The Child Care and Development Block
Grant: Background and Funding
Karen E. Lynch
Analyst in Social Policy
January 28, 2010
Congressional Research Service
7-5700
www.crs.gov
RL30785
CRS Report for Congress
P
repared for Members and Committees of Congress

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The Child Care and Development Block Grant: Background and Funding

Summary
The Child Care and Development Block Grant (CCDBG) provides subsidies to assist low-income
families in obtaining child care so that parents can work or participate in education or training
activities. Discretionary funding for this program is authorized by the Child Care and
Development Block Grant Act of 1990 (as amended), which is currently due for reauthorization.
In addition, mandatory funding for child care subsidies is authorized in Section 418 of the Social
Security Act (sometimes referred to as the “Child Care Entitlement to States”). In combination,
these two funding streams are commonly referred to as the Child Care and Development Fund
(CCDF). The CCDF is the primary source of federal funding dedicated solely to child care
subsidies for low-income working and welfare families.
The CCDF is administered by the U.S. Department of Health and Human Services (HHS), and
provides block grants to states, according to a formula, which are used to subsidize the child care
expenses of working families with children under age 13. In addition to providing funding for
child care services, funds are also used for activities intended to improve the overall quality and
supply of child care for families in general.
Discretionary CCDF funds are subject to the annual appropriations process. The FY2010
Consolidated Appropriations Act (P.L. 111-117) provided $2.127 billion for discretionary CCDF,
the same level of funding as requested in the Obama Administration’s FY2010 Budget. This is
also the same amount of funding the program received in the FY2009 Omnibus Appropriations
Act (P.L. 111-8), though the American Recovery and Reinvestment Act appropriated an additional
$2.000 billion in one-time discretionary CCDF funding in FY2009. The mandatory (or capped
entitlement) CCDF funding was directly appropriated (or pre-appropriated) for fiscal years 1997
through 2002 by the 1996 welfare reform law, which enacted the mandatory component of the
CCDF. Temporary extensions provided mandatory CCDF funding into FY2006. On February 8,
2006, a spending budget reconciliation bill was enacted into law (P.L. 109-171), increasing
mandatory child care funding by $1 billion over five years (for a total amount of $2.917 billion
for each of fiscal years 2006 to 2010).
Federal funding levels for child care assistance continue to be a source of debate, in the context of
increased work requirements for single welfare mothers, those leaving welfare for work, and low-
income working families in general. Moreover, the quality of available child care services, and
the relationship of child care programs to the broader world of early childhood education and care
remain active concerns of Congress.
This report provides background information on the CCDBG and will be updated as necessary.

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Contents
Introduction ................................................................................................................................ 1
A Brief Legislative History ......................................................................................................... 1
Child Care Programs Prior to 1996........................................................................................ 1
Child Care Programs After 1996 Reforms ............................................................................. 2
Program Rules and Benefits ........................................................................................................ 3
Goals .................................................................................................................................... 4
Eligible Children and Families .............................................................................................. 4
Methods of Payment for Child Care Subsidies....................................................................... 4
Parental Co-payments ........................................................................................................... 5
Provider Payment Rates ........................................................................................................ 5
Activities to Improve Child Care Quality and Availability ..................................................... 6
Limitations on Use of Funds ................................................................................................. 6
State Application and Plan........................................................................................................... 6
Parental Choice..................................................................................................................... 7
Parental Access ..................................................................................................................... 7
Parental Complaints .............................................................................................................. 7
Consumer Education Information.......................................................................................... 7
Licensing and Regulation...................................................................................................... 7
Health and Safety Requirements............................................................................................ 8
Restriction Against Supplanting State Funds.......................................................................... 8
Funding ...................................................................................................................................... 8
Discretionary Appropriations ................................................................................................ 8
FY2010 Appropriations................................................................................................... 8
President’s FY2010 Budget Request................................................................................ 9
FY2009 Appropriations................................................................................................... 9
President’s FY2009 Budget Request.............................................................................. 10
Mandatory Pre-appropriations ............................................................................................. 10
Additional Funding History................................................................................................. 10
Allocation of Funds............................................................................................................. 12
Discretionary Funds ...................................................................................................... 12
Mandatory Funds .......................................................................................................... 12
Transfer of Funds from TANF ............................................................................................. 15
Federal Enforcement ................................................................................................................. 15
Recent Regulations ................................................................................................................... 15
State Error Rate Reporting .................................................................................................. 15
State Match Requirements................................................................................................... 17
Data Collection ......................................................................................................................... 18
Religious Providers ................................................................................................................... 18
Indian Tribes and Tribal Organizations ...................................................................................... 19
Additional Reading ................................................................................................................... 20

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Figures
Figure 1. Child Care Programs Before and After Welfare Reform in 1996.................................... 3

Tables
Table 1. Funding Trends in the CCDF, FY1997-FY2010 ........................................................... 10
Table 2. FY2009 CCDF Allocations .......................................................................................... 13

Contacts
Author Contact Information ...................................................................................................... 21

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Introduction
The Child Care and Development Block Grant (CCDBG) provides subsidies to assist low-income
families in obtaining child care so that parents can work or participate in education or training
activities. Discretionary funding for this program is authorized by the Child Care and
Development Block Grant Act, which is currently due for reauthorization. In addition, mandatory
funding for child care subsidies is authorized in Section 418 of the Social Security Act
(sometimes referred to as the “Child Care Entitlement to States”). In combination, these two
funding streams are commonly referred to as the Child Care and Development Fund (CCDF).
While this term is not found in statute, it can serve as a useful catch-all when discussing the
complex financing structure underlying federal support directly targeted to child care subsidies.
For the purposes of this report, the term CCDBG will refer specifically to the discretionary
funding stream, while the term CCDF will refer to the jointly administered funding streams.
The CCDF is administered by the Department of Health and Human Services (HHS), and
provides block grants to states, according to a formula, which are used to subsidize the child care
expenses of working families with children under age 13. In addition to providing funding for
child care services, funds are also used for activities intended to improve the overall quality and
supply of child care for families in general. Notably, the CCDF is the primary source of federal
funding dedicated solely to child care subsidies for low-income working and welfare families.1
The FY2010 funding level for the CCDF is approximately $5.0 billion, which includes $2.1
billion in discretionary funds and $2.9 billion in mandatory fund.
A Brief Legislative History
The current structure of federal child care programs and funding is most easily understood by
tracing its evolution from the system that existed prior to 1996, when the welfare reform law (P.L.
104-193) simultaneously repealed, created, and consolidated federal child care programs (see
Figure 1).
Child Care Programs Prior to 1996
Before 1996, four separate federal programs specifically supported child care for low-income
families. Three were associated with the cash welfare system, then Aid to Families with
Dependent Children (AFDC). At that time, families on AFDC were entitled to free child care. In
addition, families who had left the AFDC rolls with employment were entitled to 12 months of
“transitional” subsidized child care. The third AFDC-related child care program targeted families
who, without a child care subsidy, would be “at risk” of qualifying for AFDC. These three
programs operated under three separate sets of rules, and targeted three separate populations.
Critics argued that mothers navigating their way through the welfare system faced unnecessary
complexity that could be alleviated with a more unified child care program.

1 The second-largest source of federal support for child care is the Dependent Care Tax Credit, which is a
nonrefundable tax credit used to offset some of the child care expenses of working families with children under 13.
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All three of the AFDC-related child care programs were funded with mandatory money, and fell
under the same congressional committee jurisdiction (the Ways and Means Committee in the
House, and the Finance Committee in the Senate). AFDC Child Care and Transitional Child Care
were both open-ended federal entitlements (i.e., there was no limit on program funding), with the
federal share of payments to states based on the state’s Medicaid matching rate. The AFDC At-
Risk program, on the other hand, was not open-ended, but was instead authorized as a “capped
entitlement” to the states at an annual level of $300 million.
The fourth pre-1996 child care program for low-income families was the CCDBG. Established in
the CCDBG Act of 1990 (as a component of the Omnibus Budget Reconciliation Act, P.L. 101-
508), the CCDBG was designed to support child care for low-income families who were not
connected to the AFDC welfare system. The CCDBG subsidized child care for children under age
13 whose working family income did not exceed 75% of state median income (SMI), adjusted for
family size. In addition, it provided funds for activities to improve the overall quality and supply
of child care for families in general. Unlike the AFDC-related programs, the CCDBG was funded
with discretionary funds appropriated as part of the annual appropriations process. Authorizing
legislation fell under the jurisdiction of the Education and Labor Committee in the House (later
renamed the Committee on Education and the Workforce) and the Labor and Human Resources
Committee in the Senate (later renamed the Committee on Health, Education, Labor and
Pensions).
Child Care Programs After 1996 Reforms
The 1996 welfare reform law (P.L. 104-193) repealed AFDC and its three associated child care
programs. Like cash welfare, child care was no longer an individual entitlement to welfare
families. Instead of preserving three separate programs, the new law created a consolidated block
of mandatory funding under Section 418 of the Social Security Act. Like the earlier three
programs, this new block of funding was designed to be largely targeted toward families on,
leaving, or at risk of receiving welfare (now Temporary Assistance for Needy Families, or
TANF).2 However, unlike the three AFDC-related child care programs, each of which was
administered under its own set of rules, the 1996 law instructed that the new mandatory funding
be transferred to each state’s lead agency managing the CCDBG, and be administered according
to CCDBG rules. The law authorized and appropriated funding for the new mandatory child care
program through FY2002.
In addition to creating the new block of mandatory child care funding, the 1996 welfare reform
law reauthorized the CCDBG through FY2002. This law also substantially amended the CCDBG
by modifying program rules such as income eligibility requirements, which were expanded from
75% of SMI (under pre-1996 law) to 85% of SMI (under the 1996 law).
The child care provisions in the 1996 law were designed to achieve several purposes. As a
component of welfare reform, the child care provisions were intended to support the overall goal

2 Section 418 of the Social Security Act requires that states spend at least 70% of their mandatory child care funds on
families receiving TANF assistance, families attempting to transition from TANF to work, or those “at-risk” of welfare
dependency. However, because the at-risk group is not defined as a distinct group from other working poor families
(the targeted group for CCDBG discretionary funds), the 70% target could, in practice, be met by spending all funds on
low-income working families with no connection to TANF (i.e., the requirement could be met by spending all of the
“earmarked” funds on “at-risk” families).
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of promoting self-sufficiency through work. However, separate from the context of welfare
reform, the legislation attempted to address concerns about the effectiveness and efficiency of
child care programs. The previous four separate child care programs (the original CCDBG and
the three AFDC programs) had different rules regarding eligibility, time limits on the receipt of
assistance, and work requirements. Consistent with other block grant proposals considered in the
104th Congress, the child care provisions in P.L. 104-193 were intended to streamline the federal
role, reduce the number of federal programs and conflicting rules, and increase the flexibility
provided to states.
Figure 1. Child Care Programs Before and After Welfare Reform in 1996

Source: Prepared by the Congressional Research Service (CRS).
Program Rules and Benefits
At the federal level, the CCDF is administered by the Administration for Children and Families
(ACF) within HHS. Federal law requires states to designate a lead agency to administer the
CCDF. The responsibilities of the lead agency are to administer federal funds, develop a state
plan, and coordinate services with other federal, state, or local child care and early childhood
development programs. States have tremendous flexibility in the design and operation of their
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child care policies, but federal law establishes program goals and a set of requirements that states
must meet in order to receive CCDF funds.
Goals
The 1996 law established five goals for the CCDF. They include (1) allowing states maximum
flexibility in developing their child care programs; (2) promoting parental choice; (3) encouraging
states to provide consumer education information to parents; (4) helping states to provide child
care to parents trying to become independent of public assistance; and (5) helping states to
implement health, safety, licensing and registration standards established in state regulations.
Eligible Children and Families
Federal law states that children eligible for services under the CCDF are those whose family
income does not exceed 85% of the state median. However, states have the discretion to adopt
income eligibility limits below this federal maximum, and most do. According to a summary of
state plans submitted to HHS, state income eligibility limits range from 34% to 85% of SMI in
FY2009.3 Because child care funding is not an entitlement for individuals, states are not required
to aid families even if their incomes fall below the state-determined eligibility threshold. Federal
law does, however, require states to give priority to families defined in their state plan as “very
low income.”
To be eligible for CCDF funds, children must be less than 13 years old and be living with parents
who are working or enrolled in school or training, or be in need of protective services. States
must use at least 70% of their total mandatory CCDF funds for child care services for families
who are receiving public assistance under TANF, families who are trying to become independent
of TANF through work activities, and/or families who are at risk of becoming dependent on
public assistance. In their state plans, states must demonstrate how they will meet the specific
child care needs of these families. Of their remaining child care funds (including discretionary
CCDBG funds), states must ensure that a substantial portion is used for child care services to
eligible families other than welfare recipients or families at risk of welfare dependency.
Preliminary HHS program data indicate that about 1.7 million children received child care
subsidies funded by the CCDF in an average month in FY2007.4
Methods of Payment for Child Care Subsidies
Parents of children eligible to receive subsidized child care must be given maximum choice in
selecting a child care provider. Parents must be offered the option to enroll their child with a
provider that has a grant or contract with the state to provide such services, or parents may
receive a certificate that can be used to purchase child care from a provider of the parents’ choice.
A child care certificate (also sometimes referred to as a voucher) is an authorization form, letter,

3 National Child Care Information and Technical Assistance Center (NCCIC), Child Care and Development Fund
Report of State and Territory Plans FY 2008–2009, U.S. Department of Health and Human Services, Administration
for Children and Families, Office of Family Assistance, Child Care Bureau, p. 71, http://nccic.acf.hhs.gov/pubs/
stateplan2008-09/part3.pdf (hereinafter CCDF Report of State and Territory Plans FY2008-FY2009).
4 See Table 1 of the preliminary FY2007 CCDF data tables available online at http://www.acf.hhs.gov/programs/ccb/
data/ccdf_data/07acf800_preliminary/table1.htm.
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voucher, or other disbursement document authorizing child care payments for the provider of the
parents’ choice. The certificate may be in the form of a check or other disbursement directly to
the parent, but must be used for child care services only. Under limited circumstances, payments
can also be provided in the form of cash. The 1996 law expanded the definition of “child care
certificate” to allow the vouchers or disbursements to be used as a deposit for child care services,
if such deposits are required for other children cared for by the same provider.
Parental Co-payments
The CCDBG Act generally requires that families contribute to the cost of care on a sliding fee
scale basis. However, federal regulations allow states to waive child care fees for families with
incomes at or below the poverty guidelines.5 According to a summary of state plans submitted to
HHS, nearly all states anticipated waiving fees for some or all families with incomes at or below
the poverty level.6 HHS has suggested that a family’s fee should be no more than 10% of its
income. States may use this 10% limit as a guide in deciding the amount of the fee, but are not
required to do so. Federal statute requires that states take family size and income into account
when establishing co-payments, but states may also take other factors into account, such as the
number of children in care, whether care is full-time or part-time, or cost of care. States have
flexibility in establishing rules for counting income.
Provider Payment Rates
States must establish payment rates for child care services that are sufficient to ensure equal
access for eligible children to comparable child care services provided to children whose families
are not eligible for subsidies. Essentially, payment rates are reimbursement rate ceilings (that is,
the maximum rate providers can receive for child care services through CCDF). Providers are
paid either the state’s established payment rate (i.e., reimbursement rate ceiling) or the actual fee
that providers charge to nonsubsidized parents, whichever is the lesser of the two. When
determining payment rates, states are not required to consider variations in costs based on child
care settings, age groups, and special needs (this was required prior to the1996 law); however
many state plans do link payment rates to such characteristics and/or to regional variation.
States are required to conduct a local market rate survey every two years to assess the price of
child care being charged. Federal regulations suggest that states establish payment rates equal to
at least the 75th percentile of the market rate to ensure equal access for eligible families. (That is,
HHS recommends that states set their payment rate ceiling at a level that, on average, equals or
exceeds the rate charged by three out of every four providers who responded to the local market
rate survey.) However, federal law does not require that payments be set at this rate, nor that
states use the most current market survey when setting rates. Instead, states must include a
summary of the facts they used in determining the sufficiency of their payment rates to ensure
equal access when they submit their state plans. According to a summary of state plans submitted

5 In addition, state lead agencies may choose to waive, on a case-by-case basis, contributions from eligible families
whose children are in protective services or in foster care.
6 CCDF Report of State and Territory Plans FY2008-FY2009, p. 88. According to this summary of state plans, only
two states (Illinois and Wyoming) planned to offer no waivers whatsoever with respect to copayments from families at
or below poverty during FY2008 and FY2009.
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to HHS, state payment rates in FY2009 are expected to range from an average of the 10th
percentile of the current market rate survey to the 85th percentile across the country.7
Activities to Improve Child Care Quality and Availability
Federal law requires that no less than 4% of expenditures made from states’ CCDF allotments
(discretionary and mandatory) be spent on activities designed to (1) provide consumer education
to parents and the public, (2) increase parental choice, and (3) otherwise improve the quality and
availability of child care (such as resource and referral services). States use quality funds for a
variety of activities, including professional development, licensing and monitoring, and
improving provider compensation.8 In addition, federal appropriations frequently target portions
of discretionary CCDBG funds toward quality improvement activities, including specific quality
set-asides in areas such as infant and toddler care, school-aged child care, and child care resource
and referral services.
Limitations on Use of Funds
Although the CCDF is a fairly flexible funding source for states, there are some limitations on use
of funds. For instance, CCDF regulations prohibit states from expending more than 5% of
aggregate CCDF funds from each fiscal year’s allotment on administrative costs. However,
regulations also specify that costs considered to be an “integral part of service delivery” should be
excluded from the 5% administrative cap. These activities include eligibility determination (and
redetermination), the establishment and maintenance of computerized child care information
systems, and determination of erroneous payments (including case reviews and the preparation of
error rate reports).
In addition, the CCDBG Act prohibits the use of federal funds for the purchase or improvement
of land or buildings, with a limited exception for sectarian organizations. The amendments of
1996 also added an exception for Indian tribes and tribal organizations with respect to
construction, though this is subject to the Secretary’s approval. Finally, the law states that, in
general, no federal CCDF funds be used for any sectarian purpose or activity, including
sectarian worship or instruction (more detail on this in the section on “Religious Providers”).
State Application and Plan
To receive federal funding for child care, states must submit an application and plan to HHS.
After an initial three-year plan, required by the original CCDBG Act in 1990, states are now
required to submit plans that cover a two-year period. State plans include detailed information on
many components of CCDF program administration, including state decisions about child and
family income eligibility criteria, state priorities in children served, sliding fee scales, provider
payment rates, and specific quality improvement initiatives. In addition, state plans must certify,
or assure, that their programs will include certain elements related to parental choice, parental

7 CCDF Report of State and Territory Plans FY2008-FY2009, p. 67.
8 For more information on what states are doing with quality funds, see Part 5 of the CCDF Report of State and
Territory Plans FY2008-FY2009, online at http://nccic.acf.hhs.gov/pubs/stateplan2008-09/part5.pdf.
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access, parental complaints, consumer education information, licensing and regulation, and health
and safety requirements.
Parental Choice
Parents of children eligible to receive subsidized child care must be given the option to enroll
their child with a provider that has a grant or contract with the state program to provide such
services, or to receive a child care certificate or voucher that can be used with a provider of the
parents’ choice. State plans must include a detailed description of how this parental choice
provision is implemented. In addition, they must assure that the value of child care certificates
will be commensurate with the subsidy value of child care services provided under a grant or
contract, and that their payment rates for all subsidies will be sufficient to ensure equal access for
eligible children to comparable child care services provided to children whose families are not
eligible for subsidies. States may not significantly restrict parental choice among the various
types of child care providers, which range from child care centers to family homes. Under the
CCDBG Act, eligible child care providers can include individuals, age 18 and older, who provide
child care services for their grandchildren, great grandchildren, siblings (if the provider lives in a
separate residence), nieces, or nephews.
Parental Access
States must have procedures to ensure that child care providers receiving subsidies will give
parents unlimited access to their children and to providers while the children are in care. State
plans must include a detailed description of these procedures.
Parental Complaints
States are required to maintain a record of substantiated complaints made by parents, and to make
information about these complaints publicly available upon request. The state plan must include a
detailed description of how this record is maintained and made available.
Consumer Education Information
Under the CCDBG Act, states must collect and disseminate, to parents of eligible children and to
the general public, consumer education information that will promote informed child care
choices. At a minimum, the information must include information about the full range of
providers available, and health and safety requirements.
Licensing and Regulation
States must have in effect licensing requirements applicable to child care services provided within
the state, and state plans must include a detailed description of these requirements and how they
are effectively enforced. Federal law does not dictate what these licensing requirements should be
or what types of providers they should cover. The 1996 law specifies that this provision shall not
be construed to require that licensing requirements be applied to specific types of providers. The
conference report on the 1996 law further states that the legislation is not intended to either
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prohibit or require states to differentiate between federally subsidized child care and
nonsubsidized child care with regard to the application of specific standards and regulations.
Health and Safety Requirements
States must have in effect, under state or local law, health and safety requirements that are
applicable to child care providers; and states must have procedures in effect to ensure that
subsidized child care providers (including those receiving child care certificates) comply with
applicable health and safety requirements. States must have health and safety requirements in the
following areas: prevention and control of infectious diseases (including immunization), building
and physical premises safety, and health and safety training. In addition, state plans must assure
that children receiving services under the CCDF are age-appropriately immunized, and that the
health and safety provisions regarding immunizations incorporate (by reference or otherwise) the
latest recommendation for childhood immunizations of the state public health agency.
Restriction Against Supplanting State Funds
HHS requires states to assure that discretionary CCDBG funds will be used to supplement, not
supplant, state general revenue funds for child care assistance for low-income families. While this
is not a requirement in the CCDBG Act or accompanying regulations, federal appropriation laws
typically make this stipulation. For instance, this stipulation was included in the FY2010
Consolidated Appropriations Act (P.L. 111-117).
Funding9
Discretionary Appropriations
Discretionary CCDBG funds are subject to the annual appropriations process. The 1996
amendments to the CCDBG Act authorized funding through FY2002 at an annual authorization
level of $1 billion. Actual appropriations have surpassed the authorized level, reaching
approximately $2.1 billion in each of fiscal years 2002 through 2009 (see Table 1). In years since
FY2002, appropriations have been made without an authorization level.
FY2010 Appropriations
On December 16, 2009, President Obama signed the Consolidated Appropriations Act, 2010, into
law as P.L. 111-117. The measure provided $2.127 billion in discretionary funds for the CCDBG,
reflecting the conference report (H.Rept. 111-366) filed on the bill, H.R. 3288, on December 8,
2009. The House and Senate agreed to the conference report on December 10 and December 13,
respectively.

9 For a detailed discussion of child care funding history and the financing of the CCDF, see CRS Report RL31274,
Child Care: Funding and Spending under Federal Block Grants, by Melinda Gish.
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Prior to the passage of H.R. 3288, both the House and Senate had initiated the Labor-HHS-
Education (L-HHS-ED) appropriations process for FY2010. Although the full Senate did not pass
a bill to provide L-HHS-ED appropriations for FY2010, the Senate Appropriations Committee
did report such a bill (S.Rept. 111-66, H.R. 3293) on August 4, 2009, which sought to maintain
funding for the CCDBG at the $2.127 billion level. Meanwhile, on July 24, 2009, the House
passed its FY2010 L-HHS-ED appropriations bill, H.R. 3293, which also sought to maintain
funding for the CCDBG at $2.127 billion. Prior to consideration by the full House, this bill was
reported by the House Committee on Appropriations on July 22, 2009 (H.Rept. 111-220).
President’s FY2010 Budget Request
In May 2009, the Obama Administration released the detailed FY2010 Budget. The request
proposed to maintain discretionary CCDBG funding at $2.127 billion in FY2010, the same level
of funding the discretionary CCDBG received under the omnibus appropriation in FY2009 (P.L.
111-8).10
FY2009 Appropriations
President Obama signed the FY2009 Omnibus Appropriations Act (P.L. 111-8) into law on March
11, 2009. The FY2009 Omnibus funded the discretionary CCDBG at an annual level of $2.127
billion in FY2009, an increase of $65 million above the funding level proposed in the FY2009
budget request submitted by President Bush.
Prior to the passage of the FY2009 Omnibus Appropriations Act, Congress had passed two
continuing resolutions (CRs) for FY2009 (P.L. 110-329 and P.L. 111-6). Both CRs funded the
discretionary CCDBG at $2.062 billion, the level it had received in FY2008. The first of the two
CRs (P.L. 110-329) was signed into law by President Bush on September 30, 2008, and remained
in effect until March 6, 2009. The second CR (P.L. 111-6) was signed into law by President
Obama on March 6, 2009, and lasted until it was superseded by the FY2009 Omnibus on March
11, 2009.
In addition to annual appropriations contained in the FY2009 Omnibus, the CCDBG received
$2.0 billion in discretionary funds from the American Recovery and Reinvestment Act (ARRA) in
FY2009. The ARRA was signed into law by President Obama on February 17, 2009 (P.L. 111-5).
The ARRA specifies that the CCDBG funds should be used to supplement, not supplant, state
general revenue spending on child care assistance for low-income families. The ARRA also
specifies that a sum of approximately $255 million be reserved, out of the total appropriated to
CCDBG, for activities designed to (1) provide comprehensive consumer education to parents and
the public, (2) increase parental choice, and (3) improve quality and availability of child care
(such as resource and referral services). This sum would augment the amount that states are
already required by law to use for such activities (not less than 4% of the total amount received
by each state). Of the $255 million, nearly $94 million is reserved for activities designed to
improve the quality of infant and toddler care.

10 The Obama Administration’s FY2010 Budget also proposes maintaining mandatory CCDF funding at its pre-
appropriated level of $2.917 billion in FY2010.
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President’s FY2009 Budget Request
On February 4, 2008, the Bush Administration released its proposed budget for FY2009, which
proposed maintaining both the discretionary and mandatory portions of the CCDF at current
levels ($2.062 billion and $2.917 billion respectively).
Mandatory Pre-appropriations
The 1996 welfare reform law provided pre-appropriated mandatory CCDF funding to states from
FY1997 to FY2002. The annual amounts of mandatory funding were $1.967 billion in FY1997;
$2.067 billion in FY1998; $2.167 billion in FY1999; $2.367 in FY2000; $2.567 billion in
FY2001; and $2.717 billion in FY2002. Because these funds were directly appropriated by the
welfare reform law, the mandatory funding for CCDF did not go through the annual
appropriations process. Mandatory CCDF funding was extended through FY2005 (at the FY2002
rate of $2.717 billion annually) via a series of continuing resolutions; welfare reauthorization
legislation was debated in each of these years, without reaching fruition. Finally, on February 8,
2006, a spending budget reconciliation bill (S. 1932, The Deficit Reduction Act), which included
mandatory child care funding provisions, was passed into law (P.L. 109-171). The law pre-
appropriated $2.917 billion annually for each of FY2006-FY2010.
Additional Funding History
Beginning in FY1997, the treatment of CCDBG funding in the appropriations process was
changed to reflect states’ actual obligation of money for the program. Prior to FY1997, the funds
appropriated for the CCDBG only became available for obligation by the states in the last month
of the year in which they were appropriated. As a result, most of a given year’s appropriation was
actually obligated during the next fiscal year. With the enactment of the FY1997 appropriations
law, that practice was changed so that the CCDBG was officially advance funded by an entire
year. In other words, the FY1997 appropriation became available for obligation at the beginning
of FY1998 (rather than the end of FY1997). As a result of this change, only $19 million was
appropriated in FY1997 specifically for FY1997; this amount was added to funds previously
appropriated and available for obligation at the end of FY1996. The bulk of the FY1997
appropriation—$937 million—was to become available in FY1998. This practice of advance
funding continued in fiscal years 1999-2001, and is shown in Table 1.
Table 1. Funding Trends in the CCDF, FY1997-FY2010
($ in millions)
Discretionary Funding
Advance Appropriation
Same Year’s
All Available
Mandatory
Fiscal Year
from Prior Year
Appropriation
Funds for FY
Funding Total
1997 0a 19a 19a 1,967
1,986a
1998 937
66
1,002
2,067
3,069
1999 1,000
0
1,000
2,167
3,167
2000 1,183
0
1,183
2,367
3,550
2001 1,183
817
2,000
2,567
4,567
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Discretionary Funding
Advance Appropriation
Same Year’s
All Available
Mandatory
Fiscal Year
from Prior Year
Appropriation
Funds for FY
Funding Total
2002 0 2,100
2,100
2,717
4,817
2003 0 2,086b 2,086b 2,717c
4,803b
2004 0 2,087d 2,087d 2,717e
4,804d
2005 0 2,083f 2,083f 2,717g
4,800f
2006 0 2,062h 2,062h 2,917i
4,979
2007 0 2,062j 2,062j 2,917i
4,979
2008 0 2,062k 2,062k 2,917i
4,979
2009 0 2,127l 2,127l 2,917i
5,044m
2010 0 2,127
2,127
2,917
5,044
Source: Prepared by the Congressional Research Service (CRS) using annual U.S. Department of Health and
Human Services, Administration for Children and Families budget justifications and appropriations legislation for
relevant years.
a. What appears in the table to be limited discretionary CCDBG funding in FY1997, and consequently, in total
funding, actually reflects a shift to advance appropriating of funds for the following fiscal year. The FY1997
appropriation law provided $956 million for CCDBG, with only $19 million available immediately during
FY1997, and the remainder available on Oct. 1, 1997 (the first day of FY1998). In earlier years the funds
appropriated for CCDBG became available for obligation only in the last month of the given fiscal year, and
therefore most of the appropriation for a given year ($935 million in FY1996) was actually obligated in the
following fiscal year.
b. The figure shown reflects the 0.65% “across-the-board” cut included in the Consolidated Appropriations
Resolution, 2003 (P.L. 108-7).
c. P.L. 108-40 extended mandatory funding for the CCDF through the final quarter of FY2003, at the FY2002
rate.
d. The figure shown reflects the 0.59% “across-the-board” cut included in the Consolidated Appropriations
Act, 2004 (P.L. 108-199).
e. P.L. 108-262 extended mandatory funding for the CCDF through Sept. 30, 2004, at the FY2002 rate (which
was also maintained during FY2003).
f.
The figure shown reflects the 0.8% “across-the-board” cut included in the Consolidated Appropriations Act,
2005 (P.L. 108-447).
g. P.L. 108-308 extended (and maintained) mandatory funding for the CCDF through Mar. 31, 2005, at the
FY2002 rate. P.L. 109-19 extended (and maintained) the funding through Sept. 30, 2005.
h. The figure shown reflects the 1% “across-the-board” cut included in the FY2006 Defense Appropriations
Act (P.L. 109-148) that applies to discretionary programs funded by P.L. 109-149. Prior to the rescission,
funding was set at $2.083 billion. In FY2006, the Secretary of HHS invoked his authority (per section 2008
of the L-HHS-ED and Related Agencies Appropriation Act of 2006) to transfer a portion of the CCDBG
appropriation—$1.417 million—to the Centers for Medicare and Medicaid. This transfer is not reflected
above; when including it, total FY2006 discretionary CCDBG funding would round to $2.061 billion.
i.
The Deficit Reduction Act (S. 1932/P.L. 109-171), provides $2.917 billion in mandatory CCDF funding for
each of FY2006-FY2010.
j.
FY2007 funding was provided via four continuing resolutions, the last of which was P.L. 110-5.
k. This amount reflects the 1.747% across-the-board cut included in the Consolidated Appropriations Act of
2008 (P.L. 110-161).
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l.
In addition to the $2.127 billion appropriated in the FY2009 Omnibus Appropriations Act (P.L. 111-8), the
American Recovery and Reinvestment Act (P.L. 111-5) provided an additional $2.0 billion in discretionary
funding for the CCDBG.
m. This amount does not include funding appropriated by the American Recovery and Reinvestment Act (P.L.
111-5), which provided $2.0 billion to the CCDBG, for a total of $7.044 billion in FY2009 CCDF funds.
Allocation of Funds
Discretionary Funds
Discretionary CCDBG funds are allocated among states according to a formula that is based on
each state’s share of children under age five, the state’s share of children receiving free or
reduced-price lunches, and state per capita income. Half of 1% of appropriated funds is reserved
for the territories, and between 1% and 2% is reserved for payments to Indian tribes and tribal
organizations. States are not required to match these discretionary funds. Funds must be obligated
in the year they are received or in the subsequent fiscal year, and the law authorizes the Secretary
to reallocate unused funds. Table 2 displays the FY2009 discretionary CCDBG allocations from
both the FY2009 Omnibus and the ARRA.
Mandatory Funds
The Secretary must reserve between 1% and 2% of mandatory funds for payments to Indian tribes
and tribal organizations. After this amount is reserved, remaining mandatory funds are allocated
to states in two components. First, each state receives a fixed amount each year, equal to the
funding received by the state under the child care programs previously authorized under AFDC in
FY1994 or FY1995, or the average of FY1992-FY1994, whichever is greater. This amount equals
$1.2 billion each year, and is sometimes referred to as “guaranteed mandatory” funds. No state
match is required for these funds, which may remain available for expenditure by states with no
fiscal year limitation.
Second, remaining mandatory funds (after distribution of the “guaranteed” portion) are allocated
to states according to each state’s share of children under age 13. States must meet maintenance-
of-effort and matching requirements to receive these funds. Specifically, states must spend all of
their “guaranteed” federal entitlement funds for child care described above, plus 100% of the
amount they spent of their own state funds in FY1994 or FY1995, whichever is higher, under the
previous AFDC-related child care programs. Further, states must provide matching funds at the
Medicaid matching rate to receive these additional entitlement funds for child care. If the
Secretary determines that a state will not spend its entire allotment for a given fiscal year, then the
unused amounts may be redistributed among other states according to those states’ shares of
children under age 13. Table 2 displays the FY2009 CCDF allocations for both the “guaranteed”
mandatory and the federal share of mandatory matching funds.
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Table 2. FY2009 CCDF Allocations
(amounts, in dollars, do not include potential re-allotments)

Mandatory Funds
Discretionary Funds

Federal Share
Recipient (State,
“Guaranteed"
Matching
FY2009
Terr., Tribe, Other)
Mandatory
Funds
Omnibus
ARRA
Total Federal
Alabama
16,441,707
25,408,245
40,699,663
38,470,990
121,020,605
Alaska
3,544,811
4,063,825
4,269,912
4,036,095
15,914,643
Arizona
19,827,025
38,843,917
53,824,247
50,876,886
163,372,075
Arkansas
5,300,283
16,012,812
26,589,798
25,133,767
73,036,660
California
85,593,217
211,811,933
233,034,605
220,273,864
750,713,619
Colorado
10,173,800
27,529,729
25,720,747
24,312,305
87,736,581
Connecticut
18,738,357
18,178,031
14,478,449
13,685,624
65,080,461
Delaware
5,179,330
4,655,334
4,809,076
4,545,736
19,189,476
District of Columbia
4,566,974
2,596,430
2,841,092
2,685,517
12,690,013
Florida
43,026,524
91,403,553
111,433,225
105,331,254
351,194,556
Georgia
36,548,223
58,395,506
87,646,485
82,847,053
265,437,267
Hawai
4,971,633
6,473,217
6,822,298
6,448,715
24,715,863
Idaho
2,867,578
9,406,606
12,638,572
11,946,497
36,859,253
Illinois 56,873,824
72,660,972
78,046,369
73,772,628
281,353,793
Indiana
26,181,999
36,039,410
45,241,711
42,764,321
150,227,441
Iowa
8,507,792
15,992,058
19,170,605
18,120,842
61,791,297
Kansas
9,811,721
15,879,664
19,482,264
18,415,435
63,589,084
Kentucky
16,701,653
22,798,415
36,920,367
34,898,645
111,319,080
Louisiana
13,864,552
24,414,650
42,332,204
40,014,134
120,625,540
Maine
3,018,598
6,066,612
7,149,448
6,757,951
22,992,609
Maryland
23,301,407
30,454,015
25,433,096
24,040,405
103,228,923
Massachusetts
44,973,373
31,846,226
25,355,376
23,966,942
126,141,917
Michigan
32,081,922
54,088,623
62,080,653
58,681,179
206,932,377
Minnesota
23,367,543
28,427,578
27,609,193
26,097,341
105,501,655
Mississippi
6,293,116
17,475,750
32,778,293
30,983,387
87,530,546
Missouri
24,668,568
32,065,667
40,922,593
38,681,713
136,338,541
Montana
3,190,691
4,851,889
6,079,937
5,747,006
19,869,523
Nebraska
10,594,637
10,187,127
12,482,903
11,799,352
45,064,019
Nevada
2,580,422
15,305,948
15,144,641
14,315,336
47,346,347
New Hampshire
4,581,870
6,513,515
5,010,614
4,736,238
20,842,237
New Jersey
26,374,178
46,381,871
36,081,817
34,106,014
142,943,880
New Mexico
8,307,587
11,375,335
18,848,669
17,816,534
56,348,125
New York
101,983,998
98,195,618
102,392,553
96,785,640
399,357,809
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Mandatory Funds
Discretionary Funds

Federal Share
Recipient (State,
“Guaranteed"
Matching
FY2009
Terr., Tribe, Other)
Mandatory
Funds
Omnibus
ARRA Total
Federal
North Carolina
69,639,228
50,968,578
71,455,992
67,543,134
259,606,932
North Dakota
2,506,022
3,180,045
3,854,955
3,643,862
13,184,884
Ohio
70,124,656
61,627,213
72,088,324
68,140,840
271,981,033
Oklahoma
24,909,979
20,598,914
31,905,779
30,158,651
107,573,323
Oregon
19,408,790
19,459,057
23,814,406
22,510,354
85,192,607
Pennsylvania
55,336,804
61,379,602
63,631,144
60,146,767
240,494,317
Rhode Island
6,633,774
5,136,805
5,526,768
5,224,128
22,521,475
South Carolina
9,867,439
23,947,853
38,420,103
36,316,257
108,551,652
South Dakota
1,710,801
4,446,971
5,776,337
5,460,031
17,394,140
Tennessee
37,702,188
33,464,276
44,361,712
41,932,510
157,460,686
Texas
59,844,129
154,440,610
227,298,219
214,851,599
656,434,557
Utah
12,591,564
19,457,466
23,661,260
22,365,594
78,075,884
Vermont
3,944,887
2,816,093
2,986,934
2,823,373
12,571,287
Virginia
21,328,766
41,548,889
40,086,857
37,891,741
140,856,253
Washington
41,883,444
34,566,445
35,283,281
33,351,204
145,084,374
West Virginia
8,727,005
8,682,904
13,803,056
13,047,215
44,260,180
Wisconsin
24,511,351
29,495,338
32,259,829
30,493,313
116,759,831
Wyoming
2,815,041
2,825,579
2,736,365
2,586,525
10,963,510
America Samoa
-
-
2,831,968
2,662,774
5,494,742
Guam
-
-
3,978,605
3,740,906
7,719,511
N. Mariana Islands
-
-
1,938,850
1,823,015
3,761,865
Puerto Rico
-
-
35,353,476
33,417,556
68,771,032
Virgin Islands
-
-
1,885,982
1,773,305
3,659,287
Tribes
58,340,000

- 42,541,620 40,000,000 140,881,620

Technical Assistance
3,792,100
3,500,400
5,317,703
5,000,000
17,610,203
Child Care Awarea
-
-
1,000,000
-
1,000,000
Research & Evaluationb
-
-
9,910,000
-
9,910,000
Total
1,239,656,881
1,677,343,119
2,127,081,000
2,000,000,000
7,044,081,000
Source: Prepared by the Congressional Research Service (CRS) based on data from the U.S. Department of
Health and Human Services (HHS). In estimating al ocations, HHS used data from the fol owing sources:
population under age 5 and population under age 13 from the Census Bureau, published July 2007; FY2007
participants in Free and Reduced School Lunch Program from the Department of Agriculture; and per capita
income for 2004, 2005, and 2006 from the Department of Commerce, published March 2008.
Notes:
a. The FY2009 Omnibus (P.L. 111-8) included a $1 million set-aside for Child Care Aware, specifying that this
amount come out of the $19 million targeted funds for resource and referral and school-age care activities.
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b. The FY2009 Omnibus also included $9,910,000 for research, demonstration, and evaluation.
Transfer of Funds from TANF
In addition to amounts provided to states specifically for CCDF, states may also transfer up to
30% of their TANF block grant allotment to the CCDF. Transferred funds must be spent
according to the CCDBG Act rules. The transfer from the FY2008 TANF allotment to the CCDF
totaled nearly $1.725 billion (representing 10% of the FY2008 TANF allotment). It should be
noted, however, that states may choose to move previously transferred TANF funds back to
TANF, and when these amounts are taken into account, the net amount transferred in FY2008 (as
opposed to funds from only the FY2008 TANF allotment) comes to just under $1.679 billion.
Nothing precludes a state from using TANF funds for child care services without formally
transferring them to the CCDF, in which case the CCDBG Act rules do not necessarily apply.
HHS reports that in FY2008, states spent almost $1.622 billion in federal TANF money on child
care within the TANF program. (In addition, states report spending $2.614 billion in FY2008 on
child care through state TANF and separate state program (SSP) MOE funds.)
Federal Enforcement
The Secretary must coordinate child care activities within HHS, and, to the extent practicable,
with similar activities in other federal agencies. The Secretary is also required to publish a list of
child care standards every three years, and to provide technical assistance to states. The Secretary
must monitor state compliance with the statute and state plans, and must establish procedures for
receiving and assessing complaints against a state.
Upon finding that a state is out of compliance with either the statute, regulation, or state plan, the
Secretary is authorized to require that the state reimburse the federal government for any misspent
funds, or to withhold the amount from the state’s CCDF allotment for the next fiscal year, or to
take a combination of these steps.
States also must arrange for independent audits of their programs, and must repay the federal
government for any funds that are found to have been misspent, or the Secretary may offset these
amounts against future payments due to the state. In addition, states are now required to complete
a case review every three years to check for improperly authorized payments. This new mandate
is tied to “State Error Rate Reporting” requirements added to CCDF regulations in 2007.
Recent Regulations
In 2007, HHS published two final rules that affect the CCDF program. These rules amend
existing CCDF regulations with respect to state error rate reporting and state match requirements.
State Error Rate Reporting
Following the enactment of the Improper Payment Information Act of 2002 (P.L. 107-300), the
Office of Management and Budget (OMB) identified CCDF as a program at risk of significant
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improper payments.11 As with other “high risk” programs, HHS was required to complete
erroneous payment risk assessments for CCDF every three years. HHS has taken a number of
steps to respond to this mandate, culminating in the publication of new regulations, effective
October 1, 2007, on state requirements for error rate reporting.12
The new regulations specify that states must calculate, prepare, and submit to HHS a report of
errors occurring in the administration of CCDF grant funds. In this report, states must establish
target error rates (i.e., goals for reducing future errors) and discuss strategies for reducing error
rates. In addition, states must report on:
• state error rates (defined as the percentage of cases with an error and expressed as
the total number of cases with an error compared to the total number of cases);
• percentage of cases with an improper payment (expressed as the total number of
cases with an improper payment compared to the total number of cases);
• percentage of improper payments (expressed as the total amount of improper
payments in the sample compared to the total dollar amount of payments made in
the sample);
• average amount of improper payment; and
• estimated annual amount of improper payments.
The CCDF error rate methodology requires that states conduct a comprehensive review of a
random sample of case records to determine whether child care subsidies were properly
authorized to eligible families. The methodology focuses on administrative errors and improper
authorizations for payment made during the client eligibility determination process.13 States must
conduct these reviews and report their findings to HHS once per every three-year reporting cycle.
States are required to provide federal staff with access to, and the opportunity to participate and
provide oversight in, case reviews and calculations of error rates.
HHS uses a three-year rotation for measuring CCDF improper authorizations for payments. A
stratified random sampling method was used for selecting states, with approximately one-third of
the total of 52 states (50 states plus the District of Columbia and Puerto Rico) selected to
participate in each year of a three-year cycle implementing the error rate measurement
methodology. To date, HHS has reported two years of data (FY2007 and FY2008) in the annual
HHS Agency Financial Report.14 According to the most recent data, the CCDF payment error
rate (or percentage of improper authorizations for payment) was estimated at 11.9% for FY2008,
a slight increase from 11.5% in FY2007.15 The actual amount of improper authorizations for

11 OMB Circular A-123, Appendix C, http://www.whitehouse.gov/OMB/Circulars/a123/a123_appx-c.pdf.
12 The new regulation was codified at 45 CFR 98 (subpart K). CCDF regulations are available online at
http://www.acf.hhs.gov/programs/ccb/law/finalrul/index.htm.
13 The CCDF methodology distinguishes between authorizations for payment and actual payments made to providers
for child care services rendered.
14 FY2007 base error rate data were reported in the HHS FY2008 Agency Financial Report, available online at
http://www.hhs.gov/afr/2008sectiii.pdf, while FY2008 error rate data were reported in the FY2009 Agency Financial
Report, available online at http://www.hhs.gov/afr/2009sectiii-oai.pdf.
15 The national over-authorization error rate (or the percentage of authorizations in excess of the amounts for which
cases are eligible) was 11.5% in FY2008, while the percentage of under-authorizations was equal to 0.4%. For more
information, see the FY2009 Agency Financial Report, available online at http://www.hhs.gov/afr/2009sectiii-oai.pdf.
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CCDF payments identified in state case review samples was $220,314 for FY2008.16 (HHS has
noted that the amount of improper authorizations for payment does not represent actual improper
payments, and indicated that, in general, the amount of actual improper payments is about 15%
lower, on average.) Data from the third round of participating states (FY2009) will be released in
the FY2010 HHS Agency Financial Report.
Regulations state that improper payments identified during the case reviews are subject to federal
disallowance procedures for misspent funds (that is, funds identified as having been improperly
spent will be disallowed for the purposes of federal reimbursement).17 Improperly spent funds are
subject to disallowance regardless of whether the state pursues recovery of such funds. Federal
rules require states to recover improper child care payments that occur as the result of fraud.
However, if the improper payment was not the result of fraud, as in cases of administrative error,
federal rules give states discretion as to whether or not to recover misspent funds. Recovered
funds may be used for activities specified in approved state plans, provided funds are recovered
within the applicable obligation period. If, however, funds are not recovered until after the end of
the applicable obligation period, recoveries must be returned to the federal government.18
State Match Requirements
Section 418 of the Social Security Act requires that states meet specific matching requirements in
order to draw down a portion of their mandatory CCDF funds. Since FY1999, nine states have
failed to draw down their full allotment of federal CCDF matching funds in at least one year.
Seeking to provide states with increased flexibility in making expenditures that count toward state
match requirements, HHS published a final rule that revised previous CCDF regulations, effective
October 1, 2007. Specifically, the final rule amended state match regulations with respect to use
of privately donated funds and public pre-kindergarten expenditures.
Prior to the new rule, CCDF regulations specified that privately donated funds would only qualify
as state match for CCDF if those funds were transferred to (or under the control of) the state’s
lead agency or a single entity designated by the state to receive donated funds. The new rule
amended previous regulations to permit states to designate multiple public and/or private entities
as eligible to receive donated funds. However, the rule requires that donated funds be certified by
both (1) the state’s lead agency for CCDF and (2) either the donor or the entity designated by the
state to receive privately donated funds, as appropriate. In addition, the final rule maintains
previous requirements related to private donations, which specify that such funds (1) must be
donated without any restriction that would require their use for a specific individual, organization,
facility, or institution; (2) may not revert to the donor’s facility or use; (3) may not be used to
match other federal funds; and (4) shall be subject to audit.

16 This is the actual amount of CCDF improper authorizations identified in the sample review. If you apply the
estimated error rate of 11.9% to the total amount outlaid by the CCDF in FY2008 ($5.245 billion), it would suggest that
approximately $624 million may have been improperly authorized in that year. For more information, see the FY2009
Agency Financial Report, available online at http://www.hhs.gov/afr/2009sectiii-oai.pdf.
17 HHS regulations specify, however, that extrapolations of estimated improper payments derived from random
sampling of total cases are not subject to disallowance.
18 For more information on CCDF obligation and expenditure rules, see CRS Report RL31274, Child Care: Funding
and Spending under Federal Block Grants, by Melinda Gish.
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The final rule also increased the amount of public pre-kindergarten expenditures that may be used
as state match for CCDF. Previous regulations allowed that no more than 20% of a state’s match
requirement be fulfilled by public pre-kindergarten expenditures. Under the final rule, up to 30%
of a state’s CCDF match may come from public pre-kindergarten expenditures.
Data Collection
Federal law specifies a set of data reporting requirements for states in the administration of their
CCDF programs. States must submit disaggregated data on children and families receiving
assistance to HHS every quarter, and aggregated data twice a year. The law further requires the
Secretary to submit a report to Congress once every two years. The most recent available
published report to Congress is for both FY2004 and FY2005.19 However, select program data
and statistics from more recent years, including preliminary data from FY2008, are available on
the HHS website.20
Specifically, the law requires states to collect the following information on each family unit
receiving assistance, to be included in quarterly reports: family income; county of residence;
gender, race, and age of children receiving assistance; whether the family includes only one
parent; sources of family income, separately identified and including amounts; number of months
the family has received benefits; the type of child care received; whether the child care provider
was a relative; the cost of child care; and the average hours per week of care.
Aggregate data to be reported every six months include the number of child care providers that
receive funding under this program, separately identified by type; the monthly cost of child care
services, and the portion that is subsidized by this program, identified by type of care; the number
of payments made by the state through vouchers, contracts, cash, and disregards under public
benefit programs, identified by type of child care provided; the manner in which consumer
education information was provided and the number of parents to whom it was provided; and the
total unduplicated number of children and families served by the program.
Religious Providers
Under the CCDBG Act, religious providers may receive assistance on the same basis as
nonsectarian providers. However, religious providers may use funds for construction assistance,
which is generally prohibited for other providers, to the extent such efforts are deemed necessary
to bring facilities into compliance with health and safety requirements. Use of funds for religious
activities, including sectarian worship or instruction, is generally prohibited under the CCDBG
Act. However, this prohibition does not apply to funds received by child care providers in the
form of child care certificates, if such sectarian child care services are freely chosen by the parent.
Child care providers that receive CCDF funding may not discriminate in their admissions policy
against a child on the basis of religion, with the exceptions of family child care providers (i.e.,
individuals who are the sole caregiver for children in a private home) or providers who receive

19 Annual reports to Congress are available at http://www.acf.hhs.gov/programs/ccb/ccdf/rtc/index.htm.
20 Select program data and statistics are available at http://www.acf.hhs.gov/programs/ccb/data/index.htm.
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assistance through child care certificates. However, sectarian providers may reserve unsubsidized
slots for children whose families regularly participate in their organization’s activities, unless
80% or more of their operating budget comes from federal or state funds, including child care
certificates.
In their employment practices, child care providers receiving assistance under the act may not
discriminate on the basis of religion if the employee’s primary responsibility is working directly
with children in the delivery of child care services. However, in considering two or more
qualified candidates, sectarian providers may select an individual who regularly participates in
their organization’s activities. In addition, sectarian organizations may require employees to
adhere to their religious tenets or teachings and to rules forbidding the use of drugs or alcohol,
unless 80% or more of their operating budget comes from federal or state funds, including child
care certificates.
The welfare reform law of 1996 (P.L. 104-193) included a section on services provided by
charitable, religious or private organizations under the TANF program.21 This provision also
applies to child care services funded under TANF. The provision, commonly referred to as
“charitable choice,” is intended to allow states to provide services through charitable and
religious organizations, without impairing the religious character of these organizations or the
religious freedom of individuals who participate in the programs.
Indian Tribes and Tribal Organizations
The Secretary is required by law to reserve between 1% and 2% of all child care funds (both
discretionary and mandatory), for payments to Indian tribes and tribal organizations. The
Secretary is required to allocate among other tribes and organizations any funds that an Indian
tribe or tribal organization does not use in a manner consistent with the statute.
Indian tribes and tribal organizations are required to submit applications to receive these reserved
funds. Applications must show that the organization seeking funds will coordinate with the lead
agency in the state, that activities will benefit Indian children on reservations, and that reports and
audits will be prepared. The Secretary, in consultation with the tribes and tribal organizations, will
develop minimum child care standards that reflect tribal needs and available resources that will
apply in lieu of licensing and regulatory requirements otherwise applicable under state or local
law.
Notably, while the CCDBG Act generally prohibits use of funds for construction or renovation of
facilities, the law does allow Indian tribes and tribal organizations to submit a request to the
Secretary to use funds for these purposes. The Secretary may approve the request after a
determination that adequate facilities are not otherwise available and that the lack of such
facilities will inhibit the operation of child care programs in the future. The Secretary may not
approve the request if it will reduce the level of child care services provided from the level
provided by the tribe or organization in the previous year.

21 For a discussion of this provision, see CRS Report RL32736, Charitable Choice Rules and Faith-Based
Organizations, by Joe Richardson.
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Additional Reading
CRS Report RL31274, Child Care: Funding and Spending under Federal Block Grants, by
Melinda Gish.
CRS Report RL32817, Child Care Issues in the 109th Congress, by Melinda Gish.
CRS Report RL32241, Child Care Reauthorization: A Side-by-Side Comparison of Child Care
Provisions in H.R. 4, S. 880 (108th Congress), and Current Law, by Melinda Gish.
CRS Report RS22369, TANF, Child Care, Marriage Promotion, and Responsible Fatherhood
Provisions in the Deficit Reduction Act of 2005 (P.L. 109-171), by Gene Falk.
CRS Report RL33418, Welfare Reauthorization in the 109th Congress: An Overview, by Gene
Falk, Melinda Gish, and Carmen Solomon-Fears.
U.S. General Accounting Office. Child Care: States Exercise Flexibility in Setting Reimbursement
Rates and Providing Access for Low-Income Children. GAO-02-894, September 2002.
U.S. General Accounting Office. Child Care: States Have Undertaken a Variety of Quality
Improvement Initiatives, but More Evaluations of Effectiveness Are Needed. GAO-02-897,
September 2002.
U.S. General Accounting Office. Child Care: Recent State Policy Changes Affecting the
Availability of Assistance for Low-Income Families. GAO-03-588, May 2003.
U.S. General Accounting Office. Child Care: States Increased Spending on Low-Income
Families. GAO-01-293, February 2001.
U.S. General Accounting Office. Early Childhood Programs: The Use of Impact Evaluations to
Assess Program Effects. GAO-01-542, April 2001.
U.S. General Accounting Office. Education and Care: Early Childhood Programs and Services
for Low-Income Families. GAO/HHS-00-11, November 1999.
U.S. General Accounting Office. TANF and Child Care Programs: HHS Lacks Adequate
Information to Assess Risk and Assist States in Managing Improper Payments. GAO-04-723. June
2004.
U.S. Government Accountability Office. Child Care: Additional Information Is Needed on
Working Families Receiving Subsidies. GAO-05-667, June 2005.

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Author Contact Information

Karen E. Lynch

Analyst in Social Policy
klynch@crs.loc.gov, 7-6899


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