By Christina Walker and Stephanie Schmit

For the second consecutive year, federal Temporary Assistance for Needy Families (TANF) funds used for child care have fallen—reaching a 15-year low in 2013. According to data released by the Administration for Children and Families (ACF), the total amount of TANF funds used for child care fell from $2.6 billion in 2012 to $2.5 billion in 2013, a decline of nearly $114 million (4 percent).

While it may seem small, this decline is exemplary of a continuing trend: dramatic reductions in investments in child care assistance across all funding sources. Together, the Child Care and Development Block Grant (CCDBG) and TANF provide the bulk of federal child care assistance for low-income working families. Analysis of the most recently available CCDBG expenditure data shows spending within that program fell to a 10-year low in FY 2012. 

States can choose to use TANF funding to provide child care assistance to families in need. They can do so by either spending TANF funds directly on child care or transferring money to the CCDBG program. In 2013, direct spending on child care assistance decreased by more than $123 million from 2012 to $1.1 billion. TANF transfers to CCDBG increased nominally by $9 million to $1.4 billion. Eight states transferred 30 percent of their block grant (the maximum amount allowed) to CCDBG or a combination of CCDBG and the Social Services Block Grant (SSBG): Alaska, Florida, Idaho, Indiana, Massachusetts, Mississippi, Nebraska, and Oklahoma. Seven additional states transferred 25-30 percent of their TANF funds: Iowa, Kansas, Montana, New York, North Carolina, Vermont, and Wisconsin.

Under TANF, states are required to spend state dollars to help needy families at a level determined based on their historical spending; this is known as the maintenance-of-effort (MOE) requirement. In 2013, states reported spending $2.3 billion that could be claimed toward the TANF MOE requirement. A portion of TANF MOE funds spent on child care may also be directed toward states’ CCDBG MOE requirement. Because the Administration for Children and Families has not yet released FY 2013 expenditure data for CCDBG, it’s not possible to determine total child care spending (CCDBG and TANF combined) for 2013. CLASP will provide additional analysis when the data are released.

Because the TANF block grant has not received a funding increase since its establishment in 1996, it has lost more than one-third of its value to inflation. While child care remains a priority for states, they face tough choices with limited dollars and many areas of need. The history of TANF and CCDBG shows the dramatic consequences of consolidating programs into single block grants with limited funding. Under the current system, fewer than one in six children eligible for child care subsidies get help.

The public understands the importance of affordable child care for working parents.  However, that care is often out of reach because of anemic federal investments. Both members of Congress and federal officials have proposed ways to improve the current CCDBG program—a step in the right direction toward supporting children and their working parents. But those improvements will mean little if this downward trend in child care funding continues in free fall.