The Future of Children, Princeton - Brookings: Providing research and analysis to promote effective policies and programs for children.

Society has a stake in families' child care choices, both because child care enables parents to work and because it can influence children's development. Separate strategies and funding streams have evolved over the past century in response to each of these concerns.

The settlement house movement, which began in the late 1800s, included a push to expand child care centers for single mothers who had to work. Congress redoubled this effort during World War II, rapidly expanding center-based programs for female factory workers when the labor power of young mothers was sorely needed.² A parallel effort focused on providing a wholesome environment for children in poverty. This movement first emerged in the 1930s, when federally funded nursery schools were established to create jobs for unemployed teachers, nurses, and others.³ State-funded preschools emphasizing early education and school readiness evolved out of this tradition, most notably Head Start, a child development program created in 1965 to serve low-income children and their families. Then in 1988, Congress enacted three welfare-related child care programs to subsidize care as a support for parents who were engaged in work preparation activities or work itself, and who were on welfare, leaving welfare, or at risk of becoming dependent on welfare. In 1990, Congress also created the Child Care and Development Block Grant to subsidize child care for a wider range of low-income working parents.

The welfare reform law of 1996 enacted further changes to federal child care programs. Growing out of an interest in enabling work, but touching on concerns for children's development, the Child Care and Development Block Grant was expanded and consolidated with the other welfare-related funding streams described above. (See the article by Greenberg and colleagues in this journal issue.) The new goals established for the expanded block grant, referred to in federal regulations as the Child Care and Development Fund (CCDF), are summarized in Box 1. In addition to increasing funds for child care, the law also allows states to spend funds allocated to the new welfare program, Temporary Assistance for Needy Families (TANF), directly for child care, and to transfer up to 30% of their TANF funds into the CCDF.

Meanwhile, spending on preschools and early education programs also increased. Federal spending on Head Start preschools, for example, grew from $1.2 billion in 1990 to $5.3 billion in 2000 ($3.8 billion in constant 1990 dollars).⁴ The Early Head Start program was established in 1994, and preschool support from Title I of the Elementary and Secondary Education Act began to grow rapidly in the mid-1990s as well.

Figure 1 summarizes the growth in federal appropriations for major child care and early childhood programs over the past decade. Only the federal Dependent Care Tax Credit, a nonrefundable tax credit for taxpayers who pay out-of-pocket for child care, declined during this period.⁵ The use and significance of this tax credit are likely to increase, however, as the Bush administration has agreed to make the credit refundable beginning in 2002.

In addition, with their added flexibility under TANF, some states have aggressively reallocated welfare dollars to child care and after-school programs. Total federal and state expenditures for child care under the CCDF and welfare-related programs grew from $2.8 billion in 1995 to $8.0 billion in 2000, including $2 billion in funds transferred from TANF.⁶

States have also stepped up their funding for early education. At least 43 states now support preschool programs for low-income families, enrolling more than 750,000 children. State funding for early education programs for children ages 3 to 6 grew from just $180 million in 1987 to over $2 billion in 1999. Georgia is the only state to provide universal access for all four-year-olds whose parents seek preschool programs, but state-funded programs serve sizeable shares of low-income children in California, Maryland, Massachusetts, New York, and North Carolina.⁷ According to a recent report from the National Center for Children in Poverty, total state funding for early childhood initiatives, including infant and toddler programs and an array of child development and family support efforts, exceeded $3.7 billion in 2000.⁸

Child care funding at both the state and federal level has risen significantly, and children are spending increasing amounts of time in care, but the role child care plays in the lives of children and parents is not well understood. The remaining sections of this article examine the implications of welfare reform's changes to child care as an increasing number of low-income mothers move into jobs.