HHS study: American Rescue Plan helped 200,000 child care providers stay open

Funds from the American Rescue Plan allowed 200,000 child care providers to continue operating during the COVID-19 pandemic, according to a Department of Health and Human Services study released on Oct. 21.

The funds may have helped maintain child care for as many as 9.5 million American children, according to the study.

“The ARP Child Care Stabilization program provided a nationwide lifeline to stabilize the child care sector, supporting working parents and helping spur the economy,” the department said in a statement.

The spending package sent an average of $110,000 to the 200,000 child care providers, representing more than eight out of 10 licensed child care providers across the country, according to the study. Providers used the money to pay their employees and for other operating costs.

The funds were sent to 98% of U.S. counties with a persistent rate of poverty, and included 30,000 facilities in rural areas.

The pandemic severely impacted child care providers. An April 2020 study from the Center for American Progress estimated that the pandemic could lead to the permanent loss of child care for more than 4.4 million children.

President Joe Biden signed the $1.9 trillion American Rescue Plan in March 2021 as part of his administration’s response to the COVID-19 pandemic. The legislation passed the House of Representatives and the Senate with only Democratic votes.

The Biden administration’s plan included roughly $24 billion in child care stabilization grants designed to help providers continue operating. The plan also included $15 billion for a temporary expansion of child development block grants. The total $39 billion in public spending was the largest single allocation of tax dollars for child care in U.S. history, according to The 19th News.

The White House touted the results of the HHS study, noting that child care programs have struggled with their funding since before the pandemic while the cost of child care “has been rising for years.”

“President Biden will continue fighting to ensure families can access and afford quality child care,” the release stated.

A March 9 analysis by the nonprofit progressive think tank The Century Foundation found that more than 3 million child care slots had been maintained through Rescue Plan funds. The foundation noted that the funds helped keep in place more than 70% of child care slots that had been projected to be lost. The report said that the federal funds “kept the industry from collapse.”

“The failure of the United States to invest in a comprehensive child care and early learning system before the pandemic made it much harder for the child care sector to withstand the crisis,” the report’s authors wrote. “The pandemic-related challenges also made things worse. Without the American Rescue Plan, the sector may have collapsed. It’s example proves that when America’s elected leaders act to address care needs, progress is possible.”

Published with permission of The American Independent Foundation.