Child Care in the “Build Back Better Act”

Child Care in the “Build Back Better Act”

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INSIGHTi

Child Care in the “Build Back Better Act”
Updated November 18, 2021
On November 3, 2021, the House Rules Committee released a modified version of the “Build Back Better
Act” (H.R. 5376) in Rules Committee Print 117-18. This version would establish a “Birth Through Five
Child Care and Early Learning Entitlement” (§23001). On November 17, the Congressional Budget
Office estimated the Birth Through Five program would cost roughly $273 billion over the 10-year
budget window (not accounting for revenue interactions).
Appropriations
Section 23001 would appropriate mandatory funding to the Department of Health and Human Services
(HHS) for child care programs in states, Indian tribes, tribal organizations, and territories. Funding for
activities in FY2022-FY2024 would be capped. State appropriations for these years would be designated
for particular activities (Table 1), including direct services (e.g., subsidies, payment rates), quality (e.g.,
supply-building, facilities), and administration. Beginning in FY2025, appropriations for states, tribes,
and territories would be set at “such sums as may be necessary” to ensure funds are sufficient for all
eligible children seeking assistance. Capped funding would be available for grants to localities and Head
Start expansions in states that opt not to participate in the program.
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Table 1. Birth Through Five Appropriations
(In billions of dollars; shown in the year for which funds were designated to carry out activities)

FY2022

FY2023
FY2024
FY2025

FY2026

FY2027
Statesa

Direct services
11.460
16.235
20.055

Quality
5.730
8.118
10.028

Direct services or

such sumsb
such sumsb
such sumsb
quality
4.126
5.845
7.220
Administration
1.604
2.273
2.808

Indian

tribes/organizations
0.960
1.360
1.680
such sums
such sums
such sums
Territoriesc
0.120
0.170
0.210
such sums
such sums
such sums
Localities
0.000
0.950
0.950
0.950
0.950
0.950
Head Start expansion
0.000
2.850
2.850
2.850
2.850
2.850

1.06% of total 1.06% of total
Federal administration
0.130
0.130
0.130
0.130
prior-year
prior-year
state
state
appropriation
appropriation
Total
24.130
37.930
45.930
—
—
—
Source: CRS analysis of Rules Committee Print 117-18.
Notes: Such sums = such sums as may be necessary. Totals may not sum due to rounding. Appropriations would generally
remain available through FY2027.
a. Includes Puerto Rico in FY2022-FY2024.
b. The bil would provide a single “such sums” appropriation for all eligible activities carried out by states. Federal
payments for spending on quality activities would be limited to 5% to 10% of total prior-year payments to the state.
c. Includes American Samoa, Guam, Northern Mariana Islands, and U.S. Virgin Islands in all years. Includes Puerto Rico
in FY2025-FY2027.
State Spending
Funds provided by the section shall supplement, not supplant, other federal, state, and local spending on
child care based on average spending in FY2019-FY2021. Additionally, states must meet maintenance-of-
effort requirements in all years, set at the average of state spending in the preceding three years.
Spending in FY2025-FY2027 would be subject to federal-state matching rules that vary by activity. The
federal share would be 95.440% of expenditures for direct services, an enhanced Medicaid matching rate
for quality activities, and 53.022% for administrative costs. Federal rates would be set slightly higher than
under prior versions of the bill, perhaps reflecting an expectation that federal payments may be subject to
reduction through mandatory sequestration.
States would cover the nonfederal share with state or local funds, or philanthropic or private donations.
(For quality and administrative costs, this could be provided in cash or in kind.) States could count
existing spending toward their nonfederal share, though dollars counted as nonfederal share generally
should not be considered nonfederal share for another federal award.

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Eligible Children
Eligible children would generally be those ages 0-5 (and not yet in kindergarten) with family incomes at
or below
 100% of state median income (SMI) in FY2022,
 125% of SMI in FY2023,
 150% of SMI in FY2024, and
 250% of SMI in FY2025-FY2027.
(In FY2022-FY2024, subject to HHS approval, states could serve children with incomes up to 250% of
SMI if income-prioritization rules are met.)
A child’s parent/s generally must participate in an eligible activity (e.g., employment, job search,
education/training, family leave). Certain vulnerable children and children with a parent over 65 would be
exempt from parental activity requirements. HHS would set eligibility rules for tribal children, which may
not be more stringent than rules for other children.
Eligible Child Care Providers
Eligible child care providers must (1) be licensed, (2) participate in the state’s tiered system for measuring
quality (within three years), and (3) meet health and safety requirements under the Child Care and
Development Block Grant (CCDBG) Act. Certain CCDBG-eligible providers in good standing would be
considered eligible for 3½ years.
Within 2½ years of receiving funds, states must have licensing standards and pathways for providers
seeking licensure to be made eligible. (Presently, states may exempt some providers from licensing rules
and licensure pathways may not always exist.)
Within three years, states must have a tiered system for measuring the quality of participating providers.
The top tier must use standards that are, at minimum, equivalent to Head Start performance standards.
The system must help providers at lower tiers progress to higher tiers. States must assure that within six
years of enactment, all families can choose a provider at the highest tier.
Payment Rates
Within three years of receiving assistance, states must certify that child care payment rates would be set
using a cost estimation model or study approved by HHS. Rates must use the most recent estimates/study,
be updated annually for cost-of-living changes, and reflect providers’ quality ratings. Rates must be
adequate to ensure providers can pay wages that are equivalent to those of elementary educators with
similar credentials and experience and that are, at minimum, living wages. States must, within three years,
have a wage ladder for staff of certain providers.
Family Copayments
Participating families with income at or below 75% of SMI would have no copayment for child care.
Copayments would increase with income until reaching 7% of family income for those with incomes
above 150% of SMI. Certain populations would be exempt from copays (e.g., vulnerable children, those
eligible for Head Start). States must prohibit child care providers from charging families more than the
required copay.

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Author Information

Karen E. Lynch
Conor F. Boyle
Specialist in Social Policy
Analyst in Social Policy

Disclaimer
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