June 19, 2025
Child care assistance is critical for families to become self-sufficient and is also needed to support low-wage working families to avoid welfare receipt.
The Temporary Assistance for Needy Families (TANF) Block Grant is an annual federal allocation to states that can be used to help families avoid welfare. States are also required to spend at least 80% of the funds they spent in 1994 on families prior to the creation of TANF under welfare reform. These state funds are referred to as maintenance of effort or MOE.
To support parents in obtaining and retaining employment, states can transfer up to 30% of their TANF funds to the Child Care and Development Block Grant (CCDBG).
Over $5 billion in TANF funds is spent either directly or transferred to CCDBG for child care. Any reduction or cuts to TANF will likely result in cuts to child care assistance in many states.
With only 15 percent of federally eligible families receiving assistance, more parents could be forced out of the labor market. Increasing the 30% cap for the amount of funds that can be transferred to CCDBG and allowing states to transfer any unobligated funds to CCDBG will help states support child care affordability and also expand the supply of care where needed.