American Families Plan: What’s in it for Child Care Providers?

We’ve all heard about the American Families Plan and its historic increase on child tax credit incentives. Pushed forward by the Biden administration in an effort to improve family access to child care services, it sees childcare spending in households go down to as much as just 7% of the total family budget.

Now, while the child tax credits have been given all the spotlight in the news, there are very few discussions about what benefits child care providers and workers will get from the American Families Plan Act supported by the American Rescue Plan.

Aside from increasing childcare affordability for working parents through child tax credits, did you know the American Families Plan also aims to improve child care programs and child care workers’ compensation?

In this blog, we list down the bill’s highlights for child care providers and workers.

American Families Plan: What’s in it for Providers?

The American Families Plan has allocated billions of funding that will be used for grants, scholarships, trainings, and subsidies that child care employers can apply for to boost their child care services, improve child care workers’ salaries, and even adapt better during this pandemic.

1. Provide enough funding to ensure access to high quality child care programs through the Child Care and Development Block Grant supplemental funds (CCDF)

The funding aims to provide more financial assistance to child care businesses to better child care programs and serve more families.

Increasing payment rates to cover the cost of a child care program

The bill encourages lead agencies responsible for provider payments to significantly increase payment rates for providers to ensure that the rates can cover the actual cost of operating a quality child care program.

These supplemental CCDF funds amounting to nearly $15 billion will be available to child care providers until September 30, 2024.

The funds will help providers in developing their early childhood programs’ curriculum, retaining small class sizes, and being more inclusive to children with disabilities.

Changing payment policies to fund underserved areas

Aside from improving the current payment rate, payment policies will also be expanded to reduce the expanse of child care deserts in America.Through grants or contracts with payments made directly to child care providers, these funding can pay for child care slots or even a whole class at a regular interval rate, providing child care providers peace of mind about their center profitability.

A total of nearly $24 billion funding for child care stabilization grants will be available until September 30, 2023. The stabilization grants will prioritize child care providers in areas where child care supply is low, especially in low-income rural neighborhoods, dual language learners, and children who need child care during non-traditional hours.

Moreover, the funds should help child care providers cover the fixed costs of running a child care center that is not based on enrolled children’s attendance or absences; rather it should consider the expected enrollment, staffing, and facilities cost.

2. Invest in child care workers holistically

During the pandemic, 1 in 6 child care jobs was lost, even with the higher staff-to-children ratio requirement for child care facilities. This meant child care providers had to both lessen the number of child care slots in their program and also let go of some of their staff as operating costs skyrocketed. Even before the pandemic, the child care industry was also notoriously known for having high turnover rates due to low wages.

For example, child care workers in California barely earn above the state’s minimum wage.

Raising the minimum living wage to $15

Starting with improving the minimum wage for child care workers, the majority of whom are women and people of color, the American Families Plan encourages lead agencies to stipulate a minimum living wage of at least $15 per hour with an increase depending on experience and credentials.

This will definitely help child care workers earn a livable wage, especially since the average child care worker in Florida earns a dollar less than the national average.

To further ensure the grants and funding go directly to child care workers and staff, terms and conditions can be amended.

Allocate funds for further early childhood education and training for child care workers

Lead agencies are encouraged to reserve funds for scholarships or additional training or credentials including apprenticeships and on-the-job coaching. This will help build the supply of child care workers and hopefully eradicate child care deserts all over the country.

Providing mental health support

It is not enough that child care workers are helped financially. As the pandemic has changed our environment dramatically, child care workers and their cared-for children bear trauma and stress from the sudden changes. Thus, funding for mental health support should also be given emphasis.

3. Provider healthcare and vaccination-related subsidy

As most parents need child care in order for them to attend to health errands such as vaccination, child care providers who stay open longer or on weekends can be given incentives.

Child care providers can also be granted vaccination leaves which employers can claim as refundable tax credits.

American Families Plan Funding, Grants, and Tax Credits: How can Child Care Providers Get These Benefits?

1. Contact your Regional Child Care Program Manager from the Office of Child Care.

While there’s billions of funding, and grants ready to be distributed, it is still up to the lead agencies’ discretion on how to appropriate the funds. Find your regional child care program manager here and contact them for more information.

2. File for Employer Tax Credits at IRS.

Aside from getting incentives for extending center hours to accommodate parents who need vaccination, employers can also reimburse their employees’ paid leaves that were taken for COVID-19 vaccination and recuperation from the vaccine’s side effects.

As the American Families Plan tax credits for parents have started to lower families’ childcare expenses, so should child care providers experience better government support in terms of funding, grants, and tax credits.

Did you know that you can also use the grant for paying child care software to help you manage your parent leads better and faster? Vacancy.care CRM is a lead management tool specifically designed for early learning educators.

With a built-in lead generation and automation to help you establish communication with parent leads as soon as they inquire at your center, never miss a parent lead again!