By Rachel Wilensky and Stephanie Schmit

On December 20, 2024, President Biden signed the American Relief Act, 2025 into law. In lieu of passing a full new budget for Fiscal Year (FY) 2025, Congress passed this continuing resolution, which will keep the government funded at FY2024 levels through March 14, 2025. Among other additions, the law included an additional $500 million for the Child Care and Development Block Grant (CCDBG). Half of this funding is reserved for necessary expenses directly related to the consequences of major disasters and emergencies that will go to states impacted by these events. The other $250 million is designated as emergency discretionary funding to be made as payments to all states.

The Office of Child Care in the Administration for Children and Families has published the allocations for states for the $250 million that is designated for all states from the American Relief Act, or ARA. These allocations often help state administrators and advocates understand and plan for the resources that will soon come their way. The state funding allocations distribution for major disasters and emergencies (the additional $250 million allocated through the ARA) has not yet been released and is not included in these numbers.

CCDBG is a critical support for families with low incomes who, without access to assistance, would likely be unable to afford their current child care arrangements. However, due to limited federal funding, the program was only able to serve 15 percent of eligible children in 2021. The annual appropriations process is an important opportunity to increase federal investments in programs that respond to additional need and ensure funding keeps up with rising inflation.

The additional funding for CCDBG included in the ARA is vital for communities recovering from natural disasters and for the child care sector as a whole, which continues to face the financial challenges of maintaining and building on the positive improvements from the pandemic relief funding. However, the amount allocated is hardly enough to cover the costs of inflation from the previous year.

As concerns about economic recovery, unemployment, and inflation persist, significant and sustained increases in annual discretionary funding remain a critical support. In addition, given the fragile nature of the child care sector caused in part by decades of insufficient federal funding, the need for long-term and sustainable increases for child care remains ever present. More resources for child care and early education are urgently needed. As Congress works to finish the FY25 appropriations process and begins the FY26 appropriations process, federal lawmakers must center the real needs of children, families, and providers in funding decisions.