limited time period. However, with the high
demand for child care services, states left only $17.9 million
unspent in FY 1997.
TABLES:
Footnotes
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