	Background

Federal funds for subsidizing child care for low-income families,  particularly those on welfare, are primarily provided to the states through  two block grants—CCDF and TANF. Families who receive child care subsidies under CCDF must be offered the  choice of using a voucher, which is a certificate assuring a provider that the  state will pay a portion of the child care fee, or using a provider who has a  contract with the state to provide care to subsidized families. States’ Child Care Spending Grew to Over $16 Billion Using CCDF, TANF, and State Funds

Nationwide, states spent increasingly larger amounts of their CCDF, TANF,  and state money on child care between fiscal years 1997 and 1999—a total  of more than $16 billion, as shown in table 1. State Funding Sufficient for Child Care Subsidies to Highest-Priority Families— Those on TANF

According to CCDF plans for fiscal years 2000 through 2001, more than half  the states list TANF and TANF-transitional families either first or second on  their priority list of families who are eligible for receiving child care  subsidies. But, among the seven states we examined, no  state reported that it was currently unable to fund the child care needs of  these families who requested services. While child care program officials in most of the states we reviewed  reported serving all eligible low-income families who applied, California,  Connecticut, Texas, and Oregon expressed concern that their funding of  child care was not sufficient to provide child care subsidies for all eligible  families. CCDF expenditures for  quality reported to HHS by these seven states show that expenditures grew  from around $22 million in fiscal year 1997 to about $98 million in fiscal  year 1999, totaling over $180 million for this period.
What GAO Found

Nationwide, states reported that federal and state expenditures for child care under the Child Care and Development Fund (CCDF) block grant and the Temporary Assistance for Needy Families (TANF) block grant grew from $4.1 billion in fiscal year 1997 to $6.9 billion in fiscal year 1999 and totaled over $16 billion in constant fiscal year 1997 dollars for this three-year period. More than half of the children whose child care was subsidized with CCDF funds were cared for in centers, and CCDF subsidies for all types of care were primarily provided through vouchers. Eligible parents who were subsidized by CCDF were offered a choice of receiving a voucher to pay a provider of their choosing or using a provider who had a contract with the state. More than half of all the states gave TANF and former TANF families transitioning to work first or second priority for receiving child care subsidies while other eligible low-income families were assigned lower priorities. Officials reported that their states funded the child care needs of their TANF and former TANF families transitioning to work, and were serving all of these families who requested child care assistance. However, some of these officials were concerned that their states' funding levels were not sufficient to serve all other low-income families who were eligible for aid.