Understanding the Landscape of Stabilization Grant Funding Through Provider Stories

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The American Rescue Plan Act (ARPA), passed in March 2021, included $15 billion in supplemental Child Care and Development Fund (CCDF) discretionary dollars and $24 billion to make child care stabilization grants available to providers. While states have until September 2024 to spend the supplemental CCDF discretionary funds, states were required to spend stabilization grant funding by September 2023. 

This blog examines the landscape of which states are providing additional funding after the September 2023 stabilization grant spending deadline. To learn more about providers’ experiences during this transition period, CCAoA again asked providers nationwide to tell their stories about stabilization grant funding and how these continued or discontinued payments have impacted their programs. These stories were collected in February 2024 and are incorporated into the state examinations below. More stories are available on CCAoA’s YouTube channel. This examination is not exhaustive and does not include every state. 

Stabilization Grant Opportunities: An Uneven Landscape Nationwide 

The ARPA stabilization grant funding has had wide-reaching impacts across the country. More than 225,000 child care providers have received funding, impacting as many as 10 million children. Providers have used awards to help with operational costs like wages and benefits, rent and utilities, program materials and supplies, and cleaning and sanitation.  

Recent research finds that the stabilization grants have been especially effective in lowering prices for families and increasing child care employment and wages, which helped stabilize the market. Child care providers’ experiences around the stabilization grants have aligned with this research; CCAoA previously heard from providers nationwide about how crucial this funding opportunity has been to keep doors open and programs running.  

Some states have recognized the impact the federal stabilization grant funding has had on the child care sector and are investing state general funds to keep these payments going. Others are stretching the last of their ARPA CCDF dollars to continue provider grants until this funding is exhausted in 2024. Unfortunately, some states have let this funding lapse without making further contributions with state or ARPA-CCDF funding. This patchwork of funding across the country has led to high levels of variation in provider experiences and program stabilization, with some providers continuing to benefit from ongoing grants and others struggling to bridge the gap.

States Who Haven’t Continued Funding Beyond ARPA Stabilization Grants 

Across the country, some states have not yet made significant grant opportunities available for child care that may be used toward provider wages, among other expenses, beyond the ARPA stabilization grants. These states include Arizona, Arkansas, Delaware, Idaho, Indiana, Louisiana, Michigan, Mississippi, Montana, Nebraska, Nevada, North Dakota, Oklahoma, Pennsylvania, South Dakota, Tennessee, Texas, Utah, West Virginia, and Wyoming.  

Providers from some of these states told us that the stabilization grants were essential, and many of them used it to address their most pressing need – paying teachers a living wage. With the end of funding, child care providers are now facing difficult decisions about how to keep their programs running, which could mean increasing tuition prices for parents or cutting back on wage increases for providers. 

In Mississippi, there have been no recent increases in state funding and legislation to support workforce compensation failed to advance in 2024.

West Virginia administered its final stabilization grant payment in September 2023. In addition to stabilization grant payments, West Virginia child care providers have noted how crucial another policy change to base payments to providers on enrollment instead of attendance has been to create greater financial predictability and stability for providers. Unfortunately, this policy is also scheduled to end this year, and legislative efforts to continue it permanently have not been successful. 

In Texas, final stabilization grant payments to child care programs were administered in 2023, with most programs receiving their final payments by June 2023. During the 2023 legislative session, the Texas Legislature considered a proposal to use $2.3 billion in state funding to continue the child care stabilization grants after the federal funding expires, but legislators ultimately decided not to approve the funding  

States Using ARPA CCDF to Continue Grant Opportunities 

While states were required to spend down the ARPA stabilization grant funding by September 2023, states have until September 2024 to liquidate the remaining supplemental ARPA CCDF funds. Some states are using remaining ARPA CCDF dollars to continue additional rounds of stabilization grants, bonus stipends, or other similar grant opportunities to all providers past September 2023. These states include Alabama, Florida, Georgia, Hawaii, Iowa, Missouri, New York, North Carolina, Ohio, Rhode Island, and South Carolina. Other states, like Kansas, are using ARPA CCDF funding to provide capacity-building grants on a more limited eligibility basis. Providers from these states tell us that while they are still seeing positive impacts, they are concerned about the future once this funding also runs out.  

Kansas’ last provider payments using ARPA stabilization grant dollars were made in May 2023. In the months following, the state experienced a decrease in the number of child care programs. While additional funding has not been provided to continue these flexible stabilization grants, Kansas is using ARPA CCDF funding to support other grant opportunities, like its Child Care Capacity Accelerator competitive grant program, to create new and sustainable high-quality licensed child care slots with better compensation for early educators. There was high demand for these grants and, unfortunately, not enough funding available to support all applicants, highlighting the need for more sustainable grant payments.  

In November 2023, Ohio announced that $200 million in ARPA CCDF funding would be made available to support a fourth round of stabilization grants and increase reimbursement rates starting in February of 2024.  

New York recently used ARPA CCDF funding to support its Workforce Retention Grant program and provide additional rounds of bonus payments to child care providers. In 2023, New York allocated $500 million from a combination of ARPA, CRRSA and state general funds to support an additional round of payments. Most recently, the state’s final FY 2025 budget included a smaller pot of funding$280 millionto continue another round of bonus payments to child care staff at 14,000 programs statewide. 

States Using General Funds to Support Child Care Grants 

Finally, there is a group of states that have allocated state general funds to continue stabilization-style grants or other payments that include direct payments to providers to help increase wages. This includes Alabama, Alaska, Illinois, Maine, Minnesota, New Hampshire, New Mexico, Vermont, and Washington D.C. In this year’s legislation session, Washington passed much more limited bonus payments: $772,000 for providers who offer nontraditional hour care. In 2024, Georgia’s final budget included nearly $23 million for lead teacher salary increases for its mixed-delivery preschool program, which includes child care settings but is limited to preschool staff. 

Providers from these states share that the additional state funding helps ensure greater stability and predictability for their programs. They also underscore why, in addition to the steps their state is taking, additional investments and policy changes need to be made at the federal level. 

In 2023, Massachusetts appropriated $475 million to maintain its state-funded stabilization grants, called Commonwealth Cares for Children (C3) grants. 

Minnesota allocated over $500 million in new state funding to establish the Great Start Compensation Support Program in 2023. Building off the ARPA stabilization grant funding, which ended in June 2023, this permanent state-funded program will issue monthly payments to eligible child care providers to fund increases in compensation and benefits for early educators.  

There is also a smaller group of states who, after the exhaustion of federal relief funding, have appropriated one-time state general funds to offer additional rounds of payments to providers, but these payments have also ended. In 2022, Connecticut and Maryland allocated state general funding to support stabilization grants, but those payments have been fully allocated. In 2023, Kentucky appropriated $50 million in state funding to continue another round of stabilization grants but did not allocate further funding in its 2024 final budget 

Conclusion and Recommendations 

Federal relief funding, especially ARPA stabilization grants, gave each state a one-time down payment to make much-needed improvements to the childcare system. Research underscores the impact stabilization grant funding has had in steadying the sector. Federally funded stabilization grants filled an essential need during the pandemic, but this need did not end with the end of the public health emergency. When states continue funding these kinds of flexible grant payments and wage supports, child care programs and providers are more stable. But state funding on its own still is not enough. To truly meet the needs of families across the country, long-term and robust investment is needed at the federal level. 

Be the first to hear about future updates and opportunities to share your voice on behalf of child care by becoming an advocate with Child Care Aware of America today.  

 

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