After an intense debate and discussion, the Democrats have finally agreed on a slimmed and trimmed down version of the Build Back Better bill. From its lofty $3.5 trillion budget, the new bill’s budget has been pared down to $1.5 trillion.
Despite the changes, concessions, and removals, the childcare industry still has a lot to rejoice about with $600 billion going to child-related services. A whopping $400 billion going to Child Care and Preschool while $200 billion is allotted for Child Tax and & Earned Income Tax Credits.
What changes will the Build Back Better bill introduce to the childcare industry?
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Universal Preschool for 3-4 year olds
This has a six-year funding that will give high quality preschool services to over 6 million children.
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Federal funding for states
This will help states help childcare providers give quality childcare services to eligible families. The funding will help grow more childcare slots with the expenses shared between the state (10%) and federal government (90%).
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Tiered payment system based on the quality of childcare services provided
Childcare providers will now be incentivized to provide high quality childcare as the state will base the amount they receive on the tier they are in.
The tiers may differ from state to state but the highest tier will most definitely use Head Start program performance standards.
Meanwhile, the payment for each tier will be based on the most recent cost estimation model of how much it takes to provide childcare services.
This payment will then allow providers to increase the quality of childcare services they provide in order to move up the tier. The tiered payment will also allow a childcare provider to give their staff a living wage that is on par with what elementary educators receive.
To ensure the rates remain competitive, the payment rates will be adjusted annually according to the increase in cost of living.
How will the Build Back Better funding be distributed?
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50% of funds for more child care subsidy to more eligible families and increasing payment rates to childcare providers
A key promise of the Biden administration is to cap family spending for childcare services down to 7% of their income. Another key promise, this time for childcare workers, is to give them a minimum living wage of $15 per hour.
Through this budget allocation, the bill will allow more families access to better quality childcare services and childcare providers will be able to provide their staff better wages.
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25% of the funds for providing high quality childcare services to underserved communities
This quarter of the funding will hopefully lessen, if not eradicate, the existence of childcare deserts across the country.
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25% of the funds for supporting the further increase of childcare slots and increasing the quality of childcare services
These funds will help childcare providers serve more families while also improving the services they provide.
What grants will the Build Back Better funding support?
With $400 billion in federal funding, this is how it will be appropriated for various programs within the childcare industry.
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Startup grants and supply expansion grants
51% of American families live in a childcare desert. Childcare deserts have been defined as those areas in which there are three times more children than the number of available childcare slots.
And this is the statistic that the startup and supply expansion is aiming to decrease over the next 6 years.
The grant will be most useful for childcare providers who are looking to start a childcare service or expand their existing business in underserved areas.
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Quality grants
Since states will be required to allocate funding to childcare providers based on their tier, childcare providers won’t have to further slash their marginal profits in order to increase the quality of childcare services they provide.
Through these quality grants can help providers better their services based on the quality indicators their state and other governing agencies have put in place.
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Facilities grants
As childcare providers wrestle with their budget trying to find something to pay for costly renovations, remodeling, or expansion of their facilities, this grant will help childcare providers defray the costs and provide better quality childcare services in terms of their facilities and amenities.
Since President Nixon vetoed the Child Care Plan in 1971, this is the first time the child care industry has received congressional support and funding.
However, as some lawmakers still need time in deciding whether the most recent revision of the Build Back Better bill, everything is still up in the air for childcare providers and families waiting for much needed federal funding to finally repair the broken childcare industry.
As childcare providers patiently wait for the bill to pass, there are existing child care grants you can take advantage of.
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