Snapshot: States’ Use of Pandemic Relief Funds for the ECE Workforce

In March 2021, one month after the 2020 Early Childhood Workforce Index was released, the American Rescue Plan Act (ARPA) injected historic levels of new but time-limited funding into the early care and education sector.¹ Lynch, K.E., & Boyle, C.F. (2023). What Is the Child Care Funding Cliff? Congressional Research Service. https://crsreports.congress.gov/product/pdf/IN/IN12243. This funding was a lifeline for the ECE sector, along with other pandemic relief provided through the Coronavirus Aid, Relief, and Economic Security (CARES) Act (2020) and the Coronavirus Response and Consolidated Appropriations Act (CRRSA) (2021). Despite this support, the sector had been chronically underfunded prior to the pandemic and still remains far short of the estimated $140 billion needed to fully fund a high-quality system throughout the United States.² National Academies of Sciences, Engineering, and Medicine. (2018). Transforming the Financing of Early Care and Education. The National Academies Press. https://doi.org/10.17226/24984. Furthermore, the final pandemic relief funding dedicated to child care expired in September 2024.

We are just beginning to understand the critical impact these funds have had. 

• The Administration for Children and Families estimated that eight out of ten licensed child care programs received financial assistance, primarily used to pay for personnel costs, rent, utilities, and mortgage payments to keep programs staffed and open.³ U.S. Department of Health & Human Services, Administration for Children & Families, Office of Child Care. (2022, June). ARP Child Care Stabilization Funding State and Territory Fact Sheets. https://www.acf.hhs.gov/occ/map/arp-act-stabilization-funding-state-territory-fact-sheets.
• Stanford’s RAPID national provider surveys reported:
  • One quarter (24 percent) of child care providers indicated they would not have been able to keep their programs running without pandemic relief funding, and
  • More than three quarters (81 percent) of providers reported that the loss of funding will have an impact on their program, with their primary concerns relating to being unable to meet payroll and keep their program open.⁴ RAPID Survey Project. (2023). Child Care Providers Worry About ARPA Funds Ending. RAPID Survey Project, Stanford University. https://rapidsurveyproject.com/our-research/child-care-providers-worry-about-arpa-funds-ending.
• An analysis of changes in child care wages, employment, and revenue before and after the pandemic emergency finds that child care wages increased from 2020 to 2022. This increase was most likely due to higher program revenue resulting from federal relief funding.⁵ RegionTrack, Inc. (2024). Child Care in State Economies: 2024 Update. Part 2: Recent Trends in Child Care Industry Revenue and Employment. Committee for Economic Development. https://education.ced.org/child-care-in-state-economies?page=part-2.
• A 2024 White House Council of Economic Advisors report shows early evidence that states that implemented state-level funding after the expiration of federal ARPA stabilization grant funding in September 2023 may be more resilient in the post-funding period.⁶ The White House, Council of Economic Advisors. (2024, June 27). Impacts of the Expiration of Federal Child Care Stabilization Funding and the Mitigating Effects of State-Level Stopgap Funding. https://www.whitehouse.gov/cea/written-materials/2024/06/27/impacts-of-the-expiration-of-federal-child-care-stabilization-funding-and-the-mitigating-effects-of-state-level-stopgap-funding/. The report suggests that families are having a harder time finding child care since the expiration, but effects are less pronounced in states that implemented state-level funding.

CSCCE’s 2024 Index survey of state administrators provides additional evidence of how pivotal this historic increase in public funding was for the early care and education system and workforce. Detailed further in the following section, key findings include: 

• The majority of states used pandemic relief funds (ARPA, CARES, CCRSA) to support workforce initiatives that increased wages, provided wage supplements, expanded scholarships, and provided personal protective equipment (PPE) and mental health supports, among other uses.
• State leaders are concerned about risks to the gains made for the workforce if further federal and state funding is not secured.
• The majority of states do not have state-level funding or other plans in place to address the funding cliff in September 2024, though some states, including Alaska and Kentucky, have significantly increased state funding to mitigate the impacts of the expiration.

Overall these investments signal a major shift in state leaders prioritizing the use of public dollars to fund critical compensation and financial relief initiatives for the ECE workforce. Without further public funding, higher wages and financial relief for early educators are most at risk.

Most States Prioritized ECE Workforce Needs With Pandemic Relief Funds 

Our Index survey asked what state leaders were able to do to support the workforce with ARPA stabilization grants, ARPA CCDF funding, and other pandemic relief funds (e.g., CARES, CCRSA) that they would not have been able to do otherwise.

• States prioritized increasing wages, providing bonuses or wage supplements, education and training supports (expanding scholarship initiatives and offering free ECE coursework and training), and more, generally stabilizing the sector by providing flexible funding (see Figure 3.4). 
• States also invested in work environments by providing PPE and mental health supports.
• Investments in workforce data (registries and surveys) were not commonly reported uses of pandemic relief funding.

Notable state examples include:

• Utah offered ECE programs additional funding tied to their stabilization grants, but only if programs paid at least half of their staff a minimum of $15 per hour. It’s possible that this initiative contributed to the almost 17-percent inflation-adjusted wage increase CSCCE observed in Utah between 2019 and 2022 (see Appendix Table 2.5). However, this initiative ended with the pandemic relief funding.
• Kentucky used stabilization grants to incentivize wage increases by offering higher payments to ECE programs that paid higher wages. 
• Ohio used pandemic relief funds to eliminate a waitlist for educators to participate in POWER Ohio, a wage stipend and retention program.
• Mississippi provided scholarships, bonus pay incentives, additional professional development, and mental health supports.

For more details on how each state used these funds, see Appendix Table 3.13.

Number of States That Used Pandemic Relief Funds for the ECE Workforce

“We were able to prop up the workforce and somewhat compete with other industries that attract workers with higher pay.”

Delaware State Administrator⁷CSCCE 2024 Early Childhood Workforce Index survey of state administrators.

The 2024 Index survey also collected data on funding sources used for major workforce initiatives such as stipends, tax credits, and bonuses (see Figure 3.5). These data further confirm the critical importance of pandemic relief funding to the expansion of recent workforce initiatives. Other federal funding, such as CCDF and PDG B-5, continue to be key sources of funding for workforce initiatives. Some states are investing their own sources of funding, especially for workforce registries. For details on funding for each initiative per state, see Appendix 3: State Policy Tables.

Number of States That Used Public Funding Sources for State Workforce Initiatives

State Spotlight

Minnesota: Leveraging Pandemic Relief Funding to Sustain Workforce Improvements

Minnesota began issuing grants to child care programs prior to the launch of ARPA stabilization grants by using CARES funding and state general funds. Administrators in Minnesota told CSCCE that:

“These direct payments allowed Minnesota to provide some measure of stability to the child care field during the turbulent early days of the pandemic and began the process of building out an infrastructure to provide such payments.”

Once federal ARPA stabilization grant funding was released, Minnesota continued grant payments to programs, using these new federal funds to promote workforce compensation:

“Seventy percent of these funds had to be used to increase compensation for the child care workforce, so the funds allowed Minnesota to increase compensation, and presumably workforce retention, in a way that otherwise would not have been possible. The clear importance of this support for programs allowed our state to successfully advocate for [the] creation of the Great Start Compensation Support Payments Program, which will continue direct payments to programs to increase compensation on an ongoing basis.”

Minnesota administrators also used ARPA CCDF funding to support the workforce, including expanding T.E.A.C.H. Early Childhood® scholarships and REETAIN bonuses and launching Empower to Educate, which provides training and career development resources to individuals interested in entering the early childhood field.

“Minnesota used ARPA CCDF/CCDBG funds to launch several new initiatives benefitting the child care workforce that would not have been possible without these funds…. Many of these initiatives have now been sustained and expanded with state funds to continue providing support to the ECE field.”

Expiration of Pandemic Relief Funding Puts Progress at Risk, Unless Federal and State Leaders Act

Now that pandemic relief funding has expired, many states have voiced concerns about the need for additional, sustained funding and the risks to the gains made for the workforce if further funding is not secured (see Figure 3.6). For details on the concerns raised by leaders in each state, see Appendix Table 3.14.

“Additional funding is needed to continue supports for the ECE workforce, which is already in a crisis mode. I am concerned that turnover will increase if ECE workforce compensation is not addressed.”

Alabama State Administrator⁸CSCCE 2024 Early Childhood Workforce Index survey of state administrators.

“It is unlikely that we will be able to continue stabilization grants, additional scholarships, or mental health services with regular funding streams after September 2024. We understand that workforce issues will continue after that time, and workforce-related supports will still be needed. There are concerns about possible layoffs, working in classrooms with higher ratios and group sizes, and bringing on new staff with reduced wages or benefits.”

Utah State Administrator⁹CSCCE 2024 Early Childhood Workforce Index survey of state administrators.

Seven out of the 40 states that responded to this specific survey question indicated that they did not have concerns about the pandemic relief funds expiring, but of these seven states, five (Maine, Maryland, Massachusetts, Minnesota, and Vermont) indicated that their state had already begun or was in the process of contributing state-specific funding to continue the workforce advancements.

Number of States Reporting Concerns Related to End of ARPA Funding

Despite these concerns, only 21 of the 34 states that responded to this specific survey question indicated that their state had a plan to support existing initiatives (see Figure 3.7). Some states are committing their own funds to continue these initiatives, while others are repurposing federal funds like CCDF and PDG B-5 grants. For example, Illinois, Massachusetts, and Minnesota have all invested state funding to continue grants to programs that can be used for workforce needs like increased wages and benefits. For details on all state plans, see Appendix Table 3.15. 

As of June 2024, only 11 states (Alaska, California, Illinois, Kentucky, Maine, Massachusetts, Minnesota, New Hampshire, New Mexico, Vermont, Washington) and the District of Columbia had been identified as making significant state investments to fill the gaps left in child care funding when federal dollars from the American Rescue Plan Act expired.¹⁰ The White House, Council of Economic Advisers. (2024, June 27). Impacts of the Expiration of Federal Child Care Stabilization Funding and the Mitigating Effects of State-Level Stopgap Funding. https://www.whitehouse.gov/cea/written-materials/2024/06/27/impacts-of-the-expiration-of-federal-child-care-stabilization-funding-and-the-mitigating-effects-of-state-level-stopgap-funding/.

Number of States Reporting Plans to Address ARPA Funding Cliff

The need to invest in the early care and education workforce persists, as too many early educators still struggle in poverty and programs continue to face high turnover and difficulty recruiting and retaining staff. Historic levels of public ECE funding during the pandemic demonstrated an opportunity and several solutions: many state leaders chose to invest in the working conditions and well-being of early educators, and they can continue to do so in 2025 and beyond.

“Relief funding was great, but it ended. We got what we needed, but only for a certain amount of time.... Funding wages has got to be a continuous thing, set in stone.”

Early Educator in a Center-Based Classroom¹¹Quote from a virtual convening of early educators, “Elevating Early Educator Voices in the 2024 Early Childhood Workforce Index,” hosted by CSCCE on June 10, 2023.