Federal and State Funding for Child Care and Early Learning

Early childhood professionals (e.g. child care providers, teachers, consultants) receive Federal and State funding to provide a variety of services to children in low income working families. Federal and State funding for early childhood services are available through a complex maze of funding streams and government agencies. The following are some quick facts about early childhood services and the funding streams that support these services.

  • Most Federal Funds are granted to State agencies to provide statewide services. Some Federal funding is provided directly to local public and private entities.
  • Federal and State funding for child care services is also provided directly to parents via tax credits. Some States that have established business tax credits to support child care providers directly. There are also tax credits available for businesses that sponsor child care for their employees.
  • The Federal and the State Departments of Education fund public (schools) and private (schools and child care programs) entities to provide early learning services to low income children. The U.S. Department of Education also provides grants to selected Race to the Top ┬íV Early Learning Challenge (RTT-ELC) fund States to improve early learning and development programs for young children through comprehensive early learning education reform.
  • The U.S. Department of Health and Human Services (DHHS) provides grants to local public and private non-profit and for-profit agencies through the Head Start/Early Head Start program to provide early learning services to children in low-income families.
  • In addition to funding early learning programs through Head Start, DHHS also funds child care services for low-income working families. An estimated 2.51 million children received child care services through Federal funding streams in an average month in FY 2006 (Office of the Assistance Secretary for Planning and Evaluation, 2010).
  • Federal funds are also available through the U.S. Department of Agriculture (USDA) to provide nutritious meals and snacks to children in child care programs. Approximately 2.9 million children receive nutritious meals and snacks through the Child and Adult Care Food Program (CACFP) each year.
  • The majority of the Federal and State funding is used to provide direct services to children and families but some funds are used to improve the overall quality of the services provided by early care and education programs, including the funding of technical assistance and training.
Publication Date: 
August 1, 2012
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