Fact Sheet: Build Back Better Act - Child Care and UPK

Build Back Better Act

Subtitle D–Child Care and Universal Pre-Kindergarten

Sec. 23001. Birth Through Five Child Care and Early Learning Entitlement.

Subsection (a): Definitions.

• Defines terms within the Act and incorporates the definitions included in section 658P of the Child Care and Development Block Grant Act of 1990

Subsection (b): Additional Definitions

• Defines a number of terms including “child care certificate,” noting that certificates may be used for sectarian child care services if freely chosen by the parent
• Defines “child experiencing homelessness”
• Defines “eligible activity,” with respect to a parent
• Defines “eligible child” as an individual who is less than 6 years of age, not yet in kindergarten, who’s family meets annual income requirements during the years the program is in place, resides with parent(s) participating in an eligible activity, is included in a vulnerable population or resides with a parent over 65 years of age
• Defines “eligible child care provider” as a licensed center-based, family or other type of provider that participates in the state’s tiered quality rating system and meets all requirements under the Child Care and Development Block Grant Act of 1990, and puts in place a special rule for eligible providers
• Defines “FMAP”
• Defines “family child care provider”
• Defines “inclusive” care as that provided by an eligible provider serving a proportionate number of children with disabilities to the proportion in the state, and that provides care and full participation to those children with disabilities
• Defines “infant or toddler” and “infant or toddler with a disability”
• Defines “lead agency,” “State” and “territory”

Subsection (c): Appropriations.

• Appropriates the following amounts to HHS to carry out this section:
• FY 2022:
• $11.46B to remain available until September 30, 2027, to carry out subsection (h)(1)(A)
• $5.73B to remain available until September 30, 2027, to carry out subsection (h)(1)(B)
• $4.1256B to remain available until September 30, 2027, to carry out subsection (h)(1)(A) and (B)
• $1.6044B to remain available until September 30, 2027, to carry out subsection (h)(2)(A), (B) and (C)
• FY 2023:
• $16.235B to remain available until September 30, 2027, to carry out subsection (h)(1)(A)
• $8.1175B to remain available until September 30, 2027, to carry out subsection (h)(1)(B)
• $5.8446B to remain available until September 30, 2027, to carry out subsection (h)(1)(A) and (B)
• $2.2729B to remain available until September 30, 2027, to carry out subsection (h)(2)(A), (B) and (C)
• FY 2024:
• $20.055B to remain available until September 30, 2027, to carry out subsection (h)(1)(A)
• $10.0275B to remain available until September 30, 2027, to carry out subsection (h)(1)(B)
• $7.2198B to remain available until September 30, 2027, to carry out subsection (h)(1)(A) and (B)
• $2.8077B to remain available until September 30, 2027, to carry out subsection (h)(2)(A), (B) and (C)
• Sums as may be necessary for each of FY 2025 – 2027, to remain available for one additional fiscal year
• Appropriates the following for grants to Indian Tribes and Tribal organizations to carry out this section:
• $960M to remain available until September 30, 2027 in FY 2022
• $1.36B to remain available until September 30, 2027 in FY 2023
• $1.68B to remain available until September 30, 2027 in FY 2024
• Sums as may be necessary for each of FY 2025 – 2027, to the extent practicable as determined by the Secretary
• Appropriates the following for grants to Territories to carry out this section:
• $120M to remain available until September 30, 2027 in FY 2022
• $170M to remain available until September 30, 2027 in FY 2023
• $210M to remain available until September 30, 2027 in FY 2024
• Sums as may be necessary for each of FY 2025 – 2027, to the extent practicable as determined by the Secretary
• Appropriates the following for grants to localities to carry out this section:
• $950M to remain available until September 30, 2027 in FY 2023
• $950M to remain available until September 30, 2027 in FY 2024
• $950M to remain available until September 30, 2027 in FY 2025
• $950M to remain available until September 30, 2027 in FY 2026
• $950M to remain available until September 30, 2027 in FY 2027
• Appropriates the following for Head Start expansion in nonparticipating states:
• $2.85B to remain available until September 30, 2027 in FY 2023
• $2.85B to remain available until September 30, 2027 in FY 2024
• $2.85B to remain available until September 30, 2027 in FY 2025
• $2.85B to remain available until September 30, 2027 in FY 2026
• $2.85B to remain available until September 30, 2027 in FY 2027
• Appropriates to HHS $130M for each of FY 2022 – 2025, to carry out subsections (k) and (l)
• Requires the Secretary to reserve up to 1.06% from FY 2022 – 2025 appropriations for each of FY 2026 and 2027, to carry out subsections (k) and (l)

Subsection (d): Establishment of Birth Through Five Child Care and Early Learning Entitlement Program.

• Authorizes the Secretary to administer the program
• Requires that every family that applies receives assistance by October 1, 2024

Subsection (e): Lead Agency.

• Requires the Governor of a state wishing to receive funds to designate a lead agency to administer the funds

Subsection (f): Applications and State Plans.

• States may submit applications that includes either (i) a transitional state plan, or (ii) a full state plan
  • Transitional plans must be implemented during a 3-year period
  • Full plans must be implemented during a 3-year period
• The following are requirements for transitional plans:
  • Not more than 3 years following enactment of this Act, the Secretary must award funds to approved states, so long as the state assures it will submit a full plan
  • States must describe how funds will expand access to direct child care services and increase the supply and quality of providers
• The following are requirements for full plans:
  • PAYMENT RATES. The plan must certify that payment rates, within 3 years after the state receives funds, (i) sufficiently meet the cost of child care and set rates in accordance with a cost estimation model or cost study and (ii) correspond to differences in quality based on the state’s tiered system for measuring quality of eligible child care providers
  • COST ESTIMATION I. The plan must demonstrate that the state has developed and uses, after consultation with entities and stakeholders, a reliable cost estimation model or cost study for the payment rates to reflect rates for providers at each of the tiers; cost variations also need to consider geographic area, type of provider, age of child, and additional costs associated with providing inclusive care
  • COST ESTIMATION II. The plan must certify that the state’s payment rates (i) are based on the most recent estimates from the cost estimation model so providers receive sufficient payment to meet requirements of their tier; (ii) provide sufficient payments to providers not at the top tier to enable increases in quality to meet tier requirements; (iii) provide adequate wages to staff (at minimum, a living wage and equivalence to elementary educators with similar experience and credentials); and (iv) are adjusted on an annual basis for cost of living
  • PAYMENT PRACTICES. The plan must provide assurance that the state will implement payment practices that support the fixed costs of providing child care services
  • TIERED SYSTEM – MEASURING QUALITY. The plan must certify that the state will implement, within 3 years after receiving funds, a tiered system for measuring quality. The system must:
    • Include a set of standards, where the highest tier is, at a minimum, equal to Head Start performance standards and considers child development in different types of settings (e.g., centers vs. family child care providers) as quality indicators
    • Include a different set of standards for care provided during nontraditional hours
    • Provide resources and support for providers at lower tiers
  • ACHIEVING HIGH QUALITY. The plan must certify the state will implement, within 3 years after receiving funds, policies and financing practices that allow families to choose the highest quality tier within 3 years after enactment of this Act
  • COMPENSATION. The plan must certify that the state, within 3 years after receiving funds, has or will have a wage ladder for staff that at a minimum meets the living wage and equivalency to elementary educators’ wage requirement
  • SLIDING FEE SCALE FOR COPAYMENTS. The sliding fee scale must be used to determine copayment for families (family income based on State Median Income):
    • Income 75% or less - $0 copay
    • Income between 75 and 100% - more than 0 but not more than 2% of income copay
    • Income between 100 and 125% - more than 2 but not more than 4% of income copay
    • Income between 125 and 150% - more than 4 but not more than 7% of income copay
    • Income between 150 and 250% - 7% of income copay
  • PROHIBITION ON CHARGING MORE THAN COPAYMENT. Child care providers receiving federal funds cannot charge more than the total of financial assistance provided under this section and any applicable copayments
  • ELIGIBILITY. The plan must certify that each child that receives assistance will receive assistance for not less than 12 months, unless the child ages out
  • POLICIES TO SUPPORT ACCESS TO CHILD CARE FOR UNDERSERVED POPULATIONS. The state must assure priority for increasing access to quality and supply for underserved populations (low-income, underserved areas, infants and toddlers with disabilities, dual language learners, care during nontraditional hours)
  • LICENSING. The state must develop, within 2.5 years after receiving funds, licensing standards for providers

Subsection (g): Payments.

• For transition payments for FY 2022 – 2024, the Secretary is required to:
  • Make allotments to application approved states using the formula under section 658O(b) under the Child Care and Development Black Grant Act of 1990
  • Secretary can reallot funds from states, tribes and territories without an approved application by the date required by the Secretary to states, tribes and territories with approved applications
• For transition payments for FY 2025 – 2027, the Secretary is required to:
  • Pay approved states 95.440% of expenditures in each quarter for direct child care services
  • Pay approved states an amount equal to the product of 1.06045 and the FMAP of expenditures in the quarter for quality-improvement and building supply activities
  • Pay approved states 53.022% of expenditures in the quarter for administration costs
  • Make advanced estimated payments of expenditures submitted by the state and adjust payments, as necessary, based on any overpayment or underpayment for previous quarters

Subsection (h): Use of Funds.

• For FY 2022 – 2024, funds must be used for:
  • Assistance to access to child care for eligible children; increasing provider payment rates, including rates sufficient for increased staff wages; and waiving or reducing copayments
  • Activities that improve the quality and supply of child care services
  • Administration costs
• For FY 2025 – 2027:
  • Starting October 1, 2024, states must use funds provided for direct child care services for activities to improve the quality and supply of child care services
  • States must ensure that parents of eligible children can access services through grants or contracts that at a minimum, support providers’ operating expenses and address underserved populations
  • States must issue a child care certificate directly to a parent that can only be used for a payment or deposit for direct child care services
  • From the total of the payments made to states each year, states must reserve equal to not less than 5% and not more than 10% for quality improvement activities
    • Quality improvement activities include increasing quality and supply and the number of available slots (with priority for providers in underserved communities serving or seeking to serve underserved populations); startup grants and supply expansion grants (priority for providers serving underserved populations); quality grants toward provider tier improvement; and facilities grants (cannot be used primarily for sectarian instruction or religious worship)
    • Funds may be administered directly by the lead agency or through other state government agencies, local or regional child care resource and referral organizations, or community development financial institutions
    • Additional quality improvement activities include training and professional development; enhancing state’s tiered system; improving supply and quality in underserved populations; and improving access to child care services for children experiencing homelessness and children in foster care
    • A portion of this amount must be reserved for states to provide technical assistance to increase supply and quality

Subsection (i): Grants to Localities and Awards to Head Start Programs.

• Defines “eligible locality” as a city, county, or other unit of general local government, or a Head Start grantee
• Directs the Secretary to awards funds to eligible localities in states that have not received payments under subsection (g)
• Directs the Secretary to allot the amount specified in subsection (c) to children from families that are below 200% of the poverty line and that are under age 6
• Directs the Secretary to award funds under subsection (c)(5) to Head Start agencies to carry out the purposes of the Head Start Act in the applicable state
• The Secretary must prioritize entities serving a high percentage of individuals from underserved populations
• The Secretary may recoup unused funds allotted under this section

Subsection (j): Program Requirements.

• Applies Title IX of the Education Amendments of 1972, Title VI of the Civil Rights Act of 1964, Section 504 of the Rehabilitation Act of 1973, the Americans with Disabilities Act of 1990, and Section 654 of the Head Start Act to any program or activity receiving funds
• A state receiving funds must maintain the expenditures of the state at the average level of expenditures by the state for the 3 preceding fiscal years; these state expenditures may also be counted for meeting the requirements to provide a non-federal share
• Funds must be used to supplement and not supplant

Subsection (k): Monitoring and Enforcement.

• The Secretary must monitor state compliance
• The Secretary will establish procedures in the event a state fails to comply with the state plan or other requirements

Subsection (l): Administration.

• The Secretary must provide technical assistance to states to carry out research, evaluations and administration related to this section

Subsection (m): Transition Provisions.

• For each of FY 2025 – 2027, states receiving funds cannot use more than 10% of CCDBG funds to provide child care assistance to children under the age of 6 that are eligible under this Act
• Any children under age 6 that is not yet in kindergarten and is receiving assistant under CCDBG on the date funding is first allocated to the state must be deemed immediately eligible to receive assistance and may continue to use the child care provider of the family’s choice

Sec. 23003. Universal Preschool.

Subsection (a): Definitions.

• Provides or imputes statutory definitions for terms within this section
• Specifies that eligible providers include local educational agencies; Head Start agencies; licensed center-based and family child care providers; community-based networks of licensed family child care providers; or a consortium of these entities

Subsection (b): Universal Preschool.

• Appropriates to HHS $18B FY 2022 and funds as may be necessary for FY 2025 – 2027, to remain available for 1 additional fiscal year
• Appropriates to HHS for FY 2022:
  • $2.5B for payments to Indian Tribes and Tribal organizations in FY 2022, to remain available until September 30, 2027
  • $1B for payments to territories in FY 2022, to remain available until September 30, 2027
  • $300M for payment to eligible local entities that serve children in families who are engaged in migrant or seasonal agricultural labor in FY 2022, to remain available until September 30, 2027
  • $165M, to remain available until September 30, 2027, for carrying out administration, monitoring, technical assistance, and research activities in FY 2022
  • $200M, to remain available until September 30, 2027, for carrying out administration, monitoring, technical assistance, and research activities in FY 2023
  • $200M, to remain available until September 30, 2027, for carrying out administration, monitoring, technical assistance, and research activities in FY 2024
  • $208M, to remain available until September 30, 2027, for carrying out administration, monitoring, technical assistance, and research activities in FY 2025
  • $212M, to remain available until September 30, 2027, for carrying out administration, monitoring, technical assistance, and research activities in FY 2026
  • $216M, to remain available until September 30, 2027, for carrying out administration, monitoring, technical assistance, and research activities in FY 2027
  • $2.5B, to remain available until September 30, 2027, to improve compensation to Head Start staff in each of FY 2022 – 2027
  • $1.9B, to remain available until September 30, 2027, for grant to localities in each of FY 2023 – 2027
  • $1.9B, to remain available until September 30, 2017, for awards to Head Start agencies in each of FY 2023 – 2027

Subsection (c): Payments for State Universal Preschool Services.

• Directs the Secretary of HHS to provide payment to states with approved plans through two separate funding streams: preschool services and state activities
• PRESCHOOL SERVICES. Payments will be distributed along the following pay schedule:
  • FY 2022 – 2024: transition payments via a formula determined by the Secretary of HHS in collaboration with the Secretary of Education that considers the proportion of children below age 6 with family income at or below 200% FPL, compared to such children nationally and existing federal Head Start preschool investments in the state; allows the HHS Secretary to reallocate these funds from states without approved plans to states with approved plans
  • FY 2025: 95.44% of state expenditures for preschool services
  • FY 2026: 79.534% of state expenditures for preschool services
  • FY 2027: 63.627% of state expenditures for preschool services
• STATE ACTIVITIES. Directs payment for 53.022% of specified state activity expenditures, which may not exceed 10% of the state’s FY expenditures for preschool services. Eligible state activity includes:
  • State administration of the preschool services program
  • Supporting a continuous quality improvement system through research, training, etc.
  • Providing outreach and enrollment support for families of eligible children
  • Supporting data systems building
  • Supporting staff of eligible providers to pursue credentials and degrees
  • Supporting inclusive services for children with disabilities
  • Providing age-appropriate transportation services for children, including services for those experiencing homelessness or in foster care
  • Conducting or updating the statewide needs assessment
• Permits advance payments to be made based on expenditure estimates submitted by states. Such payments may be subsequently adjusted to account for any overpayment or underpayment from the previous year
• Directs state governments to designate a state lead agency to administer the universal preschool services program
• Requires states to submit a plan for achieving universal, high-quality, free, inclusive, and mixed-delivery preschool services, meeting certain criteria required by HHS regulations for quality, workforce and accessibility requirements to remain in effect for 3 years, including the following highlights:
  • Certification of evidence-based preschool standards in place and that such standards will be coordinated across the state
  • Assurance that funded preschool programs will offer programming of at least 1,020 annual hours and expedited enrollment and prioritization for homeless and foster children, families with migrant workers, children with disabilities, and dual language learners
  • Assurance to provide salaries that are equivalent to those of elementary school staff with similar credentials and experience, and at a minimum provide a living wage
  • Assurance that lead teachers have a degree in early childhood education or a related field by no later than 6 years following enactment, with exceptions for workers who have been employed for 3 of the last 5 years
  • Description of how the state will:
    • Coordinate services and funding to support a mixed delivery preschool system, facilitating participation of Head Start and other eligible providers
    • Ensure preschool services to not disrupt the stability of infant and toddler care through the state
    • Ensure consultation with the State Advisory Council on Early Childhood Education and Care established under the Head Start Act in developing the state’s plan and distributing preschool slots
    • Partner with agencies to fully utilize Head Start
    • Equitably distribute new preschool slots among child care providers, Head Start agencies, and schools
  • Certification that states will not reduce total preschool slots

Subsection (d): Subgrants and Contracts for Local Preschool Programs.

• Directs the states to use the federal allotment to pay the cost of eligible provider subgrants or contracts to operate the state’s local preschool program free of cost. Subgrants or contracts to be awarded for a period of at least 3 years
• Directs states to make enhanced payments to providers offering preschool programs to a high percentage of low-income children to support comprehensive services
• Directs the states to prioritize funding for high-need communities by using a research-based approach approved by the Secretary of HHS. States must distribute funding in high-need communities so the majority of children in the community are offered such preschool services before other communities with lower levels of need

Subsection (e): Payments for Universal Preschool Services Indian Tribes and Territories.

• Directs the Secretary to make payments to Indian Tribes and Tribal organizations with an approved application for purposes of carrying out a preschool program for FY 2022 – 2027

Subsection (f): Grants to Localities and Head Start Expansion in Nonparticipating States.

• Directs the Secretary of HHS to allocate local universal preschool grants to localities (city, county, or other unit of general local government, a LEA, or a Head Start agency) within states that have made it apparent they will not apply for federal funding to implement the program
• Requires the Secretary to specify requirements for local grant funding attributable to the standards required of state programs. The grant allocation for each fiscal year should be based on the number of children from families with incomes at or below 200% of the poverty line and who are under the age of 6, in proportion to the total number of such children in the state
• Directs the Secretary to make an award to a Head Start agency in areas of the state where the Secretary determines a local preschool program cannot be adequately served because there is no eligible locality or because no application was approved
• Requires the Secretary to prioritize entities serving communities with a high percentage of low-income children

Subsection (g): Allowable Sources of Non-Federal Share.

• Calculates a state’s non-federal share as follows: (1) may be in cash or in-kind, fairly evaluated; (2) must include any increase in amounts spent by the state to expand half-day kindergarten programs into full-day kindergarten; (3) must not include contributions being used as a non-federal share or match for another federal award; (4) must be provided from state or local sources, contributions from philanthropy or other private organizations, or a combination of such; and (5) shall count no more than 100% of the state’s current spending on prekindergarten programs toward the state match for FY 2019 – 2021

Subsection (h): Maintenance of Effort.

• Requires the Secretaries of HHS and Education to reduce support for a state’s universal preschool plan if the state reduces its combined fiscal effort per child through any state spending on preschool services or supplemental assistance funds for Head Start programs. The time period is based on any fiscal year a state receives universal preschool payments relative to the previous year. Both Secretaries must reduce the support by the same amount as the total reduction in state fiscal effort that fiscal year
• Allows the Secretaries to waive maintenance of effort requirements, if appropriate, due to an unanticipated decline in the state’s financial resources or if the state provides a justification as to why reductions in preschool funding specifically was required

Subsection (i): Supplement Not Supplant.

• Specifies that funding allocated under this section must be used to supplement and not supplant other sources of funding spent on early childhood education programs in the state

Subsection (j): Nondiscrimination Provisions.

• Provides that programs receiving funding under this section must comply with the requirements of Title IX, Title VI, Section 504 of the Rehabilitation Act, the ADA and Section 654 of the Head Start Act

Subsection (k): Monitoring and Enforcement.

• Requires the Secretary of HHS to review and monitor compliance of states, territories, tribal entities and local entities, as well as each state’s compliance with its state plan
• Requires the Secretary of HHS to establish rules for:
  • Receiving, processing and determining the validity of complaints or findings if states fail to comply with their state plan or other requirements;
  • notifying a state when the Secretary of HHS has determined there is a compliance failure; and
  • imposing sanctions