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Loss of ARPA Funding Threatens Appalachian Children & Communities : The American Rescue Plan Act

March 29, 2024

The American Rescue Plan Act (ARPA) of 2021 was a historic moment for childcare funding with an investment of $24 billion to the Child Care Stabilization Program, supplemented by an additional $15 billion for the Child Care and Development Fund which provided critical financial assistance during a crucial time. This funding helped cover operational expenses for childcare providers during the pandemic, supporting both low-income families and essential workers. However, the expiration of these funds in September 2023 has left our region on the brink of a crisis. The fallout won’t just impact children and families – it threatens the economic and social stability of our Appalachian communities. This blog dives into the potential consequences and why we need continued federal support now more than ever.

The Childcare Stabilization Program provided crucial support to over 16,390 programs across Kentucky, West Virginia, Pennsylvania, and Ohio, especially for small businesses. By covering essential costs like wages, rent, and mortgage payments, the program helped centers stay adequately staffed and childcare centers remain open. This support ensured continued service for an estimated 945,300 children in this region alone. Table 1 shows the impact breakdown:

Table 1: Impact of Stabilization Program in Four Appalachian States
StatePrograms FundedChildren ServedAmount Allocated
KY1,720 125,700$470.1 million
WV1,40542,100 $160.4 million
PA7,000 375,900 $728.9 million
OH6,265 401,600 $799.8 million 
1. 2.

The Childcare Clif

A study by The Century Foundation in June 2023 warned of a potential childcare crisis upon expiration of the funds, noting that states will experience a $10.6 billion loss in tax and business revenue per year as a result of this funding cliff. This forces families into impossible choices. 

The table below shows the number of programs that were projected to close, and children to lose access to care as of 2023:

Table 2: Projected Program Closures and Impacted Children in Four Appalachian States
StateProgram ClosuresChildren Impacted

Loss of Childcare Assistance Could Worsen Access to Quality Early Childhood Education

Without sufficient funding, maintaining quality standards in childcare programs becomes challenging. This can affect children’s learning and development. For instance, a survey by The Children’s Hospital of Philadelphia’s PolicyLab, on Pennsylvania’s Childcare staffing found that 2,395 open positions resulted in the closure of 934 classrooms and childcare providers’ inability to recruit and retain staff was having a direct impact on the quality of their programming from August to September 2023.

Low-Income Families May Struggle to Afford Childcare, Potentially Affecting Employment and Economic Stability

Childcare closures lead to immediate job losses for childcare workers, with rippling impacts on the workforce and economic growth. In Kentucky, grant money used for payroll has led to program cuts and tuition hikes (5% in 2024), pushing childcare beyond many families’ reach, and forcing parents out of the workforce. Struggling to find affordable childcare forces parents, especially single parents, into difficult choices. 

In Ohio, parents face year-long waitlists, with some spending more on childcare than rent and resorting to unlicensed in-home providers. Additionally, West Virginia manufacturers expressed concern about the lack of affordable childcare hindering recruitment. They recognize childcare’s importance in supporting workers and the local economy. Small Business Majority’s research found 1 in 3 small employers report that their employees’ families and childcare issues have affected their job performance or productivity, and 36% of small business owners with children report that not having access to childcare was a barrier to starting their business.

The potential consequences of ARPA’s expiration extend far beyond statistics. Children who lose access to quality childcare face disruptions in their education and development. Parents, particularly mothers, may be forced to choose between work and childcare, jeopardizing their economic security and career advancement.

Recent Moves by the Biden Administration Could Help Fill the Gaps

On February 29th, 2024, President Biden announced a new executive order to lower the cost of child care for over 100,000 families. This will be done via the Department of Health and Human Services (HHS) strengthening Child Care & Development Block Grant (CCDBG) program, which supports over a million children and their families across the United States with childcare assistance each month. Provisions included in this rulemaking will cap co-payments for families participating in CCDBG to no more than 7% of income and encourage states to limit co-payments entirely for families of children with disabilities, children experiencing homelessness, children in foster care, children in Head Start, and families at or below 150% of the federal poverty level. 

These provisions have the potential to improve financial stability for 140,000 care providers nationwide, however, they are not enough. ARPA provided critical support to many more providers, helping an estimated 302,012 families in four states alone (based on a US average family size of 3.13 and data on children served). This recent move addressing childcare costs is a positive step, but more systematic solutions are needed to ensure long-term affordability and accessibility for families in Appalachia and across the US.

More is Needed to Protect the Future of Appalachia

Appalachian families have long faced struggles with finding adequate, affordable child care. Many of our communities are child care deserts, defined as an area where there are more than three children under age 5 for each licensed child care slot. The impacts of the pandemic made these issues even more severe. 

Advocacy for continued federal support for childcare funding is critical. Individuals and organizations are encouraged to get involved in supporting childcare initiatives in their communities, ensuring access to quality childcare for all families in our region. We also need to see better protections and better pay for our childcare workers. These workers – primarily women and people of color – are chronically underpaid. In 2021, nearly one-third of childcare providers faced food insecurity. 

Ideally, we would see a national solution to this issue. One action Congress can take is passing a budget for 2025 that includes funding $8.5 billion for the Child Care and Development Block Grant (CCDBG) which will help states expand child care assistance to serve over 2 million low-income children. President Biden has also proposed a historic new program under which working families with incomes up to $200,000 per year would be guaranteed affordable, high-quality child care from birth until kindergarten, with most families paying no more than $10 a day, and the lowest income families paying nothing—providing a lifeline to the parents of more than 16 million children. Congress could take action on these priorities to create enormous impacts for Appalachian families. 

Bills like The Child Care for Working Families Act (CCWFA) in the House and Sen. Sherrod Brown’s Expanding Childcare in Rural America Act in the Senate offer solutions to help us solve the childcare crisis, provide better conditions for childcare workers and ensure that more children have access to quality affordable child care. 

  • $8.5 billion for the Child Care and Development Block Grant, to help states expand access to affordable child care for families in need. Many of our communities are childcare deserts, which jeopardizes our region’s workers economic security, and puts childhood development at risk.