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1 1 (May 17, 2022)

handle is hein.crs/govegnw0001 and id is 1 raw text is: Congressional Research Service Informinrg th I egislie debate sine 1914 Child Care Entitlement to States: An Overview Overview The Child Care Entitlement to States (CCES) was created by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA, P.L. 104-193). PRWORA authorized the CCES in Section 418 of the Social Security Act. Section 418 appropriates mandatory child care funding for states, territories, and tribes. The law calls for states to integrate CCES funds with discretionary allotments from the Child Care and Development Block Grant (CCDBG) and generally requires CCES funds to be spent under CCDBG Act rules. In combination, the CCES and CCDBG are commonly called the Child Care and Development Fund (CCDF). The CCDF is administered by the U.S. Department of Health and Human Services (HHS). Legislative Evolution The current structure of child care funding streams is linked to programs that existed prior to 1996, when PRWORA simultaneously repealed, created, and consolidated federal child care programs. Before this, four separate federal programs supported child care for low-income families. Each program had its own eligibility criteria and program rules. Three programs were linked to the welfare system- Aid to Families with Dependent Children (AFDC)-while one (CCDBG) targeted low-income working families not connected to AFDC (see Figure 1). Jurisdiction was split across multiple congressional committees. The 1996 law repealed the three welfare-related funding streams, created a new mandatory child care funding stream (CCES), and amended the CCDBG Act. To streamline and simplify administration, the law generally applied CCDBG Act rules to CCES funds. The Senate Finance Committee and House Ways and Means (W&M) Committee typically exercise CCES jurisdiction. The Senate Health, Education, Labor, and Pensions (HELP) Committee and House Education and Labor (E&L) Committee typically exercise CCDBG jurisdiction. Authorization and Appropriations The 1996 law authorized and appropriated CCES funding for each of FY1997-FY2002. Temporary extensions provided funding into FY2006, when the Deficit Reduction Act of 2005 (P.L. 109-171) reauthorized the CCES and appropriated $2.917 billion annually through FY2010. A series of extensions maintained funding at the same level over the next decade. In March 2021, the American Rescue Plan Act (ARPA, P.L. 117-2) amended Section 418 to provide permanent annual appropriations of $3.550 billion for FY2021 and beyond. ARPA also made other changes to the CCES (e.g., made territories eligible for the first time). The CCDBG Act-which establishes most of the program rules by which CCES funds are administered at the state level-was reauthorized through FY2020 by P.L. 113-186. Updated May 17, 2022 While this authorization has expired, annual appropriations acts have continued to provide funding for the CCDBG. Figure I. Legislative Evolution of the CCDF 8EFORE PL 104 193 4 Programs 1. AFDC Child Care Familes eceving welfre 2. Transitional Child Care Families leaving AFDC (12 months) 3. At-Risk Child Care lamihes atrisk of AlFC Mandatory Funding 4. CCDBG I ow inome workmg farilies at hrbeluw /5' SMI 4i~ AFTER RL. 104 93 1 Program Child Care and Development Fund .1 ;et of program roles - 1 target population (85% SMI) - 1 state lead agency - 2 funding authorizations ManrdatrvyFundtnq DSSA, CCt) W&Fnnce LCCTSC1_tri L+:,L HELP SSA =Social Security Act sMI =State Median Income. Source: Prepared by the Congressional Research Service (CRS). Allocation of Funds As amended by ARPA, Section 418 specifies that, from the total amounts appropriated, $75 million is to go to the territories (American Samoa, Guam, Northern Mariana Islands, Puerto Rico, and U.S. Virgin Islands) and $100 million is to go to Indian tribes and tribal organizations. In addition, since FY2016 annual CCDBG appropriations have allowed HHS to reserve, from CCES appropriations, up to 0.5% for technical assistance and 0.5% for research. Remaining CCES funds are allocated to the 50 states and the District of Columbia in two parts. * First, each state receives a fixed amount each year, equal to the federal funds the state received for welfare-related child care programs in the mid-1990s. This amount totals $1.2 billion annually and is sometimes called guaranteed mandatory funding, as there are no state maintenance-of-effort (MOE) or matching requirements. * Second, remaining CCES funds are allotted to states based on their share of children under age 13. To receive these funds, states must meet a MOE requirement set at 100% of the amount states spent on welfare-related child care programs in the mid-1990s (totaling $888 million annually). States must also match the federal funds with state dollars at the Medicaid matching rate. Discretionary CCDBG funds (appropriated separately from the CCES) are allotted to states by a formula based on their

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