Aug. 12 Federal Update: National Council of State Legislatures Releases Child Care and Early Education Federal Policy Trend Report

The National Council of State Legislatures recently issued a report examining critical child care and early childhood legislative and regulatory proposals, potential for bipartisan agreement, and implications for states. The report follows critical appropriations, including $52.5 billion for the Child Care and Development Fund and $2 billion for Head Start. The additional funding, however, is temporary and federal legislation has yet to be passed to permanently address the cost and accessibility of child care.

The reforms are especially important to consider alongside rising costs of child care and limited availability of slots that have prevented countless families from accessing formal child care arrangements.

Build Back Better
Senate negotiations of the Build Back Better Act prevented the inclusion of early childhood provisions. Nevertheless, they reflect the Biden administration and several Democratic Congress members’ early childhood policy goals. The core components may also be seen in the Child Care for Working Families Act, which has been introduced in the 117th and 118th Congresses with strong Democratic support.

The administration mirrored the Child Care and Development Fund (CCDF) model by expanding eligibility for child care subsidies and capping the cost to families according to income level. The proposal also includes a cost estimation model to set payment rates to achieve pay parity between similarly experienced and credentialed child care and elementary educators. 

The Biden administration’s Build Back Better proposal would have also implemented universal preschool available to all families, regardless of income and employment status. State participation is voluntary, and those that opt out would receive federal grants directly available to localities and Head Start providers.  

Child Care and Development Block Grant Reauthorization Proposal
Senators Tim Scott (R-S.C.) and Richard Burr (R-N.C.) introduced a bill to reauthorize the Child Care and Development Block Grant (CCDBG) Act, which was last reauthorized in 2014. S. 3899 expands eligibility to low-income families, including by reducing co-payments. The bill also establishes cost estimation models to set provider payment rates.

Child Care for Working Families Act
The Child Care for Working Families Act was first introduced in 2017 and served as the foundation for the Biden administration’s Build Back Better child care and preschool provisions. Rep. Bobby Scott (D-Va.) and Sen. Patty Murray (D-Wash.) reintroduced the bill, H.R. 2976 and S.B. 1354, in 2023. It gained significant support as the leading Democratic proposal on early childhood education.

The Child Care for Working Families Act establishes federal-state partnerships to expand eligibility for child care subsidies and reduce co-payments for low-income families. Additional grants would be directed to open new child care facilities, growing choice between providers for families. For states that decline grants, funds become available to localities.

The Act creates early education formula grants to increase wages and benefits for child care staff, promote financial stability among providers, reduce burnout and fatigue, and encourage high-quality care. Similar to the Biden Administration’s Build Back Better provisions, preschool would become available to all families regardless of income and employment status. Head Start services would also become available through full-day, full-year programs.

Recent Rulemaking

CCDF Final Rule
In February 2024, the Department of Health and Human Services (HHS) released a new final rule issuing key amendments to the Child Care Development Fund (CCDF). States are now required to pay providers according to enrollment at the beginning of the month, rather than attendance at the end of the month. Additionally, HHS has capped family co-payments at 7% of their income. While not required, states are encouraged to waive copayments for families with a minimum income reaching 150% poverty line and presumptively consider the possibility of CCDF-eligible children as well.

The rule does not offer additional federal funding, leading states to absorb costs. However, states may request waivers of up to two years for certain required provisions.

Head Start Proposed Rule
In November 2023, the Department of Health and Human Services (HHS) released a proposed rule significantly amending Head Start Performance Standards.

The rule would increase staff wages, benefits, and wellness with the goal of achieving pay parity between Head Start staff and local K-3 teachers. It would also require programs to have a multidisciplinary mental health team, mental health consultations at least monthly, and integrated mental health support services for families.

The rule further encourages identifying and meeting community needs, including by creating a maximum caseload of 40 families per family service worker. Similarly, families’ gross income will be adjusted to account for elevated housing costs.

Nevertheless, like the CCDF Final Rule, the Head Start Rule is not authorized to provide additional federal funding. The rule’s provisions accordingly hold varying implementation timelines, ranging from 60 days to 7 years. Staff wages are not expected to go into effect until Aug. 2031, while the final rule is expected to be released by the end of 2024.

Areas of Potential Bipartisan Support

Tax Credits
Tax credits have gained significant support, including from the co-chairs of the Bipartisan Pre-K and Child Care Caucus. Two notable bipartisan bills have also been introduced: Tax Relief for American Families and Workers Act (H.R. 7024) and Child Care Investment Act (H.R. 4571).

• The Tax Relief for American Families and Workers Act was led by Sen. Ron Wyden (D-Ore.) and Rep. Jason Smith (R-Mo.). The bill sought to enhance the Child Tax Credit (CTC) for low-income families by allowing the use of prior year earnings for calculation. It would also increase the maximum credit amount per child over the course of three years and tie additional per-child increases to inflation.
• The Child Care Investment Act was sponsored by Rep. Salud Carbajal (D-Calif.) and Rep. Lori Chavez-DeRemer (R-Ore.) and endorsed by the bipartisan Problem Solvers Caucus. The bill proposed making the Child and Dependent Care Tax Credit (CDCTC) fully refundable, raising credit rates, expanding the 45F credit for employer-provided child care, and enhancing Dependent Care Flexible Spending Accounts (FSAs). 

Improving Child Care Infrastructure
Bipartisan support additionally exists to support the establishment and maintenance of child care facilities, which would in turn address shortages and increase choice for families. The Biden administration’s Build Back Better proposal and Republican Child Care and Development Block Grant reauthorization proposal enabled states to direct a portion of funds toward facility-related needs. Additionally, a current draft of the Farm Bill encourages directing grants from the Department of Agriculture toward child care facilities in rural areas.

Recent Reauthorizations to Support Vulnerable Populations

Older Americans Act Reauthorization Act
Chairman Sanders and Ranking Member Cassidy opened the U.S. Senate Committee on Health, Education, Labor, and Pensions by thanking the bills’ authors and staff before discussing S. 4776, the Older Americans Act Reauthorization Act of 2024. The bill has gained bipartisan support within Congress as well as from organizations like Meals on Wheels and AARP.

Senator Sanders highlighted the Older Americans Act’s importance in reducing the poverty rate among seniors while increasing access to assistive technology, nutrition, health care, and wellness. Its reauthorization would increase the act’s funding from its current amount of 2.3 billion to 2.76 billion in fiscal year 2025 and eventually to 3.3 billion in 2029.

Additional funding will enable millions of seniors who are currently on waitlists to access meals and housing. It will also increase access to health screenings, strengthen senior centers, support home health care workers, and address the mental health needs many elderly individuals are experiencing. Additionally, the reauthorization will support the Long-Term Care Ombudsman Program, a critical safeguard to protect the health, safety, welfare, and rights of long-term care residents. Funding will further be directed toward the Advisory Council to Support Grandparents Raising Grandchildren.

Several members of the U.S. Senate Committee spoke favorably of the reauthorization before voting in favor of the Act, demonstrating strong bipartisan support through a vote of 20 to 1.

Autism Collaboration, Accountability, Research, Education, and Support Act of 2024
Sen. Lujan (D – N.M.) commended the advocacy of parents and loved ones in developing the legacy of the Autism CARES Act, which has provided funding for research, training for providers, and the development of diagnostic tools and evidence-based interventions.

Through increased awareness and public health programs offering support for children with autism and other developmental disabilities, children have begun to receive earlier diagnoses and interventions. The Autism Cares Act increases access to both immediate and long-term services and support by addressing behavioral health and communication needs through their lifespan.

Sen. Collins (R-Maine), who cosponsored the reauthorization with Sen. Lujan, amplified the need for additional research and programming. She spoke of the impact Leadership Education in Neurodevelopmental and Related Disabilities Programs, or LEND, have had in Maine and encouraged Senate colleagues to extend additional support for the programs.

The Autism Collaboration, Accountability, Research, Education, and Support Act of 2024 was reauthorized with strong bipartisan support through a vote of 20 to 1.

Traumatic Brain Injury Program Reauthorization Act of 2024
The Traumatic Brain Injury Program Reauthorization Act of 2024 identifies and addresses gaps in data of traumatic brain injuries, highlighting populations with a higher risk. It also reauthorizes Administration for Community Living grants to states for traumatic brain injury rehabilitation and other supportive services.

Sen. Mullins (R-Okla.), who introduced the Traumatic Brain Injury Program Reauthorization Act of 2024, emphasized the need for ongoing research and spoke of the hope the bill offers. He expressed gratitude to the committee for their bipartisan support.

The strong support for the bill was reflected in the committee’s vote as its reauthorization was approved by a 20 to 1 vote.

Sector Updates from the Judiciary

Corner Post, Inc. v. Board of Governors of the Federal Reserve System
On July 1, 2024, The United States Supreme Court issued a decision that significantly expands the amount of time available to challenge the actions of a federal agency.

Previously, lawsuits against federal regulators were required to be filed within six years from the date the agency rule went into effect according to the Administrative Procedure Act (APA). However, the Supreme Court’s ruling amended the time plaintiffs are allowed to challenge regulations according to the date of injury. The statute of limitations accordingly extends from the initial time of harm through the next six years, regardless of the date of publication.

The challenge was brought by Corner Post, a truck stop in North Dakota, who disputed the regulation the Federal Reserve issued to govern the fees merchants are obligated to pay banks when customers use a debit card. Although the regulation took effect in 2011, the truck stop did not open until 2018 and filed the suit in 2021.

Similar to the ruling of Loper Bright v. Raimundo, which empowered courts to interpret unclear agency regulations, the Supreme Court’s decision will likely invite additional lawsuits. Corner Post extends recently formed entities to the ability to challenge regulations that have stood for decades. The decision holds the power to impact countless government regulations, ranging from workplace safety to health care. Justices Jackson, Kagan, and Sotomayor referenced the far-reaching implications through a previous suit challenging the Food and Drug Administration’s (FDA) approval of mifepristone, one of two drugs prescribed for medical abortions. The case was previously dismissed because of the statute of limitations, although the verdict may allow recently formed entities to challenge the FDA’s approval.

Justice Ketanji Brown Jackson expressed deep concern in her dissent, joined by Justices Sotomayor and Kagan. The Justices warned, “The tsunami of lawsuits against agencies that the Court’s holdings in this case and Loper Bright have authorized has the potential to devastate the functioning of the Federal Government.”

While the full extent of Corner Post’s impact will likely remain unseen without further litigation, Social Current will continue to monitor decisions referencing the verdict to understand the potential impact organizations might experience.

Moe v. Yost
On Tuesday, Aug. 6, a common pleas court judge ruled in favor of the constitutionality of an Ohio law. House Bill 68 was recently passed to ban minors’ access to gender-affirming care, including transgender surgeries and hormone therapies. It also restricts the type of mental health services minors can receive and precludes transgender women’s access to interscholastic sports according to the gender or sex with which they identify. Bicameral supermajorities overrode Governor DeWine’s veto, while the affirmative ruling allows the law to go into effect immediately.

The American Civil Liberties Union, the American Civil Liberties Union of Ohio, and the global law firm, Goodwin, filed the suit, with the intent of protecting transgender youths’ access to healthcare.

The American Civil Liberties Union of Ohio is preparing to appeal the decision, where it will reach the Tenth District Court of Appeal.

The Attorney General applauded the trial court’s decision, stressing the importance of protecting children “from making irreversible medical and surgical decisions about their bodies” while they are still growing.

Suits Social Current Is Monitoring

NetChoice, LLC v. Bonta, 9th Cir., No. 23-2969
NetChoice, is a trade association of online businesses that advocates for free expression and free enterprise on the internet. They recently challenged the constitutionality of California’s Age-Appropriate Design Code Act (CAADCA), which regulates the collection, storage, and use of minors’ personal data. CAADCA mandates that companies, like YouTube and Instagram, consider potential harm to children younger than 18 before implementing design features. Its regulations are intended to promote children’s online safety and privacy.

NetChoice sued the Attorney General of California to prevent the law’s implementation, which was granted by the US District Court for the Northern District of California. The Judge cited First Amendment concerns of how the law would impact speech, a decision that follows several Supreme Court decisions upholding the internet as an important forum for free speech.

California recently appealed the decision, which has since been heard by the U.S. Court of Appeals for the Ninth Circuit. While the lawsuit is pending, the judge suggested overturning the previous ruling, thereby allowing CAADCA to go into effect.

The ruling holds the potential to establish key precedent surrounding the viability of internet protections for children, especially following the strong bipartisan Senate passage of the Kids Online Safety Act (KOSA). KOSA similarly intends to prevent harm to minors on online platforms they are likely to use by defaulting to the safest settings possible for accounts perceived to belong to minors. For instance, a few proposed regulations include protections for users’ information, limited ability to communicate with minors, and restricted personalized recommendation features.

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