The Child Care and Development Block Grant: Background and Funding







Prepared for Members and Committees of Congress



Several federal programs support child care for low-income families, the principal being a federal
block grant program: The Child Care and Development Block Grant (CCDBG). The CCDBG is
administered by the Department of Health and Human Services (HHS) and provides allotments to
states, according to a formula, which are used to subsidize the child care expenses of low-income
families with children under age 13. The CCDBG is currently due to be reauthorized.
The CCDBG was first enacted under the Omnibus Budget Reconciliation Act of 1990 (P.L. 101-
508) and authorized through FY1995. The Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 (PRWORA, P.L. 104-193) amended and reauthorized the CCDBG
through FY2002, and repealed the legislative authority for previous child care programs for low-
income working and welfare families under the program formerly known as Aid to Families with
Dependent Children (AFDC). The CCDBG provides funding for child care services for low-
income families, as well as for activities intended to improve the overall quality and supply of
child care for families in general. The child care provisions in the 1996 law were developed to
achieve several purposes. As a component of welfare reform, the child care provisions were
intended to support the overall goal of promoting self-sufficiency through work. However,
separate from the context of welfare reform, the legislation attempted to address concerns about
the effectiveness and efficiency of child care programs. The child care provisions in P.L. 104-193
were also intended to streamline the federal role, reduce the number of federal programs and
conflicting rules, and increase the flexibility provided to states.
The CCDBG is funded through a combination of discretionary and capped entitlement funding,
referred to by HHS as the Child Care and Development Fund (CCDF). Discretionary funds are
subject to the annual appropriations process, and $2.062 billion is appropriated for FY2008. The
President has requested this same level of discretionary funding in his budget for FY2009. The
capped entitlement (i.e., mandatory) funding was previously provided at the amounts specified in
the 1996 law, but this only covered FY1997-FY2002. Temporary extensions provided funding
into FY2006, and on February 8, 2006, a spending budget reconciliation bill was enacted into law
(P.L. 109-171), increasing mandatory child care funding by $1 billion over five years (for a total
amount of $2.917 billion for each of FYs 2006-2010).
Federal funding levels for child care assistance continue to be a source of debate, in the context of
increased work requirements for single welfare mothers, those leaving welfare for work, and low-
income working families in general. Moreover, the quality of available child care services, and
the relationship of child care programs to the broader world of early childhood education and care
remain active concerns of Congress.
This report provides background information on the CCDBG and will be updated as necessary.






Introduc tion ..................................................................................................................................... 1
Goals .......................................................................................................................... ...................... 2
Admi nistra ti on ................................................................................................................................. 2
Funding ........................................................................................................................ .................... 2
Discretionary Funds..................................................................................................................2
President’s FY2009 Budget Request..................................................................................3
FY2008 Appropriation........................................................................................................3
FY2007 Appropriation........................................................................................................3
President’s FY2008 Budget Request..................................................................................3
FY2006 Appropriation........................................................................................................3
Entitlement Funds.....................................................................................................................3
Transfer of Funds from TANF..................................................................................................6
Eligible Children and Families........................................................................................................6
Application and Plan.......................................................................................................................6
Parental Choice.........................................................................................................................6
Parental Access..........................................................................................................................7
Parental Complaints..................................................................................................................7
Consumer Education Information.............................................................................................7
Licensing and Regulation..........................................................................................................7
Health and Safety Requirements...............................................................................................7
Use of Funds....................................................................................................................................8
Payment for Child Care Services..............................................................................................8
Quality and Availability Improvement......................................................................................8
Federal Enforcement.......................................................................................................................8
Data Collection................................................................................................................................9
Religious Providers.........................................................................................................................9
Indian Tribes and Tribal Organizations.........................................................................................10
Additional Reading.........................................................................................................................11
Table 1. Funding Trends in the CCDBG, FY1997-FY2008............................................................4
Author Contact Information..........................................................................................................12






The Child Care and Development Block Grant (CCDBG) is the primary source of federal funding 1
dedicated solely for child care subsidies for low-income working and welfare families. The
program is administered by the Department of Health and Human Services (HHS), and provides
block grants to states, according to a formula, which are used to subsidize the child care expenses
of families with children under age 13. In addition to providing funding for child care services,
funds are also used for activities intended to improve the overall quality and supply of child care
for families in general.
The CCDBG, originally authorized as a component of the Omnibus Budget Reconciliation Act of
1990, was reauthorized in 1996 (through 2002) and substantially amended by the Personal
Responsibility and Work Opportunity Reconciliation Act (P.L. 104-193), commonly referred to as
welfare reform legislation. The CCDBG, as amended by the 1996 law, also consolidated three
federal child care programs previously serving low-income working and welfare families under
the former federal welfare program known as Aid to Families with Dependent Children (AFDC).
The 1996 law significantly changed federal child care policy by giving states more flexibility to
design child care policies for low-income families.
The child care provisions in the 1996 law were developed to achieve several purposes. As a
component of welfare reform, the child care provisions were intended to support the overall goal
of promoting self-sufficiency through work. However, separate from the context of welfare
reform, the legislation attempted to address concerns about the effectiveness and efficiency of
child care programs. The previous four separate child care programs (the original CCDBG and
the three AFDC programs) had different rules regarding eligibility, time limits on the receipt of
assistance, and work requirements. Consistent with other block grant proposals considered back th
in the 104 Congress, the child care provisions in P.L. 104-193 were intended to streamline the
federal role, reduce the number of federal programs and conflicting rules, and increase the
flexibility provided to states.
P.L. 104-193 also created a cash welfare block grant called Temporary Assistance for Needy
Families (TANF) to replace AFDC. In addition to amounts provided to states for child care under
the CCDBG, states are allowed to transfer up to 30% of their TANF block grant into their
CCDBG program.
Both the CCDBG and TANF were originally authorized through FY2002, and for fiscal years
2003-2005, the mandatory portion of child care funding, as well as TANF funding, were
continued (at the FY2002 rates) through a series of temporary extensions. Mandatory child care
and TANF funding for FY2006-2010 was eventually included as part of a budget spending th
reconciliation bill (S. 1932, 109 Congress) and signed into law (P.L. 109-171) on February 8,
2006. Funding for the discretionary portion of the CCDBG has been appropriated without an
authorization through the annual appropriations process each year since FY2002. Federal funding
levels for child care assistance have been and continue to be a source of debate, in the context of
increased work requirements for single welfare mothers, those leaving welfare for work, and low-
income working families in general. Moreover, the quality of available child care services and the

1 The second-largest source of federal support for child care is the Dependent Care Tax Credit, which is a non-
refundable tax credit to offset some of the child care expenses of working families with children under 13.





relationship of child care programs to the broader world of early childhood education and care
remain active concerns of Congress.

The 1996 law established five goals for the CCDBG. They include allowing states maximum
flexibility in developing their child care programs; promoting parental choice; encouraging states
to provide consumer education information to parents; helping states provide child care to parents
trying to become independent of public assistance; and helping states implement health, safety,
licensing and registration standards established in state regulations.

At the federal level, the CCDBG is administered by the Administration for Children and Families
(ACF) within HHS. Regulations implementing the 1996 amendments to the CCDBG were
published on July 24, 1998. States are required to designate a lead agency to administer the
CCDBG, and may use no more than 5% of their federal allotment for administrative costs. States
have tremendous flexibility in the design and operation of their child care policies, but federal law
establishes a set of requirements that states must meet in order to receive CCDBG funds. The
responsibilities of the lead agency are to administer federal funds, develop a state plan, and
coordinate services with other federal, state or local child care and early childhood development
programs.

The CCDBG is funded by a combination of discretionary and entitlement funding. The combined
total of funds is referred to by HHS as the Child Care and Development Fund (CCDF).
Discretionary funds are subject to the annual appropriations process, and the amended CCDBG of
1996 authorized them through FY2002 at an annual authorization level of $1 billion. Actual
appropriations have surpassed the authorized level, reaching approximately $2.1 billion in each of
FY2002-FY2008 (see Table 1). In years since FY2002, appropriations have been made without
an authorization level. These discretionary funds are allocated among states according to a
formula that is based on each state’s share of children under age five, the state’s share of children
receiving free or reduced-price lunches, and state per capita income. Half of 1% of appropriated
funds is reserved for the territories, and between 1% and 2% is reserved for payments to Indian
tribes and tribal organizations. States are not required to match these discretionary funds. Funds
must be obligated in the year they are received or in the subsequent fiscal year, and the law
authorizes the Secretary to reallocate unused funds.

2 For a detailed discussion of child care funding history and the financing of the CCDBG, see CRS Report RL31274,
Child Care: Funding and Spending under Federal Block Grants, by Melinda Gish.





On February 4, 2008, the Administration released its proposed budget for FY2009, which would
maintain both the discretionary and mandatory portions of the CCDBG at current levels ($2.062
billion and $2.917 billion respectively).
The Consolidated Appropriations Act of 2008 was signed into law (P.L. 110-161) on December
26, 2007 (following a series of continuing resolutions, as well as a presidential veto of conference
agreement H.Rept. 110-424). The funding for the CCDBG, as with most programs covered by the
act, are subject to an across-the-board reduction of 1.747%. The resulting funding level for the
CCDBG in FY2008 is $2.062 billion (the same level of funding that was provided for FY2007).
The FY2007 appropriations process consisted of a series of four continuing resolutions. The
fourth continuing resolution (CR), P.L. 110-5, signed into law February 15, 2007, provided
$2.062 billion in funding for the CCDBG—the same level requested in the President’s budget for
FY2007, and the same level as provided in FY2006.
The President’s budget for FY2008 proposed to maintain both the discretionary and mandatory
portions of CCDBG funding at their FY2006 levels: $2.062 billion and $2.917 billion,
respectively.
A bill making FY2006 appropriations for the Departments of Labor, Health and Human Services
(HHS), and Education (H.R. 3010) was signed into law (P.L. 109-149) by the President on
December 30, 2005, following three continuing resolutions. The law includes $2.062 billion for
the CCDBG. (Like other discretionary programs funded under the law, the CCDBG funding was
subject to an across-the-board rescission of 1%, which is reflected in the $2.062 billion amount.)
The law includes just under $19 million for child care resource and referral and school-aged child
care activities (of which $982,000 is for the Child Care Aware hotline); $267 million for quality
child care activities (of which $98.2 million is to be dedicated to improving infant and toddler
care); and $9.8 million for child care research and evaluation.
The welfare reform law also provided entitlement (or “mandatory”) funding to states for child
care under the CCDBG. The annual amounts of entitlement funding were $1.967 billion in
FY1997; $2.067 billion in FY1998; $2.167 billion in FY1999; $2.367 in FY2000; $2.567 billion
in FY2001; and $2.717 billion in FY2002. These amounts were directly appropriated by the
welfare reform law. Funding through FY2005 was extended (at the FY2002 rate of $2.717 billion
annually) via a series of continuing resolutions, while welfare reauthorization legislation was
debated in each of the years, without reaching fruition. Finally, on February 8, 2006, a spending





budget reconciliation bill (S. 1932), which included welfare and mandatory child care funding
provisions, was passed into law (P.L. 109-171). The law provides $2.917 billion annually for each
of fiscal years 2006-2010.
The Secretary must reserve between 1% and 2% of entitlement funds for payments to Indian
tribes and tribal organizations. After this amount is reserved, remaining entitlement funds are
allocated to states in two components. First, each state receives a fixed amount each year, equal to
the funding received by the state under the child care programs previously authorized under
AFDC in FY1994 or FY1995, or the average of FY1992-FY1994, whichever is greater. This
amount equals $1.2 billion each year, and is sometimes referred to as “guaranteed mandatory”
funds. No state match is required for these funds, which may remain available for expenditure by
states with no fiscal year limitation.
Second, remaining entitlement funds (following distribution of the “guaranteed” portion, and up
to the total amounts listed above) are allocated to states according to each state’s share of children
under age 13. States must meet maintenance-of-effort and matching requirements to receive these
funds. Specifically, states must spend all of their “guaranteed” federal entitlement funds for child
care described above, plus 100% of the amount they spent of their own state funds in FY1994 or
FY1995, whichever is higher, under the previous AFDC-related child care programs. Further,
states must provide matching funds at the Medicaid matching rate to receive these additional
entitlement funds for child care. If the Secretary determines that a state will not spend its entire
allotment for a given fiscal year, then the unused amounts may be redistributed among other
states according to those states’ share of children under age 13.
Beginning in FY1997, the treatment of CCDBG funding in the appropriations process was
changed to reflect states’ actual obligation of money for the program. Prior to FY1997, the funds
appropriated for the CCDBG only became available for obligation by the states in the last month
of the year in which they were appropriated. As a result, most of a given year’s appropriation was
actually obligated during the next fiscal year. With the enactment of the FY1997 appropriations
law, that practice was changed so that the CCDBG was officially advance funded by an entire
year. In other words, the FY1997 appropriation became available for obligation at the beginning
of FY1998 (rather than the end of FY1997). As a result of this change, only $19 million was
appropriated in FY1997 specifically for FY1997; this amount was added to funds previously
appropriated and available for obligation at the end of FY1996. The bulk of the FY1997
appropriation—$937 million—was to become available in FY1998. This practice of advance
funding continued in FY1999-FY2001, and is shown in Table 1.
Table 1. Funding Trends in the CCDBG, FY1997-FY2008
($ in millions)
Discretionary Funding
All
Available
Fiscal Advance Appropriation Same Year’s Funds for Entitlement
Year from Prior Year Appropriation FY Funding Total
1997 0a 19a 19a 1,967 1,986a
1998 937 66 1,002 2,067 3,069
1999 1,000 0 1,000 2,167 3,167
2000 1,183 0 1,183 2,367 3,550





Discretionary Funding
All
Available
Fiscal Advance Appropriation Same Year’s Funds for Entitlement
Year from Prior Year Appropriation FY Funding Total
2001 1,183 817 2,000 2,567 4,567
2002 0 2,100 2,102,714,817
2003 0 2,086b 2,086b 2,717c 4,803b
2004 0 2,087d 2,087d 2,717e 4,804d
2005 0 2,083f 2,083f 2,717g 4,800f
2006 0 2,062h 2,062h 2,917i 4,979
2007 0 2,062j 2,062 2,917i 4,979
2008 0 2,062k 2,062 2,917i 4,979
Source: Table prepared by the Congressional Research Service (CRS) using annual Health and Human Services,
Administration for Children and Families budget justifications and appropriations legislation for relevant years.
a. What appears in the table to be limited discretionary CCDBG funding in FY1997, and consequently, in total
funding, actually reflects a shift to advance appropriating of funds for the following fiscal year. The FY1997
appropriation law provided $956 million for CCDBG, with only $19 million available immediately during
FY1997, and the remainder available on Oct. 1, 1997 (the first day of FY1998). In earlier years the funds
appropriated for CCDBG became available for obligation only in the last month of the given fiscal year, and
therefore most of the appropriation for a given year ($935 million in FY1996) was actually obligated in the
following fiscal year.
b. The figure shown reflects the 0.65% “across-the-board” cut included in the Consolidated Appropriations
Resolution, 2003 (P.L. 108-7).
c. P.L. 108-40 extended mandatory funding for CCDBG through the final quarter of FY2003, at the FY2002
rate.
d. The figure shown reflects the 0.59% “across-the-board” cut included in the Consolidated Appropriations
Act, 2004 (P.L. 108-199).
e. P.L. 108-262 extended mandatory funding for CCDBG through Sept. 30, 2004, at the FY2002 rate (which
was also maintained during FY2003).
f. The figure shown reflects the 0.8% “across-the-board” cut included in the Consolidated Appropriations Act,
2005 (P.L. 108-447).
g. P.L. 108-308 extended (and maintained) mandatory funding for CCDBG through Mar. 31, 2005, at the
FY2002 rate. P.L. 109-19 extended (and maintained) the funding through Sept. 30, 2005.
h. The figure shown reflects the 1% “across-the-board” cut included in the FY2006 Defense Appropriations
Act (P.L. 109-148) that applies to discretionary programs funded by P.L. 109-149. Prior to the rescission,
funding was set at $2.083 billion.
i. The Deficit Reduction Act (S. 1932/P.L. 109-171) , provides $2.917 billion in mandatory child care funding
for each of fiscal years 2006-2010.
j. FY2007 funding was provided via four continuing resolutions, the last of which was P.L. 110-5.
k. This amount reflects the 1.747% across-the-board cut included in the Consolidated Appropriations Act of
2008 (P.L. 110-161).





As previously stated, in addition to amounts provided to states specifically for child care (shown
in Table 1), states may also transfer up to 30% of their TANF block grant allotment into their
CCDBG. Funds transferred into child care must be spent according to the CCDBG rules. The
FY2006 transfer from the FY2006 TANF allotment to the CCDBG totaled $1.925 billion
(representing 12% of the TANF allotment). It should be noted, however, that states may choose to
move previously transferred TANF funds back to TANF, and when these amounts are taken into
account, the net amount transferred in FY2006 (as opposed to from the FY2006 TANF allotment)
comes to $1.878 billion. Nothing in the act precludes a state from using TANF funds for child
care services without formally transferring them to the CCDBG, in which case CCDBG rules do
not necessarily apply. HHS reports that in FY2006, states spent $1.238 billion in federal TANF
money on child care within the TANF program.

Federal law states that children eligible for services under the CCDBG are those whose family
income does not exceed 85% of the state median. However, states have the discretion to adopt
income eligibility limits below this federal maximum. Because child care funding is not an
entitlement for individuals, states are not required to aid families even if their incomes fall below
the state-determined eligibility threshold. Federal law does require states to give priority to
families defined in their state plan as “very low income.”
To be eligible for CCDBG funds, children must be less than 13 years old and be living with
parents who are working or enrolled in school or training, or be in need of protective services.
States must use at least 70% of their total entitlement funds for child care services for families
who are receiving public assistance under TANF, families who are trying to become independent
of TANF through work activities, and families who are at risk of becoming dependent on public
assistance. In their state plans, states must demonstrate how they will meet the specific child care
needs of these families. Of their remaining child care funds (including discretionary funds), states
must ensure that a substantial portion is used for child care services to eligible families other than
welfare recipients or families at risk of welfare dependency. HHS estimates that about 1.8 million
children received child care subsidies funded by the CCDBG in an average month in 2006.

To receive federal funding for child care, states must submit an application and plan to HHS.
After an initial three-year plan, required by the original CCDBG Act in 1990, states are required
to submit plans that cover a two-year period. State plans must certify that their programs will
include certain elements. Specifically those plans must certify the following.
Parents of children eligible to receive subsidized child care must be given the option to enroll
their child with a provider that has a grant or contract with the state program to provide such
services, or to receive a child care certificate or voucher that can be used with a provider of the
parents’ choice. The certificate may be in the form of a check or other disbursement directly to





the parent, but must be used for child care services only. State plans must include a detailed
description of how this parental choice provision is implemented. Under the CCDBG Act, eligible
child care providers can include individuals, age 18 and older, who provide child care services for
their grandchildren, great grandchildren, siblings (if the provider lives in a separate residence),
nieces, or nephews.
States must have procedures to ensure that child care providers receiving subsidies will give
parents unlimited access to their children and to providers, while the children are in care. State
plans must include a detailed description of these procedures.
States are required to maintain a record of substantiated complaints made by parents, and to make
information about these complaints publicly available upon request. The state plan must include a
detailed description of how this record is maintained and made available.
Under the CCDBG Act, states must collect and disseminate, to parents of eligible children and to
the general public, consumer education information that will promote informed child care
choices. At a minimum, the information must include information about the full range of
providers available, and health and safety requirements.
States must have in effect licensing requirements applicable to child care services provided within
the state, and state plans must include a detailed description of these requirements and how they
are effectively enforced. Federal law does not dictate what these licensing requirements should be
or what types of providers they should cover. The 1996 law specifies that this provision shall not
be construed to require that licensing requirements be applied to specific types of providers. The
conference report on the 1996 law further states that the legislation is not intended to either
prohibit or require states to differentiate between federally subsidized child care and
nonsubsidized child care with regard to the application of specific standards and regulations.
States must have in effect, under state or local law, health and safety requirements that are
applicable to child care providers; and states must have procedures in effect to ensure that
subsidized child care providers (including those receiving child care certificates) comply with
applicable health and safety requirements. States must have health and safety requirements in the
following areas: prevention and control of infectious diseases (including immunization), building
and physical premises safety, and health and safety training.






CCDBG funds may be used for child care services provided on a sliding fee scale basis.
However, federal regulations allow states to waive child care fees for families with incomes at or
below the poverty guidelines. HHS has suggested that a family’s fee be no more than 10% of its
income. States may use this 10% limit as a guide in deciding the amount of the fee, but are not
required to do so. Funds may also be used for activities to improve the quality or availability of
child care, or any other activity considered appropriate by the state to achieve the goals described
above.
The 1996 law expands the definition of “child care certificate” to allow these vouchers or
disbursements to be used as a deposit for child care services, if such deposits are required of other
children cared for by the same provider.
The CCDBG prohibits the use of funds for the purchase or improvement of land or buildings,
with a limited exception for sectarian organizations. The 1996 law also added an exception for
Indian tribes and tribal organizations, subject to the Secretary’s approval.
States must establish payment rates for child care services that are sufficient to ensure equal
access for eligible children to comparable services provided to children whose parents are not
eligible for subsidies. However, states no longer have to consider variations in costs of serving
children in different settings, of different age groups, and with special needs (this was required in
the pre-1996 law). State plans must include a summary of the facts relied upon by the state to
determine the sufficiency of their payment rates to ensure equal access. HHS suggests that states th
establish payment rates equal to at least the 75 percentile of the market rate to ensure equal
access for eligible families. However, federal law does not require that payments be set at this
rate.
No less than 4% of expenditures made from states’ child care allotments (discretionary and
entitlement) is to be made for activities to provide comprehensive consumer education to parents
and the public, activities that increase parental choice, and activities designed to improve the
quality and availability of child care (such as resource and referral services).

The Secretary must coordinate child care activities within HHS, and, to the extent practicable,
with similar activities in other federal agencies. The Secretary also is required to publish a list of
child care standards every three years, and to provide technical assistance to states. The Secretary
must monitor state compliance with the statute and state plans, and must establish procedures for
receiving and assessing complaints against a state.
Upon finding that a state is out of compliance with either the statute or state plan, the Secretary is
authorized to require that the state reimburse the federal government for any misspent funds, or to





withhold the amount from the administrative portion of the state’s allotment for the next fiscal
year, or to take a combination of these steps.
States also must arrange for independent audits of their programs, and must repay the federal
government for any funds that are found to have been misspent, or the Secretary may offset these
amounts against future payments due to the state.

Federal law specifies a set of data reporting requirements for states in the administration of their
CCDBG programs. States must submit disaggregated data on children and families receiving
assistance to HHS every quarter, and aggregated data twice a year. The law further requires the
Secretary to submit a report to Congress once every two years. The most recent available 3
published report to Congress is for both FY2002 and FY2003. However, select data from more 4
recent years, including FY2006, are available on the HHS website.
Specifically, the law requires states to collect the following information on each family unit
receiving assistance, to be included in quarterly reports: family income; county of residence;
gender, race, and age of children receiving assistance; whether the family includes only one
parent; sources of family income, separately identified and including amounts; number of months
the family has received benefits; the type of child care received; whether the child care provider
was a relative; the cost of child care; and the average hours per week of care.
Aggregate data to be reported every six months include the number of child care providers that
receive funding under this program, separately identified by type; the monthly cost of child care
services, and the portion that is subsidized by this program, identified by type of care; the number
of payments made by the state through vouchers, contracts, cash, and disregards under public
benefit programs, identified by type of child care provided; the manner in which consumer
education information was provided and the number of parents to whom it was provided; and the
total unduplicated number of children and families served by the program.

Under the CCDBG, religious providers may receive assistance on the same basis as nonsectarian
providers. However, religious providers may use funds for construction assistance, which is
generally prohibited for other providers, to the extent necessary to bring facilities into compliance
with health and safety requirements. Use of funds for religious activities, including sectarian
worship or instruction, is generally prohibited under the CCDBG Act. However, this prohibition
does not apply to funds received by child care providers in the form of child care certificates, if
such sectarian child care services are freely chosen by the parent.
Child care providers that receive funding under the act may not discriminate in their admissions
policy against a child on the basis of religion, with the exceptions of family child care providers

3 Annual report to Congress covering FY2002 and FY2003, available at http://www.acf.dhhs.gov/programs/ccb/ccdf/
rtc/rtc2002/rtc_general/2002_2003.htm.
4 See http://www.acf.dhhs.gov/programs/ccb/data/index.htm.





(i.e., individuals who are the sole caregiver for children in a private home) or providers who
receive assistance through child care certificates. However, sectarian providers may reserve
unsubsidized slots for children whose families regularly participate in their organization’s
activities, unless 80% or more of their operating budget comes from federal or state funds,
including child care certificates.
In their employment practices, child care providers receiving assistance under the act may not
discriminate on the basis of religion if the employee’s primary responsibility is working directly
with children in the delivery of child care services. However, in considering two or more
qualified candidates, sectarian providers may select an individual who regularly participates in
their organization’s activities. In addition, sectarian organizations may require employees to
adhere to their religious tenets or teachings and to rules forbidding the use of drugs or alcohol,
unless 80% or more of their operating budget comes from federal or state funds, including child
care certificates.
P.L. 104-193 contains a section that deals with services provided by charitable, religious or 5
private organizations under the TANF program. This provision also applies to child care services
funded under TANF. The provision, commonly referred to as “charitable choice,” is intended to
allow states to provide services through charitable and religious organizations, without impairing
the religious character of these organizations or the religious freedom of individuals who
participate in the programs.

As described earlier, the Secretary is required to reserve between 1% and 2% of all child care
funds (both discretionary and entitlement), for payments to Indian tribes and tribal organizations.
The Secretary is required to allocate among other tribes and organizations any funds that an
Indian tribe or tribal organization does not use in a manner consistent with the statute.
Indian tribes and tribal organizations are required to submit applications to receive these reserved
funds. Applications must show that the organization seeking funds will coordinate with the lead
agency in the state, that activities will benefit Indian children on reservations, and that reports and
audits will be prepared. The Secretary, in consultation with the tribes and tribal organizations, will
develop minimum child care standards that reflect tribal needs and available resources that will
apply in lieu of licensing and regulatory requirements otherwise applicable under state or local
law.
As stated earlier, the CCDBG Act prohibits use of funds for construction or renovation of
facilities. However, the law allows Indian tribes and tribal organizations to submit a request to the
Secretary to use funds for these purposes. The Secretary may approve the request after a
determination that adequate facilities are not otherwise available and that the lack of such
facilities will inhibit the operation of child care programs in the future. The Secretary may not
approve the request if it will reduce the level of child care services provided from the level
provided by the tribe or organization in the previous year.

5 For a discussion of this provision, see CRS Report RL32736, Charitable Choice Rules and Faith-Based
Organizations, by Joe Richardson.






CRS Report RL31274, Child Care: Funding and Spending under Federal Block Grants, by
Melinda Gish.
CRS Report RL32817, Child Care Issues in the 109th Congress, by Melinda Gish.
CRS Report RL32241, Child Care Reauthorization: A Side-by-Side Comparison of Child Care th
Provisions in H.R. 4, S. 880 (108 Congress), and Current Law, by Melinda Gish.
CRS Report RS22369, TANF, Child Care, Marriage Promotion, and Responsible Fatherhood
Provisions in the Deficit Reduction Act of 2005 (P.L. 109-171), by Gene Falk.
CRS Report RL33418, Welfare Reauthorization in the 109th Congress: An Overview, by Gene
Falk, Melinda Gish, and Carmen Solomon-Fears.
U.S. General Accounting Office. Child Care: States Exercise Flexibility in Setting Reimbursement
Rates and Providing Access for Low-Income Children. GAO-02-894, September 2002.
U.S. General Accounting Office. Child Care: States Have Undertaken a Variety of Quality
Improvement Initiatives, but More Evaluations of Effectiveness Are Needed. GAO-02-897,
September 2002.
U.S. General Accounting Office. Child Care: Recent State Policy Changes Affecting the
Availability of Assistance for Low-Income Families. GAO-03-588, May 2003.
U.S. General Accounting Office. Child Care: States Increased Spending on Low-Income
Families. GAO-01-293, February 2001.
U.S. General Accounting Office. Early Childhood Programs: The Use of Impact Evaluations to
Assess Program Effects. GAO-01-542, April 2001.
U.S. General Accounting Office. Education and Care: Early Childhood Programs and Services
for Low-Income Families. GAO/HHS-00-11, November 1999.
U.S. General Accounting Office. TANF and Child Care Programs: HHS Lacks Adequate
Information to Assess Risk and Assist States in Managing Improper Payments. GAO-04-723. June

2004.


U.S. Government Accountability Office. Child Care: Additional Information Is Needed on
Working Families Receiving Subsidies. GAO-05-667, June 2005.





Melinda Gish
Section Research Manager
mgish@crs.loc.gov, 7-4618