Early Care and Education State Budget Actions FY 2020

About This Report

This report provides an overview of states’ budget and appropriations in early care and education. NCSL sent surveys to 50 state legislative fiscal offices regarding state appropriations for early care and education programs—including child care, prekindergarten, home visiting and any additional early childhood programs—for fiscal years 2018, 2019 and 2020. Twenty-four states completed the survey. The findings provide a snapshot of how legislatures in these states reported planning to use federal, state, local and any additional funding to support early learning and healthy development in young children prior to the COVID-19 pandemic. The crisis caused an economic recession that forced some legislatures back for special sessions that significantly revised appropriations for FY 2019 to FY 2020. Any changes made during these special sessions are not reflected in these findings.

Of the 24 states that participated in the survey, 23 reported funding for child care, 22 reported funding for prekindergarten, 21 reported funding for home visiting and 19 reported funding for other early childhood programs. The data offers a snapshot of one point in time for states and does not reflect all budget adjustments made after state budgets were enacted. States may have several programs for prekindergarten, home visiting, and other early care and education initiatives. When this occurred, FY 2019-2020 percentage changes were calculated based on all programs within a category reported by states, not for each individual program within a given category. Notes in tables indicate cases where states do not have a program, did not provide data or did not complete survey questions.

Terms and Definitions Used in This Report

• State appropriations: Funds allocated by formal action to government agencies for specific use. The survey asked for allowable expenditures to state agencies but not a record of expenditures.
• Designated funds: Any non-general fund that receives earmarked revenue, such as tobacco, lottery, fees and certain taxes.
• Child care funding sources: State general funds, Temporary Assistance for Needy Families (TANF) transfer or direct funds, federal Child Care and Development Funds (CCDF), state Maintenance of Effort (MOE) matches, master tobacco settlement funds, local matches, taxes and licensing fees.
• Prekindergarten funding sources: State general funds, state education finance formulas, tobacco and designated lottery funds, Title I and TANF funds.
• Home visiting funding sources: State general funds; master tobacco settlements; Maternal, Infant and Early Childhood Home Visiting (MIECHV); Medicaid; TANF; Maternal and Child Health (MCH) Title V block grants; Child Abuse Prevention and Treatment (CAPTA) grants; Substance Abuse and Mental Health Services Administration (SAMHSA) grants; Individuals with Disabilities Education Act (IDEA) Part C; and mandatory state matching funds.

Conclusion

The 24 states that responded to NCSL’s survey reported increased financial support for early care and education initiatives overall (12.8%), and for three of the four early care and education categories as well, from FY 2019 to FY 2020. Appropriations for child care increased the most of the four survey categories (23.5%), followed by home visiting (7.8%) and prekindergarten initiatives (3.7%). Funding for other early care and education initiatives increased for some states but remained consistent from FY 2019 to FY 2020 overall for those 24 states.

The COVID-19 pandemic, during which many children and parents lost access to the services and programs highlighted in this report, has underscored how important early childhood systems can be to families’ health and financial stability. During these unprecedented times, states have adapted and embraced innovative ways to deliver services and support the early childhood service providers. For example, New Mexico is prioritizing child care staff for COVID-19 testing and providing uninsured child care workers access to state health insurance. Alaska, Illinois, New Mexico, North Carolina and West Virginia are increasing compensation and benefits (e.g., paid sick days) for the child care workforce. In addition to these examples, NCSL anticipates that many legislators will give early care and education more attention in coming years. Some may leverage learnings from the COVID-19 crisis to make legislative changes that previously seemed improbable but now seem reasonable, if not necessary, from child development, workforce and economic perspectives.

Child Care

Of the 24 states that completed the survey, 23 provided information about child care appropriations; West Virginia did not submit information related to child care budget information (see Appendix A). A vast majority—20 states—reported increased funding for child care initiatives. Two states—Alaska and Louisiana—reported decreased child care funding from FY 2019 to FY 2020. Nebraska’s child care funding remained stable from FY 2019 to FY 2020.

Source: NCSL, 2020

The primary driver of the increases in California, Kansas, Mississippi, Missouri and Wisconsin—the states with largest overall state budget percentage increases in child care appropriations––was federal CCDF funding appropriations. Kansas’ $22,005,817 increase came solely from growth in CCDF, discretionary and matching funds. Missouri’s increased child care funding was primarily attributable to a 53.5% increase in CCDF funds ($49,434,736) as well as an additional $2,001,534 in TANF dollars. The state also contributed $38,927 to the Child Care Improvement Program through the Department of Health and Senior Services. Mississippi’s increased appropriations came from equal percentage (64.7%) increases in CCDF ($25,681,943), TANF ($11,608, 556) and health homes ($1,298,582), an optional state benefit for coordinated/integrated service delivery for people with Medicaid who have chronic conditions. California’s increased child care spending came from a combination of sources, including an additional $551,917,769 in general funds, primarily attributed to one-time initiatives, including increased child care slots and funds for facility and workforce development grants. They also came from an additional $3,394,000 in Title IV-E dollars, an additional $223,640,231 in CCDF dollars and a new state tax revenue on cannabis. The cannabis tax provided an additional $80,463,000 for child care funding in the state from FY 2019 to FY 2020.

All five of these states reported increases or stable funding from their general fund. It is worth noting that a few additional states—Delaware, Massachusetts, Montana, New Jersey and North Dakota—while not among the top five listed above, did report increases in general funds for child care.

Only two states—Alaska and Louisiana—reported decreased child care funding from FY 2019 to FY 2020. Although Louisiana reported an additional $11,200,000 in general fund dollars, the state also reported a $47,580,761 decrease in CCDF dollars for a net decrease of $36,380,761 (26.6%) in child care funding from FY 2019 to FY 2020. Alaska reported a $4,065,500 increase in CCDF funding but also a $4,559,900 decrease in TANF funding and a $161,300 decrease in general fund dollars dedicated to child care, yielding a $654,700 year-over-year decrease in child care funding.

Examples of Recent State Child Care Legislation

Maine enacted Legislative Document 1958 in 2020, which expands the permitted use of tax increment financing to include costs associated with operating quality child care facilities. Allowed uses include finance costs and construction, staffing, training, and certification and accreditation costs related to child care.

New Mexico enacted HB 83 in 2020, which establishes the early childhood education and care fund and the early childhood education and care program. The bill mandates that excess funds from the federal Mineral Leasing Act are distributed to the early childhood education and care fund beginning June 30, 2022, and by June 30 for each following fiscal year moving forward. 

Prekindergarten

Of the 24 states that completed the survey, 22 provided information about prekindergarten appropriations; Mississippi and North Dakota did not submit information related to prekindergarten budget information (see Appendix B). Fifteen states reported increased funding for prekindergarten initiatives. Six states—Arkansas, Delaware, Massachusetts, Montana, Nevada and West Virginia—reported decreased prekindergarten funding from FY 2019 to FY 2020. Alaska’s prekindergarten funding remained stable from FY 2019 to FY 2020.

Source: NCSL, 2020

The top five of the 15 states with overall state budget percentage increases in prekindergarten appropriations—Alabama, Kansas, Missouri, New Jersey and New Mexico—each reported fluctuations in funding streams. Missouri saw both increased and decreased appropriations for prekindergarten services across funding streams. They included a $24,567,074 increase in school finance formula funds for the state prekindergarten program and a $693,939 increase in general funds dedicated to supporting early childhood development for children birth to age 3 through the Early Childhood Development, Education and Care Programs for Low-Income Families. General funding for the Early Childhood Program/Missouri Preschool Program increased by $267,737, more than doubling general funding in FY 2019. The preschool program also received an additional $6,500,000 in in federal funds through the U.S. Department of Health and Human Services Preschool Development Grant Birth to Five Program. Offsetting these increases, dedicated funds from the Early Childhood Development, Education and Care fund decreased by $2,712,071 (47.5%). Still, Missouri reported a net increase of $29,316,679 in prekindergarten funding.

Three states reported increased general fund appropriations. New Mexico reported an additional $24,500 in general funds for the state pre-K program and a marginal increase of $2,600 in the state prekindergarten fund balance, which reverts to state prekindergarten funds and can be used for additional prekindergarten awards. Alabama’s First Class Prekindergarten and Strong Start/Strong Finish Programs received increases of $26,836,595 and $450,440, respectively, in general funds for program expansion. Kansas’ State Pre-K: 4-Year-Old At-Risk Program received an additional $4,300,608 from the school finance formula. The Pre-K Pilot Program received an additional $1,079,314 in TANF funding, plus $121,417 in tobacco settlement funds. New Jersey increased general fund appropriations by $68,385 for its state prekindergarten program.

Of the six states that decreased prekindergarten appropriations from FY 2019 to FY 2020, two had only slight reductions: 1% in Arkansas ($1,104,376) and 0.3% ($42,092) in Delaware. Nevada reduced funding by $3,196,530 (7.5%), and Massachusetts, Montana and West Virginia made even greater cuts. Despite a $5,507,987 increase in general funds for the Commonwealth Preschool Partnership Initiative, Massachusetts reported a $12,425,816 reduction in federal funds for the Preschool Expansion Grant, resulting in a $6,894,816 (29.3%) overall decrease from FY 2019 to FY 2020. The Montana Legislature did not fund its Stars to Quality prekindergarten program in 2019. In addition, the state reported a $3,353,832 (43.5%) decrease in federal Preschool Development Grant Program funding for a total year-over-year reduction of $7,844,904 (64.3%). West Virginia reported a $58,937,302 (39.4%) loss in funding, primarily from a loss of $55,296,850 in TANF, CCDB, Title I and Head Start funds and a loss of $371,158 in local funds for the WV Universal Pre-K Program.

Examples of Recent State Prekindergarten Legislation

California’s Early Learning and Care Infrastructure Grant Program provides resources to build new facilities or to retrofit, renovate or expand existing facilities to expand access to early learning and care opportunities for children up to 5 years old. In addition to $142,705,000 in general funds already appropriated for the program, California enacted AB 114 in 2019 to appropriate an additional $102,295,000 for the program.

Washington enacted SB 5851 in 2019, which uses funding distributed from the Puget Sound Taxpayer Accountability Account. Counties may use distributions from the account solely to start endowments to improve educational outcomes in early learning, K-12 and higher education. These include, but are not limited to, facilities and programs for low-income, homeless, foster care or otherwise vulnerable children and youth.

Home Visiting

Of the 24 states that completed the survey, 21 provided information about home visiting appropriations; Georgia, North Dakota and West Virginia did not submit home visiting budget information (see Appendix C). Fourteen states reported increased funding for home visiting initiatives from FY 2019 to FY 2020. Five states—Alaska, Iowa, Kansas, Louisiana and Montana—reported decreases. New Jersey’s and North Carolina’s home visiting funding remained stable from FY 2019 to FY 2020.

Source: NCSL, 2020

Fourteen states reported increases in home visiting appropriations from FY 2019 to FY 2020, with the biggest increases primarily attributable to increases in general fund investments and federal MIECHV funds. California reported large increases in appropriations supporting its CalWORKs Home Visiting Initiative. FY 2019 appropriations represented six months of services for TANF families with young children; an additional $7,989,00 increase in general fund appropriations for FY 2020 will support a full year of services. California also reported a $49,277,000 increase in TANF funds. Delaware’s additional $4,013,055 in FY 2020 funds for home visiting is attributable to a $569,737 increase in general funds and a $3,417,023 increase from federal MIECHV grants. Mississippi’s additional $1,298,582 (64.7%) for the Healthy Families Mississippi Program comes from an increase in federal MIECHV dollars. Alabama reported a $1 million (46.8%) increase in general funds to provide additional grants to HIPPY (Home Instruction for Parents of Preschool Youngsters) home visiting sites, and Indiana reported a $816,616 (35.9%) increase in general funds for its state home visiting program.

Of the five states that reported decreased appropriations for home visiting initiatives from FY 2019 to FY 2020, Kansas reported only a slight funding reduction of $273,237 (1.5%). Alaska and Iowa reported marginal reductions of $128,000 (6.7%) and $522,528 (7.4%), respectively. Montana and Louisiana experienced larger reductions in home visiting funding. Montana reported a $3,748,121 (62.5%) reduction in MIECHV funding and a $34,410 reduction in general and dedicated funds for the Public Health Home Visits Program, figures totaling an overall $3,782,531 (57%) reduction in home visiting appropriations. Louisiana reported an overall $9,309,103 (45.9%) decrease in home visiting funding stemming primarily from a $9,440,218 (68.5%) decrease in funds from the Affordable Care Act, Maternal Child Health Block Grant and MIECHV for its Nurse-Family Partnership and a $128,876 (20.1%) decrease from its Children’s Trust Fund. Louisiana’s Children’s Trust Fund is funded by a $4 fee on duplicate copies of birth certificates, federal funding through a Community-Based Child Abuse Prevention grant and various other contributions.

Example of Recent State Home Visiting Legislation

New Hampshire enacted SB 274 in 2019 to require that existing home visiting programs for children and their families be made available to all Medicaid-eligible children and pregnant women without restriction.

Other Early Care and Education Initiatives

State legislatures continued to make investments in numerous other programs serving young children and their families. Of the 24 states that completed the survey, 19 states provided information about appropriations for what NCSL is categorizing as “other early care and education initiatives” (e.g., wage supplements for the early childhood workforce, programs and services for children ages birth to 3, and preschool-aged children with special needs and developmental delays). Alabama, Mississippi, Montana, New Jersey and West Virginia did not submit budget information for other early care and education initiatives (see Appendix D). Twelve states reported increased funding for other early care and education initiatives. Five states—Alaska, Arkansas, Iowa, Nevada and North Dakota—reported decreased funding for other initiatives from FY 2019 to FY 2020. Georgia’s and Wisconsin’s funding for other early care and education initiatives remained stable from FY 2019 to FY 2020.

Source: NCSL, 2020

The primary driver of the increases in California, Indiana, Louisiana, Michigan and New Mexico—the five states with the largest overall state budget increases in this category—was increased state appropriations. Four of these five states reported budget increases in the triple-digit percentage points.

Louisiana reported a 686.4% ($7,821,931) increase in funding for other early care and education initiatives—the highest percentage increase in this category. The increase includes an additional $5,662,976 in federal funding and $2,130,000 in state general funding for the Preschool Development Grant Birth to Five Program and an additional $28,955 increase in an interagency transfer of funds to expand the Early Childhood Community Networks, regional entities that facilitate coordinated leadership functions for the early childhood community. California reported a $498,103,000 overall increase in funding. This came from increases of $492,683,000 in general funds for services for preschool-aged children with special needs and an additional $1,980,000 from the preschool development grant program.

Michigan’s $17,009,739 increase in funding for other early care and education initiatives comes from a mix of state and federal funding. At the state level, Michigan reported increased state aid fund appropriations of $2,150,000 for the Early On program—early intervention services for infants and toddlers with developmental delays and/or disabilities and their families—and $4,000,000 for Flint Water Crisis Early Intervention Supports. The state also reported an additional $2,505,000 from a local county match of state dollars awarded for early childhood systems-building work and an additional $8,354,739 from an Every Student Succeeds Act (ESSA) federal grant for the Preschool Development Grant Birth to Five Program.

New Mexico reported a 124.4% ($99,300) overall increase in funding for other early care and education initiatives. The state appropriated additional general funds, including an extra $2,800 for higher education scholarships and wage supplements for the early childhood workforce and an extra $89,700 for a K-5 Plus extended school year. New Mexico’s Family Infant Toddler Program received a marginal increase in general funds ($3,500) and a marginal increase in federal IDEA Part C funds ($3,300).

Indiana reported a net increase of $5,350,487 (39.7%) in funding for other early care and education initiatives. This figure reflects a $9,850,487 increase in general funding and a loss of $4.5 million in dedicated funding for the First Steps Program.

Of the five states that reported decreased appropriations for other early care and education initiatives from FY 2019 to FY 2020, Alaska had only a slight reduction of .1% ($7,000), and North Dakota, Iowa and Nevada had small reductions in funding—$164,348 (3.9%), $3,960,000 (4.0%) and $505,082 (5.6%), respectively. Arkansas had a much larger reduction in overall percentage of funding for other early care and education initiatives at 84.2% ($17,761,421). The state experienced increases in federal Department of Health and Human Services funds of $630,803 for a preschool development grant program serving children birth to age 5 and $314,186 for the Early Head State Child Care Partnership. These increases were offset, however, by a decrease of $18,706,411 in Department of Health and Human Services and Department of Education funding for the preschool development grant program from FY 2019 to FY 2020.

Example of Other Early Care and Education Legislation

Oklahoma enacted HB 4153 in 2020 to expand early intervention funding for SoonerStart Early Intervention Services for eligible infants, toddlers and their families.