By Christine Johnson-Staub

On May 10, the U.S. Department of Health and Human Services’ Administration for Children and Families (ACF) released guidance for how states can use the $24.9 billion in child care stabilization grant funds in the American Rescue Plan Act (ARPA). To provide immediate and critical relief to a field that has lost one in seven jobs over the pandemic, the guidance encourages rapid distribution of the grant funds to providers in all settings (centers, homes, and family, friends, and neighbors), regardless of their previous participation in the child care subsidy system.

The guidance also offers strategies for designing stabilization grant programs that can begin to address systemic inequities built into the child care industry over centuries and rooted in historic reliance on the undervalued work of Black, Latinx, and other women of color. Under this guidance, states can use stabilization grants in ways that recognize the work of and reduce barriers to support for providers in communities of color. States can also use the grants to intentionally meet the needs of diverse children and families, while building a foundation for the future—although significantly more permanent funding would be required to achieve the transformative change the sector needs.

States can use the funds to support costs providers have incurred since the pandemic began. Here are six important opportunities states should consider as they use ARPA funds to meet the field’s immediate relief needs. States can:

1. Design accessible and inclusive grant application processes that welcome all types of providers. States can spend up to 10 percent, and Tribes up to 20 percent, of their stabilization grant funds for administrative purposes that can include engaging intermediary organizations—often critical and trusted messengers for communities that face barriers. These organizations can be important partners for distributing grants, designing application processes that are accessible and supported with technical assistance, and other activities to ensure providers have the information and access they need to apply for stabilization grants.

2. Improve data systems to increase equity and better locate children, families, and providers in the state and understand their needs. States have struggled with outdated data systems and limited data collection, which create barriers to understanding inequities in child care availability, access, and utilization. States can use administrative funds to update systems and expand data collection in communities that may be underrepresented and develop new strategies to better understand needs.

3. Set grant amounts that reflect adequate compensation and benefits and address salary inequities. Compensation for early childhood educators has always been low and inequitable, undervaluing and making it hard to recruit and retain this critical workforce. Grants can support recruiting, retaining, and paying early educators and caregivers what they deserve.

4. Simplify applications and support the true costs of providing care by estimating costs. The guidance allows states to streamline the granting process by basing their grants on cost estimation, enrollment and capacity formulas, or survey data. These strategies can simplify the application process for providers and reduce barriers to access.

5. Fund supply-building activities to create the care families need. States can help stabilize and expand a mixed-system delivery that includes care 1) during non-traditional hours, 2) for infants and toddlers, 3) for children with disabilities, and 4) in geographically underserved areas by supporting staffed family child care networks, covering startup costs for new programs, and offering technical assistance to providers on business practices. Through the grants, states can also support facility improvements that update and expand child care spaces.

6. Connect children and educators to mental health services. Communities—particularly those hardest hit by the effects of the pandemic—have an even greater need for mental health consultation and services. States can use ARPA funds to connect more families and providers to these services.

Cumulatively, these options allow states to use the funds to better assess and meet the needs of diverse children, families, and providers.

The stabilization grant guidance places states on a quick timeline. They must include plans for the funding in their 2022-2024 Child Care and Development Fund (CCDF) State Plans, due July 1, 2021, and must have a plan by April 2022 to obligate all the grant funds by the end of the fiscal year (September 30, 2022). By building equity-focused strategies and significant flexibility into its guidance, ACF has made it easier for states to take bold steps and make major investments that will have long-term positive impacts on providers, children, and their families.