In-Home Care Providers and the Impact of $300M Child Care Funding

The American Rescue Plan and Child Care

When the COVID-19 pandemic hit, the child care sector came under severe strain. Providers faced sudden closures, rising costs for sanitation and protective equipment, and workforce shortages. In response, Congress included $39 billion for child care in the American Rescue Plan Act (ARPA), signed into law in March 2021. The largest share of that funding, $24 billion, created the Child Care Stabilization Program, which distributed grants directly to licensed, regulated, and registered child care providers, including in-home and family child care providers.

How In-Home Providers Benefited

In-home (also called family) child care providers are small businesses that operate out of a provider's home, caring for small groups of children. They make up a large share of child care in many states, especially in rural areas and communities where center-based care is scarce. During the pandemic, the Child Care Stabilization Program specifically included family providers as eligible recipients, ensuring they were not left out of the federal response.

According to federal data, more than 225,000 child care providers nationwide received stabilization grants, with combined impact on approximately 10 million children. Family child care providers received average awards of roughly $27,000, with providers most commonly using the funds for rent, utilities, and mortgage payments so they could remain open.

Uses of Stabilization Grants

The Child Care Stabilization Program allowed providers to spend grant funds across a wide range of operational needs:

• Wages and benefits for staff
• Rent, utilities, mortgage payments, and facility costs
• Personal protective equipment and cleaning supplies
• Curriculum materials and learning supplies
• Mental health supports for staff and children
• Family co-pays and subsidies

For home-based providers, who often mix personal and business use of space, the flexibility to apply funds toward mortgage and utility costs made a meaningful difference in keeping programs operating.

State-Specific Efforts

In addition to the federal stabilization program, several states used their own ARPA recovery dollars to shore up child care. In North Carolina, advocates have urged the General Assembly to maintain $300 million in state stabilization grant funding after federal dollars expired. Other states, including New York, California, Minnesota, Washington, and Illinois, used state ARPA funds to extend stabilization grants, raise subsidy rates, or invest in workforce compensation.

The End of Federal Stabilization Funds

Federal Child Care Stabilization Program funds were required to be obligated by September 30, 2023 and liquidated by September 30, 2024. As federal funding sunsetted, providers experienced what researchers called a 'child care cliff.' The National Women's Law Center, Center for American Progress, and other research organizations documented higher tuition, reduced enrollment, and some closures as stabilization support ended.

Why It Matters for Homeowners

Many in-home child care providers are homeowners who rely on their residences as both living space and business site. When their programs lose funding, the ability to pay a mortgage can be directly at stake. Several foreclosure prevention counselors reported helping providers navigate temporary hardship when stabilization funds ended. Providers who are also homeowners should know that federal Homeowner Assistance Fund dollars, where still available, and state mortgage assistance programs can help keep them current on their mortgages during revenue disruptions.

Support Resources for Providers

Providers seeking support can contact:

• Their state Child Care Resource and Referral (CCR&R) agency
• Child Care Aware of America for national information and advocacy
• The Administration for Children and Families at ACF.gov for program details and updates

Looking Ahead

The pandemic-era investments demonstrated what sustained federal support can do for in-home and family child care providers. Advocates continue to press for permanent, higher levels of federal investment in child care, including expansion of Head Start, higher reimbursement rates under the Child Care and Development Block Grant, and direct support to providers. For homeowners who double as child care providers, stable funding is a housing issue as well as an early education one.