Financing Child Care in the United States - Ewing Marion Kauffman ...

SOCIAL AND HUMAN SERVICES
A number of states have opted to transfer welfare funds, also known as Temporary
Assistance for Needy Families (TANF), to their subsidized child care programs. The most
prominent example of this approach is covered in the profile on the Rhode Island Child Care
Entitlement, which successfully consolidates federal child care and welfare funding. Rhode
Island’s approach highlights a new concept for subsidized child care: distinctions are no
longer made among families based on current or past welfare status. Instead, the state
program draws upon multiple funding streams, recognizes that the need for child care is
driven by parental work or training, and that working families with incomes of up to about
$30,000 annually need assistance paying for child care.
Some states have tapped TANF resources to focus on
improving child care quality or increasing child care
capacity. Iowa has applied TANF funds to strengthen
local child care capacity as part of an overall,
comprehensive approach to supporting child
development. Florida, too, has used TANF to increase
supply. Washington has sought to take advantage of
TANF’s flexibility by providing new incentives that
simultaneously boost the number of centers accepting
subsidized child care payments while creating wage
ladders and improved pay for staff at these centers.
Connecticut takes advantage of TANF’s flexibility to help
support its comprehensive approach to school readiness.
TANF is an important, but certainly not the only, source of
social or human service revenue that can be applied to
child care. State general funds are often allocated
through state agencies with an immediate and direct
relationship to child care. Prominent among the general
revenue supporting quality improvement in child care is
Wisconsin’s Child Care Quality Improvement Initiatives
and Vermont’s Quality Incentive Bonus. Each is
administered through the state agency charged with
oversight of the child care program. Minnesota is leading
the country through its decision to reserve state funding
to provide a financial incentive to low– and middle–income
parents to stay at home with their infants. North Carolina,
already an innovator with its T.E.A.C.H. Early Childhood ®
Program, has tapped general fund resources to address
the health insurance and compensation problems that
plague the child care field.
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