During pregnancy and early childhood, a person’s brain architecture—the foundation for perception, learning, communication, movement and behavior—is built, with more than 1 million new neural connections formed every second in infancy.[1] Research shows that high quality early care and education activities improve children’s capacity to learn and succeed in school, their emotional development[2] and their ability to succeed in jobs and careers.[3] Such early care and education narrows achievement gaps[4] and allows parents to succeed at work or in training; an estimated 60 percent of employee turnover could be reduced with access to affordable child care.[5] Census data from August 2020 found that around one in five working-age adults said the reason they were not working was because COVID-19 disrupted their child care arrangements, and of those not working, women ages 25–44 were almost three times as likely as men to not be working due to child care demands.[6] This data further illustrates the critical role of child care in enabling working parents, particularly working mothers, to remain in the workforce and provide for their families.

Policy | Increase Funding for the Child Care Entitlement to States and Head Start

Background on Policy

On average, America’s poorest children are unprepared for school when they first walk through the classroom door. Research has shown that, at age four, children living below the poverty line are 18 months below the developmental norm for their age.[1] In addition, these children score significantly lower on cognitive tests than children from the wealthiest families before entering kindergarten.[2] Investing in early childhood education is a cost-effective strategy that will help improve economic growth in the long run. In fact, research has found the return on investment of high-quality early childhood programs to be up to $16 for every $1 invested.[3]

Head Start has a particularly strong track record of helping lift children and families out of poverty. A study of Head Start children in Harrisburg, Pennsylvania found that they had higher scores in the fifth grade than a control group on all academic and executive functioning outcomes.[4] These benefits stay with children into adulthood. Research shows Head Start children have a higher likelihood of graduating high school, attending college and receiving a post-secondary degree, license or certification.[5] Moreover, children of Head Start graduates are significantly more likely to finish high school and enroll in college and they are significantly less likely to become teen parents or to be involved in the criminal justice system.[6]

Unfortunately, high quality early childhood programs currently reach just a fraction of the children and families who stand to benefit. Only one in six eligible children receives federal child care assistance,[7]and Head Start programs currently serve just 36 percent of eligible children ages 3—5.[8] At the same time, the cost of child care has increased by 25 percent over the past decade. According to data from Child Care Aware, in Pennsylvania, the average cost of full-time center-based daycare is $12,308 for an infant. This is about 12 percent of annual income for married couples, and 45 percent of annual income for single parents.[9]

Child Care Subsidy Eligibility

Increasing mandatory funding for the Child Care and Development Fund (CCDF) would allow states to provide a child care subsidy to more families, giving more children access to critical early learning opportunities.

Policy Description

Increase the Child Care Entitlement to States (CCES), the mandatory portion of the CCDF. CCES funds are integrated, at the state level, with discretionary allotments from the Child Care and Development Block Grant (CCDBG), and the funds must be spent according to CCDBG Act rules. While historically, CCES funds were the largest portion of the CCDF, CCDBG funds now make up the largest share due to much needed significant increases in FY 2018 and FY 2019. Currently, annual CCES (mandatory) appropriations are about $2.9 billion, while CCDBG (discretionary) appropriations are around $5.2 billion. Increasing the CCES will help to keep pace with discretionary gains and ensure states continue their investments in child care. This would be a steppingstone towards enacting Senator Patty Murray’s Child Care for Working Families Act

Increase Head Start funding by $18 billion annually.[1] Head Start received about $10 billion in FY 2019. The increased funds should be used to serve all eligible 3- and 4-year olds in full day, full year programs (1,020 hours per year).

Expected Impact of Policy

According to the Center for Law and Social Policy,[1] if there were a $7.1 billion (for a total of $10 billion) increase in mandatory child care funding and the state match remained the same, an estimated 1.57 million additional children could be served with the federal mandatory and state match dollars annually. This estimate includes the cost of inflation to maintain the children who are currently served and the current provider rates. This would more than double the number of children who are currently served through CCDBG. Increasing mandatory funding would also provide states with a more robust source of funding that would not be dependent on annual appropriations, providing more stability in the program.

Increasing Head Start funding would ensure all eligible 3- and 4-year olds could be served in high-quality programs for at least 1,020 hours per year.Approximately 1.56 million eligible 3–5 year olds would gain access to a Head Start program. The whole child, family-centered approach of Head Start has impacts that stretch beyond improving kindergarten readiness and health outcomes for children served. Head Start helps to lift families by providing parents with needed supports, such as opportunities to increase their advanced education and receive job training.[2]

Policy | Child and Dependent Care Tax Credit Enhancement Act

Background on Policy

The cost of child care has increased by 25 percent over the past decade, creating significant financial strain for middle class families. The coronavirus pandemic has only exacerbated these challenges. Child care is one of the largest expenses for parents, and especially for single parents.[1] Parents should not be thrust into poverty for having a child. A robust Child and Dependent Care Tax Credit supports working parents, and increases labor force participation. Enacted in March 2021, the American Rescue Plan  included a one-year expansion of the Child and Dependent Care Tax Credit based on legislation that Senator Casey authored, the Child and Dependent Care Tax Credit Enhancement Act. While the ARP’s temporary expansion of the CDCTC provides significant relief to working families, passage of Senator Casey’s bill to make the expanded credit permanent would provide long-term support to help all working families cover the costs of child care.

Child Care Costs

Policy Description

The Child and Dependent Care Tax Credit Enhancement Act would:

  • Make the full Child Care Tax Credit available to most working families: This bill would make the full credit available to families with income under $125,000. The previous phase-down of the credit began at $15,000 of income.
  • Put more money into a family’s pockets: The bill would cover up to half the cost of childcare and increase the maximum credit from $1,050 to $4,000 per child (age 0–13), up to $8,000 per family.
  • Ensure lower income families see a benefit: The bill would make the credit fully refundable to make sure those with the greatest need benefit.
  • Retain the value over time: The bill would index benefits to inflation to ensure they keep up with ever-growing costs.

Expected Impact of Policy

According to the NASEM report,[1] A Roadmap to Reducing Child Poverty, a robust Child and Dependent Care Tax Credit would:

  • Reduce child poverty by 9.2 percent;
  • Increase net employment by more than 500,000 jobs; and
  • Raise aggregate earnings by more than $9 billion.

The NASEM study also found that a robust Child and Dependent Care Tax Credit would be particularly effective in reducing poverty for African Americans, single parents and mothers younger than 25.


[1] National Academies of Sciences, Engineering, and Medicine, “A Roadmap to Reducing Child Poverty (Washington, DC: The National Academies Press, 2019), https://doi.org/10.17226/25246.

[1] Editorial Staff, “This is how much child care costs in 2019,” July 15, 2019, Care.com, https://www.care.com/c/stories/2423/how-much-does-child-care-cost/.

[1] Based on an analysis prepared by staff at the Center on Law and Social Policy, June 18, 2019.

[2] 2019 National Head Start Profile (National Head Start Association, 2019), https://nhsa.app.box.com/s/rbuxmgf0fun72gr1r5akm8q65qj40ufo/file/522669383910.

[1] W. Steven Barnett, Ph.D. and Allison H. Friedman-Krauss, Ph.D., State(s) of Head Start (National Institute on Early Education Research and Rutgers University, 2016), http://nieer.org/wp-content/uploads/2016/12/HS_Full_Reduced.pdf.

[1] Laura J. Colker, “The Word Gap: The Early Years Make the Difference,” Teaching Young Children Vol. 7, No. 3 (2014), https://www.naeyc.org/resources/pubs/tyc/feb2014/the-word-gap.

[2] Emma García and Elaine Weiss, Education inequalities in the school starting gate: gaps, trends, and strategies to address them, (Economic Policy Institute, September 2017) https://www.epi.org/files/pdf/132500.pdf.

[3] Libby Nelson, “The biggest benefit of pre-K might not be education,” Vox, July 30, 2014, https://www.vox.com/2014/7/30/5952739/the-research-on-how-pre-k-could-reduce-crime.

[4] The Head Start Impact Study in 2019 (National Head Start Association, 2016), https://www.nhsa.org/files/resources/head_start_impact_study_2016_0.pdf.

[5] “Head Start Facts and Impacts,” January 21, 2020, National Head Start Association, Center for Policy, Data, and Research, https://www.nhsa.org/facts-and-impacts.

[6] Ibid.

[7] Child Care Assistance: A Vital Support for Working Families, (Center on Law and Social Policy, June 2015), https://www.clasp.org/sites/default/files/public/resources-and-publications/publication-1/CCDBG-Advocacy-Fact-Sheet.pdf.

[8] “National Head Start Fact Sheet: Head Start by the Numbers,” 2019, https://www.nhsa.org/national-head-start-fact-sheets.

[9] “Picking Up the Pieces: Building a Better Child Care System Post COVID-19,” 2020, Child Care Aware of America, https://www.childcareaware.org/ccdc/state/pa/.

[1] “Brain Architecture,” last accessed January 21, 2020, Harvard University Center on the Developing Child, https://developingchild.harvard.edu/science/key-concepts/brain-architecture/.

[2] Elaine A. Donoghue and AAP Council on Early Childhood, “Quality Early Education and Child Care From Birth to Kindergarten, Pediatrics Vol. 140, No. 2 (2017), https://doi.org/10.1542/peds.2017-1488.

[3] Christy Guilfoyle, “For College and Career Success, Start with Preschool,” ACSD, Policy Priorities Vol. 19, No. 4, p. 1-7, http://www.ascd.org/publications/newsletters/policy-priorities/vol19/num04/For-College-and-Career-Success,-Start-with-Preschool.aspx.

[4] Josh Biven et al., It’s time for an ambitious national investment in America’s children (Economic Policy Institute, April 2016), https://www.epi.org/files/uploads/EPI-Its-time-for-an-ambitious-national-investment-in-Americas-children.pdf.

[5] Brigid Schulte, “The Corporate Case for Child Care,” Slate, February 8, 2018, https://slate.com/human-interest/2018/02/the-corporate-case-for-childcare.html.

[6] Misty L. Heggeness and Jason M. Fields, “Working Moms Bear Brunt of Home Schooling While Working During COVID-19,” August 18, 2020, United States Census Bureau, https://www.census.gov/library/stories/2020/08/parents-juggle-work-and-child-care-during-pandemic.html.