Federal Funding Streams
Funding for early child development and learning initiatives is available to states through various federally funded programs. Federal dollars typically flow to the state in one of two ways:
- A designated state agency charged with administering an early childhood program receives the federal funds (e.g., child care subsidy) or
- Federal dollars go directly to providers of early childhood services at the local level (e.g., Head Start).
| Federal Program | Overview | Administrator | Flow of Federal Funds and Additional Notes |
| Child Care and Development Block Grant (CCDBG), also referred to as the Child Care Development Fund (CCDF) | CCBDG is the primary source of federal funding for child care subsidies for low-income working families. It also provides funds to improve child care quality. | US Department of Health and Human Services, Office of Child Care | Federal funds go to the NC Department of Health and Human Services, Division of Child Development and Early Education (DCDEE). DCDEE then pays licensed child care centers and child care homes in local communities, using rates set by NC state law. In FY 2021, an average of 60,900 children in North Carolina were served each month. |
| Temporary Assistance for Needy Families (TANF) | TANF is designed to help low-income families achieve self-sufficiency. States receive block grants to design and operate programs that focus on parental employment and child and family well-being. | US Department of Health and Human Services, Office of Family Assistance | North Carolina’s TANF program is called Work First. In FY 2019, North Carolina allocated 35% of TANF funding to child care services. Federal funds go to the NC Department of Health and Human Services, Division of Social Services. TANF is operated at the local level by county Departments of Social Services. |
| Head Start/Early Head Start | Head Start is a federally funded preschool program that provides comprehensive services to support the social, emotional, physical and cognitive development of three and four–year-old children. Early Head Start serves infants and toddlers. | US Department of Health and Human Services, Office of Head Start | Federal funds go directly to local Head Start grantees. In FY 2018, Head Start served about 16,600 North Carolina children, and, Early Head Start served about 4,600 children. |
| COVID-19 Relief Funds | During the COVID-19 pandemic, Congress provided additional flexible child care funds to states to address the effects of the pandemic. Funds came from three different pieces of legislation: the Coronavirus Aid, Relief and Security Act (CARES) in March 2020; the Coronavirus Response and Relief Supplemental Appropriations Act (CCRSA) in December 2020; and the American Rescue Plan Act (ARPA) in March 2021. | US Department of Health and Human Services, Administration for Children and Families, Office of Child Care | Funds go to the NC Department of Health and Human Services, Division of Child Development and Early Education and have been used for child care subsidies, operational grants to providers, and bonus payments to staff. NC received the following approximate allocations for flexible CCDF funds: CARES Act: $310 million CCRSA: $336 million ARPA: $504 million plus $806 million for provider stabilization grants. |
| Preschool Development Grant Birth through Five (PDG B-5) | PDG B-5 is a competitive grant program for states to conduct a comprehensive needs assessments and in-depth strategic planning for early learning programs and systems. | US Department of Health and Human Services, Administration for Children and Families, Office of Child Care | Funds go to the NC Department of Health and Human Services, Division of Child Development and Early Education. NC received a $4.5 million planning grant in 2018 and a $40.2 million grant for 2020-2022. |
| Every Student Succeeds Act (ESSA) | ESSA is the main federal law governing K-12 public education, with the purpose of ensuring public schools provide high-quality education for all kids. The Preschool Development Grant Birth through Five (PDG B-5) program is part of ESSA, and it also encourages states to develop plans that align with early childhood education systems. | U.S Department of Education | Federal funds go to the NC Department of Public Instruction and are distributed to Local Education Agencies (school districts). |
| Individuals with Disabilities Act (IDEA) Part B, Section 619(Special Education Preschool Funding) | IDEA Section 619 awards formula grants to states for special education and related services for children with disabilities aged three through five. | US Department of Education, Office of Special Education Programs | Federal funds go to the NC Department of Public Instruction, Office of Early Learning. NC is required to distribute most of its grant to local educational agencies, which operate local programs. |
| Individuals with Disabilities Act (IDEA) Part C - Grants for Infants and Toddlers (Special Education Early Intervention Services) | IDEA Part C awards formula grants to assist states in operating comprehensive statewide early intervention programs and services for children with disabilities, age birth through two. | Department of Education, Office of Special Education Programs | Federal funds go to the NC Department of Health and Human Services, Women’s and Children Health Section Early Intervention Branch and are administered by the local Children’s Developmental Services Agencies. |
| Child and Adult Care Food Program (CACFP) | CACFP provides subsidized food service to children under 12, migrant children 15 and younger, children 18 and under in the Area Eligible Snack Program and in emergency shelters, children with special needs in child care centers or day care homes through age 18 as well as adults 60 and older enrolled in an adult care center. | U.S. Department of Agriculture, Food and Nutrition Service | Federal funds go to the NC Department of Health and Human Services, Division of Public Health. The Division provides reimbursement to qualified caregivers. |
| Child Care Access Means Parents in Schools (CCAMPIS) | CCAMPIS provides competitive grants to institutes of higher education to provide campus-based child care services for students with low incomes. | U.S Department of Education, Office of Postsecondary Education | Funds go directly to colleges and universities. In FY 2020, six institutions in NC received a total of approximately $600,000. |
| Maternal Infant, and Early Childhood Home Visiting Program (MIECHV) | MIECHV supports pregnant people and families with young children who live in communities that face greater barriers to achieving positive maternal and child health outcomes through home visiting programs connections to health and child development service providers. | US Department of Health and Human Services, Health Resources and Services Administration, Maternal and Child Health Bureau | Federal funds go to NC Department of Health and Human Services, Women’s and Children Health Section. Through a Request for Proposals, communities are selected to implement evidence-based home visiting programs. In FY 2020, MIECHV served 561 households in North Carolina. |
| National Child Traumatic Stress Initiative | Provides grants to public and non-profit entities to improve treatment and services for children, adolescents, and families who have experienced traumatic events. | US Department of Health and Human Services, Substance Abuse and Mental Health Services Administration | Funds go directly to public and non-profit entities. |
Note: The table above does not include federal funding sources that are no longer active. Previously North Carolina has received funding from the Race to the Top Early Learning Challenge (2012-2016.)
Earned Income Tax Credit
The Earned Income Tax Credit (EITC) is a federal refundable tax credit for low- and moderate-income working people. It encourages and rewards work as well as offsets federal payroll and income taxes. For tax year 2015, more than 931,000 North Carolinians claimed the federal EITC, worth a total of $2.3 billion. (National Conference of State Legislators) According to the Brooking Institute, this tax credit lifted approximately 298,000 North Carolinians—half of whom were children—above the federal poverty line between 2010 and 2012.
In 2007, state lawmakers established a state EITC to build upon the federal tax credit and provide a modest boost to the wages of low- and moderate-income North Carolina workers. In 2013, state lawmakers eliminated the state EITC, making North Carolina the first and only state with an EITC to eliminate the tax credit.