Child Care Mandatory and Matching Funds of the Child Care and Development Fund

Objectives: The Mandatory and Matching portion (or Child Care Entitlement or CCE) of the Child Care and Development Fund (CCDF) program consists of Mandatory funds (which are 100% federal) and Matching funds (which require a State match and maintenance of effort). The Mandatory and Matching funds are made available in section 418 of the Social Security Act (42 U.S.C. 618) and are not subject to annual appropriations. Allocations of the Mandatory Funds are based on a State's Federal share of the expenditures for the now-repealed AFDC-linked child care programs (AFDC/JOBS Child Care, Transitional Child Care, and At-Risk Child Care) in 1994 or 1995, or the average of 1992 through 1994, whichever was greater. A State is not required to expend any State funds in order to receive its share of the Mandatory Funds. Previously, the Mandatory and Matching funds provided about $2.9 billion in federal funding per year for child care. The American Rescue Plan (ARP) Act of 2021 (P. L. 117-2) was enacted March 11, 2021 and appropriated $3,550,000,000 (Section 9801) in mandatory and matching funding for CCDF, which is a permanent annual appropriation effective fiscal year 2021. The appropriation includes $3.375 billion to States, $75 million to Territories (previously not eligible), and $100 million to Tribes. To access Matching Funds, a State must obligate all of its Mandatory Funds allotted in a fiscal year and maintain 100% of the State's share of expenditures for the former programs in fiscal year 1994 or fiscal year 1995, whichever is greater (i.e., maintenance of effort). Matching Funds must be matched at the applicable Federal Medical Assistance Percentage (FMAP) rate, which is the Medicaid Program matching rate. The Matching Funds are distributed based on the number of children under age 13 in a State compared with the national total of children under age 13. Section 9801 of the ARP Act of 2021 (P. L. 117-2) appropriated $3.375 billion in CCDF Mandatory and Matching funds to States. Because the state Mandatory fund amount remains fixed in law, the $512,250,000 increase appropriated to states by the ARP Act are awarded in Matching funds. Matching funds are available to states if three conditions are met by the end of the fiscal year in which the funds are awarded: (1) all Mandatory funds are obligated; (2) the state’s Maintenance-of-Effort funds are expended; and (3) the state provides its share of Matching funds at the FMAP rate. However, states are not required to match the additional funds awarded in section 9801 of the ARP Act in FY 2021 or FY 2022. Section 9801 of the ARP Act appropriated CCDF Mandatory funds to territories for the first time, including American Samoa, Guam, Puerto Rico, the Commonwealth of the Northern Mariana Islands, and the Virgin Islands of the United States. Mandatory funds to territories are allotted based on the number of children under age five living in territories and per capita income in the territories. Territory Mandatory funds are not subject to any matching requirements. Territory Mandatory funds must be obligated in the fiscal year that they are awarded and liquidated in the following year. Not less than 1%, but not more than 2% of the total Mandatory and Matching Funds are reserved for Tribes and tribal organizations based on the number of children living on or near Tribal reservations or other appropriate area served by the tribal recipient. Tribes and tribal organizations are not required to provide matching funds. Prior to the ARP Act, Tribal lead agencies received a proportion of the child care funds appropriated under Section 418 of the Social Security Act. Section 9801 of the ARP Act of 2021 (P. L. 117-2) amended the Social Security Act to explicitly appropriate $100 million in Mandatory funds to Tribal lead agencies. This increases the initial FY 2021 Mandatory funds awarded to Tribal lead agencies by 70 percent. Otherwise, the requirements for Tribal Mandatory funds remain the same. Mandator