Trump’s Childcare Funding Freezes Are Going to Hit All Kids Hard

In recent days, the Trump administration has taken dramatic steps to make federal funds for childcare more difficult to obtain. A lack of clarity around how a slew of new requirements will be implemented has left childcare providers reeling, and raised the specter of facility closures even as childcare costs skyrocket. As providers work to sort through the confusion, experts are warning that no family will be immune from the impact of these policy changes.

The administration has made it more difficult for childcare providers to obtain federal subsidies. In the wake of unverified allegations of fraud in Minnesota day care centers by right-wing influencers, the Department of Health and Human Services said it would freeze childcare funds to all states unless they met additional verification requirements. Days later, HHS announced that it would roll back Biden-era rules governing the Child Care and Development Fund, or CCDF, with the ostensible goal of preventing fraud, now requiring that states base payments to providers on attendance rather than enrollment, no longer mandating that providers be paid ahead of services, and reprioritizing vouchers instead of guaranteed slots for providers. On Tuesday, HHS said that it would specifically freeze $10 billion in childcare funds to five blue states—Minnesota, New York, California, Illinois, and Colorado—including nearly $2.4 billion from the CCDF.

“There is no evidence of clear or widespread fraud in the states that they have chosen now, so there is no way to anticipate who they would choose next. This is not evidence-based or data-based. This looks to be a form of punishment,” said Ruth Friedman, a senior fellow at the Century Foundation, a progressive think tank. “HHS is not following their normal processes for investigating and responding to fraud.”

Although HHS has provided some guidance on the requirements that states will need to meet to receive federal childcare funds, there are still open questions on timelines for providing proof that money is being used to the administration’s liking.

“The fact that everyone has these big questions about something that is so integral to families’ ability to just function day to day, and for communities and businesses to be prosperous, and that this chaos and confusion is reigning is—in and of itself—a big problem in the short and long term,” said Melissa Boteach, chief policy officer for Zero to Three, an advocacy organization focused on early childhood care.

In 2019, around 1.4 million children and 857,700 low-income families nationwide received federally subsidized childcare through the CCDF, according to the most recent data from HHS. States, tribes, and territories can draw down these federal funds under certain guidelines, and then pay providers directly to assist low-income families that may otherwise struggle to afford childcare. States have flexibility in how these funds are used; while the CCDF requires that states also contribute a certain amount of money to childcare, the amount that states contribute varies.

This means that a childcare provider in a state that offers significant childcare assistance, such as New Mexico, may have a bit more flexibility to maintain operations even if federal childcare payments are delayed. But a childcare provider in a state that does not provide funding for childcare outside of what is required by the federal government, such as Oklahoma, may not have the resources to keep its doors open, said Cindy Lehnoff, director of the National Child Care Association.

Lehnoff added that most small providers she knew in higher-income areas had cash flow to maintain operations for three months without federal assistance, but providers that serve lower-income families that don’t benefit from CCDF may only have a cushion to remain open for a month or less.

“Once they close their doors, there’s no coming back from that,” Lehnoff said.

Christina Killion Valdez, the director of a childcare center in Rochester, Minnesota, said in a press briefing that the Minnesota state government had promised support, and that her organization had a cushion of three months for its overall program. But if the freeze continues for several months, her childcare center will be at risk, along with others in the state.

“If the children we serve lose their tuition assistance, it will destabilize our entire budget, like it will for 4,000 other programs. In many areas, there aren’t enough families that can afford childcare to take these spots, and programs will have to cut staff,” said Valdez. “Cutting staff means cutting spots for kids, whether they receive assistance or not. In many cases, it means closing childcare centers altogether. It means a collapse of the childcare system in Minnesota.”

Even for those centers that stay open, if a provider offers care for both low-income families who rely on assistance and households that are able to pay the full cost, losing that funding could result in providers needing to up their prices.

“If you lost all of your subsidized children, that would raise the cost of care to those paying. And we’re already seeing unaffordable childcare in our country,” said Lehnoff.

State agency staff responsible for distributing funds may subsequently have their attention divided by the need to provide evidence of proper spending to the federal government, which could also slow down the distribution process. Experts say there are already guardrails in place to prevent the misuse of federal dollars, so providing an extra layer of verification would increase work for state agencies.

“The staff at state agencies are already overburdened by the work that they’re doing, and adding even this additional small step is going to take additional capacity,” said Stephanie Schmit, director of childcare and early education at the Center for Law and Social Policy. Even if a state meets necessary requirements, the length of time it takes to verify could result in delays in funding being distributed.

The five states specifically singled out by the Trump administration will be the most immediately affected because they will not be able to draw down on funds at all. But the new requirements could also amount to a “de facto freeze” for every other state, said Eliot Haspel, a family policy expert at the think tank Capita. “You’re still asking [for] hoops to jump through before you can get the money you’re otherwise owed,” said Haspel in a press briefing.

Then there is the potential impact on quality of care as a whole, given that a portion of CCDF funds are used to improve childcare programs for all. “There’s a certain percentage of the resources that are allocated to quality activities, and those resources actually impact all children. It’s not just the children who are receiving childcare assistance; it’s all the children in a center whose providers are receiving this additional quality support funded through the resources,” said Schmit.

Because the CCDF funds may be used for paying childcare staff, the freeze in funding could exacerbate workforce shortages for childcare workers. Without those subsidies, staff could lose their jobs or seek employment elsewhere, at a time when wages for childcare providers are frequently insufficient to keep workers afloat.

“When you disrupt an important source of funding in a system that’s already strained to the brink, you’re going to see some providers going out of business. You’re going to see some early educators leaving the field. And that has ripple effects beyond the children who are getting vouchers,” said Boteach.

The funding freeze comes as the Trump administration works to rapidly reshape the social safety net as a whole. Last summer, the Republican-majority Congress approved legislation that made dramatic cuts to Medicaid and the food stamp program, known as SNAP. Although some of these cuts have yet to go into effect, states are already preparing for a loss in funding. The White House also froze funding to several government programs last year and has significantly reduced the workforce for the Administration for Children and Families, which oversees the CCDF. Moreover, the government shutdown in October and November threatened services for low-income households, including SNAP and Head Start. As a result, families that are already vulnerable to cuts to social services will be deeply affected.

“They’re not going to have access to health insurance, they’re not going to have access to food, and now are going to have a challenging time accessing childcare. It’s going to be multiple hits to families who already are in a position where they need support,” said Schmit. “I see this as, on the whole … something that’s really aiming to undermine the needs of families with low incomes in this country.”