Child Care and Development Fund, Report to Congress for Fiscal Years 2002 and 2003
CCDF SPENDING BY CATEGORY
States report on how expenditures are used: direct services, quality improvement activities, non-direct services, and administration. TANF spending on child care directly (as opposed to TANF transferred to CCDF) is not categorized, and therefore is not included in the following figure on spending by category. Unless otherwise noted, total expenditures reflect available funding from multiple fiscal years.
Notes: 1TANF direct spending on child care is not categorized; therefore, the $1.7 billion in TANF direct expenditures are not included in this chart. 2Quality activities include the expenditure of earmarked funds. 3Non-direct services include State expenditures related to the operation of voucher programs and include such costs as information and referral, eligibility determination and recertification, and maintaining computer systems.
Direct Services
States spend the majority of their funds on direct services for child care services, primarily through vouchers and contracts. In FY 2002, States spent $6.9 million, or 81 percent, on direct services. This increased slightly in FY 2003, with States spending $7.6 million, or 84 percent, on direct services. Because TANF direct spending on child care services is not categorized, the total amount spent on direct services (and other costs) is underestimated.
Quality Improvement Activities
While direct services make up the bulk of total spending, the largest percentage growth has occurred for quality improvement activities. Including the earmarks established above the 4 percent minimum quality spending requirement, FY 2002 quality expenditures reached $945 million, a 30 percent increase over FY 2001 quality spending and 11 percent of total spending. FY 2003 quality spending was $881 million, or 9 percent of total CCDF expenditures.
- Earmarks: States spent $141 million of the $292 million earmarked
in FY 2002 for quality in that year. States have 3 years to fully
expend these funds. Expenditures to date include $72 million on
child care quality improvement, $43 million on infant and toddler
quality improvement, and $25 million on child care resource and
referral and school-age care. States spent $112 million of the $290
million in earmarked discretionary funds for FY 2003 in FY 2003.
Expenditures include: $469 million on child care quality improvement
activities, $31 million on infant and toddler quality improvement,
and $12 million on child care resource and referral and school-age
care.
- Four Percent Set-Aside: States reported spending $359 million of FY 2002 appropriations on improving the quality of child care (excluding the earmarks). This was 7 percent of combined FY 2002 Federal and State expenditures and well above the 4 percent quality spending requirement of the CCDBG Act. An additional $48 million was spent on quality activities from the States' MOE expenditures. In FY 2003, State spending was $346 million, or a little over 6 percent of FY 2003 total Federal and State expenditures, also above the statutory requirement. An additional $10 million was spent on quality activities from the States' MOE expenditures.
1Total quality spending includes discretionary earmarks for quality improvement activities.
Non-Direct Services
Non-direct spending on items such as information technology, referral services, and eligibility determination declined in both FY 2002 and FY 2003. Compared to FY 2001, there was a 5 percent decrease of approximately $25 million. Overall, however, non-direct services remained at between 5 and 6 percent of total expenditures.
Administrative Expenses
In both FY 2002 and FY 2003, administrative expenses made up 2 percent of total expenditures at $207 million and $227 million, respectively. By law, no more than 5 percent of any fiscal year's CCDF appropriation may be used for administrative costs. In both FY 2002 and FY 2003, the States used less than 3 percent of each year's appropriation on administration.