MEMORANDUM
TO: Child Care Aware® of America (CCAoA) Members and Advocates
FROM: CCAoA Policy & Advocacy Team
DATE: November 12, 2021
RE: Birth through Five Child Care & Early Learning Entitlement Program in the Build Back Better Act
On September 27, 2021, the individual House of Representatives committee portions of the budget reconciliation package were combined into H.R. 5376, the Build Back Better (BBB) Act for consideration by the full House. After continued negotiations between the White House and Democratic leaders in the House and Senate, on October 28, President Biden announced a new framework for the BBB Act along with nearly 1,700 pages of companion text for Congress to move through the process and pass into law. The BBB Act includes a long-awaited, robust investment in affordable, high-quality child care for all families and for the first time, federally funded universal preschool for three- and four-year-olds. Together, these investments – totaling roughly $400 billion – are known as the Birth through Five Child Care and Early Learning Entitlement Program. Below are details about the Entitlement Program.
Additional changes are expected to be made to the legislative text as the House of Representatives and the Senate continue to move the BBB Act through the process.
- Child Care
Beginning at the start of federal Fiscal Year (FY) 2025 on October 1, 2024, all families who apply for assistance in a State, territory, or Tribe (herein “state”) with a U.S. Department of Health and Human Services (HHS)-approved plan shall be provided child care assistance for their eligible child. This Entitlement Program builds on the existing Child Care and Development Block Grant (CCDBG), and CCDBG remains intact as a program. States would continue to receive a mandatory allocation and discretionary funds for CCDBG. For each of FY2025-2027, a state receiving these funds can not use more than 10 percent of any CCDBG funds to provide assistance for direct child care services to children who are under the age of 6, who are not yet in kindergarten, and are deemed eligible.
State Plan Process: A state must submit a transitional plan and a full plan (both lasting for no more than 3 years). The transitional plan should describe how the state will expand access to child care assistance, how the state will increase the supply and quality of child care, and how the state will increase provider payment rates to cover the full costs of high-quality and increased educator wages.
The full plan should include, at a minimum, information on whether payment rates will cover the cost of child care, that they are set using the most recent, statistically valid/reliable cost estimation model or cost study approved by HHS, and that the payment rates will correspond to the state’s QRIS program tiers. NOTE: This is significant because it gets rid of the Market Rate system of reimbursement, and requires payments to support the fixed costs of providing child care. The payment rates must also reflect variations in the cost of child care by geographic area, type of provider, and age of child. The rates must also support and be sufficient for child care providers not at the top QRIS tier to move up in the tiered ratings.
How the Child Care Program is Funded: The BBB Act includes a three-year phase-in for the proposed Birth to Five Child Care and Early Learning Entitlement.
- FY2022-2024: Appropriations would be set at $24 billion in FY2022, $34 billion in FY2023, and $42 billion in FY2024.
- FY2025-FY2027: Appropriations would be set at “such sums as may be necessary,” consistent to ensure that funding in these years is sufficient to serve all eligible children whose families seek assistance.2
- In FY2022-2024, federal funds would cover the entirety of the program. In FY2025 and beyond, child care assistance expenses will be shared between the state (10%) and federal government (90%).
- Beginning in FY2025, states would share a portion of quality investments and of administrative costs.
- Payments to territories and tribal grantees would be made on the basis of their relative need. Territories and tribes will receive their funds after submitting applications as before. States would have to meet a maintenance-of-effort requirement in all years based on an average of state spending on child care in the preceding three fiscal years. This spending can be counted in meeting state match requirements.
Set-Asides: Appropriates $2.5 billion for payments to Indian Tribes and Tribal organizations for FY2022-FY2027; $1 billion for payments to territories distributed on the basis of relative need; $300 million for eligible local entities that serve children in families who are engaged in migrant or seasonal agricultural labor; and $165 million for FY2022, $200 million for each of FY2023-FY2024, $208 million for FY2025, $212 million for FY2026, and $216 million for FY 2027 for federal activities including administration, monitoring, technical assistance and research.
Child care supply for Underserved Populations: The state must at least prioritize increasing child care access/quality/supply for low-income families, children in “underserved areas,” infants/toddlers, children/infants/toddlers with disabilities, dual language learners, and children receiving nontraditional hours care.
Locality Grants: HHS must set aside $1B annually for each of FY 2023-2027 to carry out Locality Grants, which are Birth through Five Child Care and Early Learning grants to eligible localities in states that have indicated they do not intend to submit an application for funds under this legislation. The locality grants will come from the state’s allotment, which will correspond roughly to the state’s proportion of children living at 200% below the Federal poverty line. The requirements for a state to provide child care under these grants will be consistent with the requirements applied to states that do apply for funds and submit a state plan to HHS. Localities will have to apply for these grants, and eligible entities are cities, counties, our other units of general local government, or a Head Start grantee. While we hope that no states opt out of applying for the federal funds provided by this landmark legislation, CCR&Rs that are Head Start grantees located within states that choose to opt-out should consider applying for these grants. Localities serving underserved populations will be prioritized for these grants.
Who is Considered an “Eligible Child”?
- A child 0-5 years old;
- Not yet in kindergarten;
- Without regard to the immigration status of the child or a parent;
- Whose family income in FY 2022 is less than 100% SMI; in FY 2023 is less than 125% SMI; and in FY 2024 is less than 150% SMI. In FYs 2025-2027, the family income must be less than 250% SMI.
- A child must have one parent who is working or participating in another eligible activity (e.g.,
job search, job training, educational program, health treatment for a work-limiting condition, family leave). Exceptions to the parental activity requirement would be made for certain vulnerable children (including children with disabilities, foster children and children in kinship care, and children experiencing homelessness) and for children with a parent over age 65.4
CCR&Rs’ Involvement: A state’s lead agency can administer this child care assistance directly or through other state government agencies, local or regional child care resource and referral organizations, community development financial institutions, other intermediaries with experience supporting child care providers, or other appropriate entities that enter into a contract with the State to provide such assistance. CCR&Rs will continue to receive support for their work through CCDBG in addition to the new programs.
Family Copay and the Sliding Fee Scale: The state must implement a sliding fee scale to determine the family’s copay (pro-rata for part-time care). The sliding scale must include the following:
- A family with no more than 75% of SMI has no copay;
- A family with 75%-100% of SMI shall have a copay of 0-2% of their income for all of their children;
- A family with 100%-125% of SMI shall have a copay of 2-4% of their income for all of their children;
- A family with 125%-150% of SMI shall have a copay between 4-7% of their income for all of their children;
- A family between 150-250% of SMI shall have a copay of no more than 7% of their income for all of their children.
- The state must certify that it does not permit a child care provider to charge the family of an eligible child more than the sum of the voucher/subsidy plus the copayment.
- Eligibility continues for no less than 12 months until the child ages out once determined. Re-determination should be implemented to minimize barriers to enrollment and to support child well-being.
Child Care Educator Compensation: The Entitlement Program gives child care providers the resources to raise wages for child care workers and expand available supply to serve more children and families. A state’s full plan must set payment rates that ensure adequate wages for staff of child care providers. What this means is that at a minimum the state’s payment rates “provide a living wage for all [child care] staff” and are equivalent to wages for elementary school educators with similar credentials and experience in the state. The wages must also be COLA-adjusted annually. The state plan must also certify the state has, or will implement within 3 years of receiving funds, a wage ladder for providers, along with the certification that it can “ensure adequate wages” for staff as described above.
QRIS: The state’s plan must certify that it has a quality rating system or it will implement one within 3 years of receiving funds. The requirements for this quality rating system are that it:
- Has a highest tier standard that is at minimum is equivalent to Head Start performance standards OR other equivalent evidence-based standards approved by HHS; and
- Include quality indicators and thresholds appropriate for child development in different child care settings, including for settings that serve mixed-age groups.
- Include a different set of standards that include “indicators” for care during non-traditional hours; and
- Provide “sufficient resources and supports” for providers below the top tier to move up.
The state plan must also certify that it has implemented, or will implement within 6 years of enactment of the bill, “policies and financing practices” that ensure all families of eligible children can choose for their children to attend the highest quality tier of child care.
Quality set-aside: For FY2025-2027, there is a requirement that states set aside between 5-10% of their funds to pay for quality activities. (These activities are described further below.) The funds must be used to increase the quality and supply of providers and the number of available slots, and a portion of the quality funds shall be used to provide technical assistance (TA), including TA to achieve licensure. Priority must be given to those providers who are in underserved communities and who are providing/who seek to provide child care for underserved populations. This quality set-aside money may be administered by the state, or by CCR&Rs, community development financing institutions (CDFIs), other experienced intermediaries, or those who enter into a contract with the state to provide this assistance. This provides a new path forward to CCR&R activities and partnerships with state agencies.
The quality activities that can be funded by the set-aside are as follows:
- Startup grants and supply expansion grants;
- Quality grants (to help providers reach the highest quality tier or to sustain quality);
- Facilities grants (for remodeling/renovations/repair permitted under CCDBG currently); the facility grants can start in FY 2022 for construction, permanent improvement, or major renovation of a building or facility primarily used for providing child care. Training and professional development of the early childhood workforce, including degree attainment and credentialing for early childhood educators. For example, free community college could be used to support early childhood educators in getting equitable access to higher education.
- Developing, implementing, or enhancing the state’s QRIS program;
- Improving the supply and quality of developmentally appropriate child care programs and services for underserved populations;
- Improving child care access for children experiencing homelessness and for children in foster care; and
- Other activities to improve child care supply and quality, including those listed in existing CCDBG regulations (see 42 USC § 9858e(b)(1-10)). This includes additional support for CCR&Rs for current activities, on top of continued funding through CCDBG which will remain in place.
To put the amount of money that will be available for quality in perspective:
- Over the first 3 years, 25% of the funding states receive is dedicated to activities that improve the quality and supply of child care services and 25% to direct child care services, supply and quality building, or administration.
- In FY2025-2027, states must reserve between 5 and 10% of total funds for activities that increase the quality and supply of eligible child care providers.
Application of Existing CCDBG Statute: The state must certify that they apply the CCDBG statutory requirements regarding Parental Choice of Providers, Unlimited Parental Access, Health and Safety Requirements, Compliance with State and Local Health and Safety Requirements, Enforcement of Licensing and Other Regulatory Requirements (K(i) only, re: licensing and inspections), Consultation, and Disaster Preparedness.
Licensure: States must, within 2.5 years, maintain (if they already have them) or develop (if they do not have them) licensing standards and a pathway to licensure that are available to and appropriate for providers in a variety of settings. This provision is in place to ensure that providers currently eligible under CCDBG have a pathway to becoming eligible providers under the Entitlement Program. Those providers licensed, registered, or regulated and eligible under CCDBG are automatically eligible for the first 3.5 years of the new program. Resources will be available to assist states in developing the standards and the licensure pathway. Providers will need to comply with such licensing standards to remain eligible providers after 3.5 years after the state first receives funding.
Other provisions:
- Federal nondiscrimination/civil rights statutes apply to the provision of these funds (Title IX, Title VI, Section 504 of the Rehabilitation Act, the ADA, and Section 654 of the Head Start Act).
- States are required to periodically report to HHS on the use of funds received.
Monitoring and enforcement: HHS will review and monitor state compliance with the law and with state plans. HHS will also promulgate a rule in the future regarding how an entity might submit a complaint or a finding that a state is failing to comply with its plan or the law, and on notification of non-compliance and sanctions.
- Universal Preschool
Universal preschool: The BBB Act funds a new preschool program with $4 billion for FY22, $6 billion for FY23, $8 billion for FY24 and “such sums as may be necessary” for each of FY 2025-FY 2027 to carry out this section. Funds would be appropriated to HHS and the program would be administered by HHS in collaboration with the U.S. Department of Education (ED).
Eligible children: Eligible children would be those ages three or four on the date established by the local educational agency for kindergarten entry. There would be no income, asset, or parental activity requirements.
Eligible providers: The legislation creates a mixed delivery system for preschool. Preschool providers would be eligible if they are Head Start agencies; local educational agencies (acting alone or with an educational service agency) that are licensed by the state or meet comparable health and safety standards; licensed child care providers (including center-based providers, family child care providers, and community- or neighborhood-networks of family child care providers); or consortia of such entities.
Use of funds: States will be able to use funds for certain state-level activities: costs of program administration, data systems, degree attainment, age-appropriate transportation for children, and improving inclusive services for children with disabilities, among others.
In addition, states could fund subgrants or contracts with eligible providers to cover the costs of enrolling and serving children in preschool programs. These include personnel costs; costs of meeting state standards (including those related to child development, licensure, and health and safety); professional development and training; materials, equipment, and supplies; and rent, mortgage, utilities, insurance, and costs associated with security and maintenance.
For providers serving a high percentage of low-income children, amounts should be enhanced to support comprehensive (including social and emotional) services, health and developmental screenings, and service referrals for participating families. Subgrants and contracts should generally be awarded for not less than three years. In awarding funds, states must prioritize high-need communities.
State Match: In FY 2022-FY 2024, there would be no state match required for spending on the costs of preschool services. Starting in FY 2025, states (including DC) must contribute a 10% match, in cash or in kind. States will contribute 25% in FY2026 and 40% in FY2027. Meanwhile, spending on state-level activities must be matched at 50% in each year (FY 2022-FY 2028). Total spending on state-level activities would be capped.
In general, a state must maintain its combined fiscal effort per child under this section, as well as under
any existing publicly funded preschool programs or state-funded Head Start programs. If a state reduces per child spending, HHS (in collaboration with ED) may correspondingly reduce federal funds. (States
may request a waiver of this requirement in certain circumstances.) Funds provided under this section
shall supplement, not supplant, other federal, state, and local funds for early childhood care and education programs.
State Plans: States will submit two types of applications, each for a period of not more than 3 years: a transitional state plan and a full state plan. A state must submit applications that include the following elements:
- A plan to provide universal, high-quality, free, inclusive preschool via a mixed delivery system;
- A certification that the state:
Has in place developmentally appropriate, evidence-based preschool standards that, at minimum, meet Head Start performance standards found in 6;
- Will prioritize the expansion of universal preschool to high-need communities, as defined by the state and approved by HHS that includes the consideration of the rate of poverty of eligible children; rates of access to high-quality preschool, other indicators of community need as determined by HHS;
- Will support a mixed delivery preschool system, including a requirement that the state facilitate the participation of Head Start and licensed child care providers;
- Will ensure a highly qualified early childhood workforce; and
- Preschool seats are distributed equitably among Head Start, child care (including family child care), and local public schools.
- An assurance that the state will:
- Expand access to high-need communities before the state establishes and expands universal preschool to other communities;
- Use funding to ensure children with disabilities have access to preschool in the least restrictive environment, consistent with the inclusivity provisions in the Individuals with Disability in Education Act (IDEA);
- Partner with at least one institution of higher education to facilitate degree attainment for preschool staff;
- Offer programming that provides at least 1,020 hours of instruction, consistent with.
- Adopt policies and practices to conduct outreach and provide expedited enrollment to children:
- Experiencing homelessness;
- In foster care or kinship care;
- With disabilities;
- In families who are engaged in migrant or seasonal agricultural labor;
- Dual language learners.
- Provide salaries and set salary schedules for staff equivalent to salaries of elementary school staff with similar credentials/experience;
- Require, at a minimum, that all lead preschool teachers have a bachelor’s degree in early childhood education or related field by 2029. NOTE: This does not apply to individuals working in child care programs for cumulative 3 of the last 5 years from the date of enactment and who have the necessary skills and knowledge to serve as preschool educators, as demonstrated through measures determined by the state.
III. Conclusion
The Birth through Five Child Care and Early Learning Entitlement Program within the Build Back Better Act is a watershed moment for the early care and education community – no doubt about it. From an overarching perspective, this bill takes the child care field away from the scarcity situation it has been mired in for decades. It creates a floor of child care licensing and provides time and funding to help educators across states and settings get to that floor. It also advances compensation for a deeply undervalued child care workforce.
In addition, it creates something that perhaps even ten years ago seemed undoable: federally-funded, universal preschool. What is more, it requires the creation of a mixed delivery preschool model, thereby helping solidifying child care’s role in providing preschool and preserving the community-embedded programs that have been doing too much with too little for too long. However, the Entitlement Program faces many challenges throughout the legislative process before it can be signed into law. In order to preserve the gains in this legislation, CCAoA will need perhaps the largest advocacy effort ever given by its members to communicate to members of Congress just how important and transformative this Program is, and how important it is to preserve it as the legislation moves through the House and the politically divided Senate.
