link to page 1 
Updated May 17, 2022
Child Care Entitlement to States: An Overview
Overview
While this authorization has expired, annual appropriations
The Child Care Entitlement to States (CCES) was created
acts have continued to provide funding for the CCDBG.
by the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 (PRWORA, P.L. 104-193).
Figure 1. Legislative Evolution of the CCDF
PRWORA authorized the CCES in Section 418 of the
Social Security Act. Section 418 appropriates mandatory
child care funding for states, territories, and tribes. The law
calls for states to integrate CCES funds with discretionary
allotments from the Child Care and Development Block
Grant (CCDBG) and generally requires CCES funds to be
spent under CCDBG Act rules. In combination, the CCES
and CCDBG are commonly called the Child Care and
Development Fund (CCDF). The CCDF is administered by
the U.S. Department of Health and Human Services (HHS).
Legislative Evolution
The current structure of child care funding streams is linked
to programs that existed prior to 1996, when PRWORA
simultaneously repealed, created, and consolidated federal
child care programs. Before this, four separate federal
programs supported child care for low-income families.
Each program had its own eligibility criteria and program
rules. Three programs were linked to the welfare system—
Aid to Families with Dependent Children (AFDC)—while
one (CCDBG) targeted low-income working families not
connected to AFDC (see Figure 1). Jurisdiction was split
across multiple congressional committees.
Source: Prepared by the Congressional Research Service (CRS).
The 1996 law repealed the three welfare-related funding
Allocation of Funds
streams, created a new mandatory child care funding stream
As amended by ARPA, Section 418 specifies that, from the
(CCES), and amended the CCDBG Act. To streamline and
total amounts appropriated, $75 million is to go to the
simplify administration, the law generally applied CCDBG
territories (American Samoa, Guam, Northern Mariana
Act rules to CCES funds. The Senate Finance Committee
Islands, Puerto Rico, and U.S. Virgin Islands) and $100
and House Ways and Means (W&M) Committee typically
million is to go to Indian tribes and tribal organizations. In
exercise CCES jurisdiction. The Senate Health, Education,
addition, since FY2016 annual CCDBG appropriations
Labor, and Pensions (HELP) Committee and House
have allowed HHS to reserve, from CCES appropriations,
Education and Labor (E&L) Committee typically exercise
up to 0.5% for technical assistance and 0.5% for research.
CCDBG jurisdiction.
Remaining CCES funds are allocated to the 50 states and
Authorization and Appropriations
the District of Columbia in two parts.
The 1996 law authorized and appropriated CCES funding
First, each state receives a fixed amount each year, equal
for each of FY1997-FY2002. Temporary extensions
to the federal funds the state received for welfare-related
provided funding into FY2006, when the Deficit Reduction
child care programs in the mid-1990s. This amount
Act of 2005 (P.L. 109-171) reauthorized the CCES and
totals $1.2 billion annually and is sometimes called
appropriated $2.917 billion annually through FY2010. A
“guaranteed” mandatory funding, as there are no state
series of extensions maintained funding at the same level
maintenance-of-effort (MOE) or matching requirements.
over the next decade. In March 2021, the American Rescue
Second, remaining CCES funds are allotted to states
Plan Act (ARPA, P.L. 117-2) amended Section 418 to
based on their share of children under age 13. To receive
provide permanent annual appropriations of $3.550 billion
these funds, states must meet a MOE requirement set at
for FY2021 and beyond. ARPA also made other changes to
100% of the amount states spent on welfare-related
the CCES (e.g., made territories eligible for the first time).
child care programs in the mid-1990s (totaling $888
The CCDBG Act—which establishes most of the program
million annually). States must also match the federal
rules by which CCES funds are administered at the state
funds with state dollars at the Medicaid matching rate.
level—was reauthorized through FY2020 by P.L. 113-186.
Discretionary CCDBG funds (appropriated separately from
the CCES) are allotted to states by a formula based on their
https://crsreports.congress.gov
link to page 2 link to page 2 Child Care Entitlement to States: An Overview
share of children under age five, share of children receiving
Beyond this, Section 418 largely defers to the CCDBG Act
free- or reduced-price lunches, and state per capita income.
with respect to program rules—meaning that the discussion
below generally applies to the CCDF as a whole.
Funding History
Table 1 provides a 10-year CCDF funding history. Federal
Eligibility
CCES funding of $2.9 billion was the largest single source
To be eligible for the CCDF, children must
of annual CCDF funding until FY2018, when CCDBG
be under age 13 (or older in certain circumstances);
funding was increased by 83% to $5.2 billion. CCDBG
funding has since increased, though in smaller increments.
have a parent who is working or attending job training
The FY2021 CCES increase (+22%) is due to ARPA.
(unless the child needs or receives protective services);
have family income no greater than 85% of state median
Federal CCDF appropriations are augmented each year by
income (SMI), or lower depending on state policy; and
CCES state match and MOE. Typically, state funds total
have no more than $1 million in family assets.
about $2.2 billion annually, but P.L. 116-127 temporarily
reduced (during the COVID-19 public health emergency)
States often adopt initial income limits below the federal
state match by 6.2 percentage points. In addition, ARPA
maximum. States need not serve all eligible children.
effectively exempted a portion of the increased CCES funds
from match requirements in FY2021-FY2022. States may
Payment Methods
also transfer up to 30% of their Temporary Assistance for
States may contract with child care providers to serve
Needy Families (TANF) block grants to the CCDF. Such
CCDF children, but it is more common for families to
transfers typically account for more than $1.2 billion
receive a certificate (or voucher) to use at the provider of
annually. Transfers must be spent under CCDBG Act rules.
their choice. In FY2019, 93% of children used certificates.
Supplemental and one-time mandatory appropriations
Provider Reimbursement Rates
provided by ARPA are not shown in Table 1. The CCDBG
States set the payment rates for child care providers based
received several supplemental appropriations during this
on a market rate survey or an alternative methodology (e.g.,
period, including $30 million in FY2019, $3.5 billion in
cost estimation). HHS recommends that states set payment
FY2020, and $10.0 billion in FY2021. In addition, ARPA
rates at the 75th percentile of the market. States often use a
provided, via one-time mandatory funding, $15.0 billion for
tiered system, issuing higher payments to providers meeting
the CCDBG, $24.0 billion for child care stabilization
certain criteria (e.g., high quality or nontraditional hours).
grants, and $35 million for child care administrative costs.
Parental Cost-Sharing
Table 1. CCDF Funding History, FY2013-FY2022
Parents are generally expected to share in the cost of child
(nominal dol ars in bil ions; excludes supplemental funds)
care, though states may waive co-payments in some cases.
States set sliding fee scales based on income, family size,
Fiscal Federal
State
TANF
and other factors. HHS suggests that states set parental fees
Year
CCES
CCES
CCDBG Transfer
Total
at no more than 7% of family income.
2013
2.917
2.168
2.206
1.367
8.658
Health and Safety Rules
2014
2.917
2.170
2.358
1.382
8.828
The CCDF requires states and child care providers to carry
2015
2.917
2.186
2.435
1.320
8.859
out or meet certain health and safety rules. For instance,
2016
2.917
2.178
2.761
1.403
9.260
states must establish and enforce minimum health and
2017
2.917
2.174
2.856
1.288
9.235
safety standards covering broad areas, such as first aid,
building safety, and emergency preparedness;
2018
2.917
2.179
5.213
1.498
11,807
CCDF providers must complete preservice and ongoing
2019
2.917
2.124
5.258
1.302
11.634
training on health and safety topics;
2020
2.917
1.863
5.826
1.437
12.044
states must conduct pre-licensure and unannounced
annual inspections for licensed CCDF providers, and
2021
3.550
1.813
5.852
TBD
TBD
annual inspections for license-exempt CCDF providers;
2022
3.550
TBD
6.165
TBD
TBD
states must set age-specific standards for group size
Source: Prepared based on CCES appropriations, CCDF al ocation
limits and child-to-provider ratios; and
data (including transfers, as appropriate), and TANF financial data.
states must conduct criminal background checks on
Notes: State CCES estimates include MOE and matching funds, and
applicable child care providers and staff members.
reflect real otment of prior-year funds except in FY2020-FY2022, due
to data limitations. (Federal funds do not reflect real otments.)
Children Served
Supporting TANF-Related Families
About 1.4 million children were served by the CCDF in an
average month in FY2019. Nearly two-thirds of the
Section 418 requires states to spend at least 70% of their
children were under the age of six and the majority (72%)
CCES funds on families receiving TANF, transitioning out
were served in licensed or regulated center-based settings.
of TANF, or at risk of becoming dependent on TANF.
https://crsreports.congress.gov
Child Care Entitlement to States: An Overview
IF10511
Karen E. Lynch, Specialist in Social Policy
Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
United States Government, are not subject to copyright protection in the United States. Any CRS Report may be
reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include
copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you
wish to copy or otherwise use copyrighted material.
https://crsreports.congress.gov | IF10511 · VERSION 10 · UPDATED