TANF funds used for child care continue to fall

Federal Temporary Assistance for Needy Families (TANF) funds used for child care declined slightly in fiscal year 2006, marking the sixth consecutive year of decline since the beginning of the decade. Nationally, states directed a total of $3.1 billion in TANF funds to child care in FY 2006, approximately $100 million less than in the previous year, according to FY 2006 TANF Financial Data posted by the Administration for Children and Families (ACF) last week. ACF does not report on the number of children receiving TANF-funded child care assistance.

States choose whether to use TANF funds to provide child care assistance to families. States may spend TANF funds directly on child care, usually in the form of vouchers given to parents; they may also choose to transfer up to 30 percent of their annual TANF block grant to the Child Care and Development Block Grant (CCDBG) or to a combination of CCDBG and the Social Services Block Grant (SSBG). TANF funds may also be used to support early education programs.

According to the new data, TANF transfers to CCDBG totaled $1.9 billion and TANF funds spent directly on child care totaled $1.2 billion in 2006. This compares to $1.9 billion in TANF transfer and $1.3 billion in TANF direct in FY 2005. In FY 2006, 11 states transferred the maximum amount of 30 percent of TANF funds: Alaska, Colorado, Florida, Idaho, Kentucky, Louisiana, Massachusetts, Minnesota, Mississippi, Oklahoma and Washington. Only Kentucky transferred all 30 percent of its funds to CCDBG alone. An additional 10 states transferred between 25 to 29 percent of TANF funds to a combination of CCDBG and SSBG.

States are required to meet a maintenance-of-effort (MOE) requirement in the TANF program. In an upward shift, states spent $2.3 billion in state MOE funds on child care. This was an increase of $386 million compared to 2005.

The Administration for Children and Families has not yet released FY 2006 expenditure data for CCDBG. When that data is available, CLASP will produce additional analysis on national child care spending trends as in prior years, as well as updated state-by-state child care spending pages.