Feeding More Youth While Strengthening Child Care Businesses

For our local workforce to come back strong, we need childcare businesses to be operating at full strength. Despite the importance of this business sector, these local business owners received less than one percent of the Paycheck Protection Program loans. The American Rescue Plan Act (ARPA) addresses some of the needs with targeted funding to states to help stabilize the sector.

Childcare businesses provide an essential service where youth receive a quality education and caregivers know that their children are safe while at work. Many childcare businesses also provide nutritious meals to their early learners by participating in the Child and Adult Care Food Program (CACFP).

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The U.S. Department of Agriculture (USDA) has issued a nationwide waiver that will allow licensed childcare businesses operating out of their home who participate in CACFP, regardless of their location, to receive a higher reimbursement rate for all meals and snacks through June 2022.

According to an analysis of the first seven months of COVID-19 (March through September 2020) by the Food Research and Action Center, CACFP served 480 million fewer meals than the same months in 2019. This drop decreased childcare businesses’ CACFP reimbursements by 37%, or $690 million. The loss of these funds was another blow to these businesses’ fixed costs and pushed some businesses to exit the program. The loss of these meals also was a shock to family budgets as caregivers had to replace meals that their children would have otherwise received while in care.

With the passage of the COVID-19 Relief bill in December of 2020, CACFP received emergency funding to help sponsors, childcare centers, licensed providers operating out of their homes, and afterschool programs cover operating cost deficits created because of shutdowns and the resulting shift in services. Those businesses with cost deficits will receive 55% of their reimbursement funding lost from April to June 2020 and half of March 2020. State agencies will be sending these funds to childcare centers and sponsors starting in June. Childcare businesses operating out of their home that participate in CACFP should receive funding from their sponsors before September of this year. 

The U.S. Department of Agriculture (USDA) has issued a nationwide waiver that will allow licensed childcare businesses operating out of their home who participate in CACFP, regardless of their location, to receive a higher reimbursement rate for all meals and snacks through June 2022. This increased funding could allow them to double the amount that they receive through reimbursement.

City leaders can work with their state agency to publicize the funds that the childcare businesses should receive and note the increased reimbursement rate. City leaders also have an opportunity to connect with childcare businesses operating within their community to make sure they are aware of CACFP and where to go if they are interested in learning more about applying or finding a sponsor. City leaders could also explore utilizing ARPA funds to provide resources or support to help increase the number of childcare businesses that participate in CACFP.

Expanding participation of childcare businesses in CACFP helps municipalities’ bottom line, caregivers’ family budgets and provides nutritious meals to early learners- a win for any community.

DISCLAIMER: The information contained here is not legal advice. It will be subject to change based on updates from the U.S. Department of the Treasury, and any recipients should confirm applicability to their specific situation.

Learn More

Visit NLC’s ARPA Resource Page for all the latest events and information, including the latest federal guidance and funding availability. 

About the Author

Patrick Hain

About the Author

Patrick is a Program Manager with the Economic Opportunity and Financial Empowerment team at the National League of Cities’ Institute for Youth, Education, and Families.