Officials Sound Alarm Over Delayed Federal Child Care Payments to States

Yahoo

16-05-2025

The Trump administration has failed to send out an estimated hundreds of millions in discretionary funding to state child care agencies that should have gone out weeks ago, five sources in the federal government and advocacy organizations confirmed.
The Child Care Development Block Grants (CCDBG), which states mostly use to provide subsidies to low-income families, were anticipated to arrive around April 1, the start of the federal fiscal year's third quarter.
Get stories like this delivered straight to your inbox. Sign up for The 74 Newsletter
'The money hasn't gone out, and that is extremely unusual,' said Ruth Friedman, a senior fellow at The Century Foundation who served as director of the Office of Child Care at the Administration for Children and Families (ACF) under the Biden administration.
Emily Adams, policy associate for child care & early childhood programs at the American Public Human Services Association, concurs. Adams works directly with state child care agency directors across the country, and one told her they were notified by their regional child care office that ACF's Office of Grants Management said the funding has not yet been approved for awards and there was no timeframe for when the grants might be approved.
In response to a request for comment, a spokesperson at the Department of Health & Human Services, said, 'ACF is working to award third quarter discretionary CCDF funding as soon as possible.'
The CCDBG is part of a complex system of federal child care funding. The largest source comes from the Child Care and Development Fund (CCDF), which has two components: mandatory payments made through the Child Care Entitlement to States, which states have already received, and the much larger pot of discretionary CCDBG money, which they haven't. Congress determines the level of CCDBG spending annually and has allotted $8.75 billion to states for the 2025 fiscal year that ends in September.
It usually takes two weeks for these block grants to flow to states after Congress passes a continuing resolution funding the government, which it did on March 14. Officials in the Biden administration sent out the first and second quarter funding to state child care agencies on a normal schedule. But the third quarter installment hasn't gone out under the Trump administration, Friedman, Adams and other sources confirmed.
Unlike Head Start programs, which face immediate consequences if their funding is delayed, states typically have more cushion for child care, so they may not yet have to make hard choices. That's in part due to the fact that they have a longer time to spend the money, so some may have past funding to keep using. Also, some states put more of their own money into the mix than is required by federal rules, creating even more runway in those places.
Related
'Most states have about a month of funds that they can use before they're in big trouble,' Adams notes.
But if the money doesn't arrive soon, 'It is eventually going to cause a problem for states,' Friedman explains. The vast majority of the funding covers subsidies that help low-income families pay for child care; if that money dries up, states will have to stop paying for those subsidies.
If that happens across all states, the parents of the 1.4 million children who receive them could be left to either cover the full cost themselves or pull their children out of child care. Providers, in turn, could face a wave of unpaid bills and disenrollments. 'It would be extraordinarily destabilizing,' Friedman said.
It's unclear if the funding is delayed due to personnel challenges or is being held back for more substantive reasons. By April, the Trump administration had fired nearly half the workforce at ACF. Trump has threatened to eliminate Head Start (although officials recently walked that back) and the so-called 'skinny' budget he released on May 2 would eliminate preschool development grants that help states improve early childhood education and the Child Care Access Means Parents in School program, which helps low-income parents afford child care while going to college.
The Trump administration has withheld other federal funding that Congress appropriated and he legally has to disburse. In April, Congressional Democrats released a tracker that found at least $430 billion had yet to go out the door to a wide variety of programs, from Head Start to USAID. But the CCDBG funding wasn't included in that sum.
On top of the delayed block grants, state child care agencies have also been subjected to Elon Musk's DOGE effort dubbed 'Defend the Spend' without any warning and little explanation. Now, when an agency wants to draw down federal funds from the payment system — normally a 'routine and regular process,' Friedman said, and one in which they're typically reimbursed for dollars they already spent — they receive an email directing them to take a new step in which they have to justify why they need the money.
In an email received by a state agency director on April 17 and shared with Adams, the sender wrote, 'We are requesting additional clarification regarding this payment. An ideal payment justification includes a description of the award and what you plan to do with the funds.' It then directs the recipient to click on a long URL to do so. The email ends with simply, 'God Bless America.' Adams noted that agency directors told her the emails 'looked spammy and they don't come from a known email address.'
Some states have had to justify their spending as many as three times before getting it. The process has now led to delays. 'What they typically would get in two to four business days is taking five to 10 business days,' Adams said.
An ACF spokesperson said in a response to a request for comment, 'While some states have been asked for additional clarification prior to their CCDF drawdowns being approved, no states have been denied the ability to draw down CCDF funds as the result of the Defend the Spend review. In addition, the CCDF program is being phased out of the Defend the Spend review, so CCDF grant recipients will no longer be asked for a justification to draw down CCDF funds.'
In Ohio, the delay caused a scary hiccup in April, said Tamara Lunan, director of care economy organizing at the Ohio Organizing Collaborative. The week of April 14, providers who typically receive subsidy payments from the state on Tuesdays didn't receive anything. Then those with Saturday payments didn't get them either. Although the state technically has a 10-day window to send payments out, 'usually the only thing that throws it off is if there was some type of error in the billing or a holiday,' Lunan explained.
When Lunan, who was hearing directly from providers about the missing payments, asked the Ohio Department of Children and Youth (DCY) what happened, she said she was told 'that they got DOGE'd,' and were made to give an extra explanation for the money. But in a later meeting, the state changed its tune slightly: According to meeting notes, the department said it was due to a 'system glitch at the federal level.'
The payments went out on April 22, which falls within the 10-day window, but some providers had to wait a week longer than usual to get paid. It took a quick toll: Some had to lay off staff because they couldn't make payroll, while others paid staff late, Lunan said.
Jodi Norton, DCY's chief communications officer, noted that the department hasn't strayed outside the allotted time frame, including the week of April 14. 'DCY continues to work with federal partners when additional justification is needed and thus far has been successful in maintaining the 10-day window for payments,' she said.
Lunan said the payments have now resumed as normal, but if more delays crop up in the future it could leave some providers to not just lose staff but go out of business entirely. 'Providers are really scared about this,' she added.
States already go through a rigorous process to justify their spending long before they draw down money. Every three years they have to submit a lengthy state plan to the federal government, as required by law, that describes their child care programs and how they will follow relevant rules. Those plans, which are publicly available, are then carefully reviewed by the U.S. Department of Health and Human Services; it's only after they're approved that states can get any money.
After that, states are monitored to make sure they are following federal rules, and they must track their spending and report it back to the agency to make sure they follow all the requirements. They also undergo annual financial audits. 'There are many pieces put in place by Congress to ensure that federal funds are being spent as intended and as required,' Friedman said. It is 'already quite extensive.'
The new 'Defend the Spend' approach 'is not an efficient process for ensuring good stewardship of federal funds,' she added. 'This new process does not create new information, but it does create burden and uncertainty for state agencies.'