How the American Rescue Plan will affect child care providers and what actions they should take.

For child care providers and families alike, the past year has been wrought with unimaginable, COVID-related challenges. Child care programs across the country have struggled to stay open with increased operational costs coupled with significantly reduced enrollment, to keep children and staff safe. Fortunately, some relief is in sight. On March 11, Congress passed the American Rescue Plan Act of 2021, a $1.9 trillion economic stimulus bill that includes an unprecedented $39 billion in funding towards  child care. Not only is this the largest federal funding of child care in history, but it’s also unique because it seeks to alleviate the high costs that child care programs have faced and the financial burden of care on families.


Families and child care providers who have been financially impacted by COVID.


$39 billion in child care relief funding, which falls into two buckets:

1) $15 billion towards the Child Care and Development Block Grant (CCDBG) program that offers subsidies directly to families to offset the cost of child care, with some additional flexibility in how states can spend this money

2) $24 billion in direct relief to child care programs  to offset the lost revenue and increased operational costs through a stabilization fund.


Unlike federal child care funding that historically goes directly to families, the stabilization funding  portion of the relief package has been set aside specifically for child care providers to maintain our current supply of available care and ensure that families have care to return to when they’re ready.


The goal is to help child care providers stay in business and more quickly connect families to care. Part of the funds will be used to subsidize the lost revenue that providers, both home- and center-based, have experienced over the past year in order to follow public health guidelines and limit the amount of children in their programs. 


The nearly $24 billion in funding from this package is for child care stabilization grants to be distributed to qualified programs. Each state will have more specific eligibility criteria for qualified child care programs, but both home- and center-based programs will receive these grants. States will determine subgrant amounts based on their own criteria, but they will use  child care providers’ current operating expenses to determine the amount. The funds can be used for things like personnel expenses, rent or mortgage payments and utilities, personal protective equipment and cleaning supplies or services, and mental health supports. 


Get in touch with your child care resource and referral agency, city or county agency, shared service alliance, or local coalition of early education advocates to make sure you’re in the loop when funding will be distributed in your state. State lead agencies technically have three years (this year and the next two fiscal years) to spend down the funds, and the process will vary widely from state to state depending on the decisions that each state lead agency makes on how to spend them. While each state’s situation will be different, the state agencies are currently discussing how to best distribute these funds to support child care providers and families in their communities. Speaking to your state lead agency and being an active participant in the conversation ensures that your voice–and that of your local child care community–is heard. The intent of the stabilization funding is to move the federal funds as quickly as possible, so continue to speak to your state lead agency to get the financial assistance you need.

Learn more about the legislation’s details here.