What’s Going on with School Readiness Assistance Child Care Subsidies in Arkansas?
The School Readiness Assistance (SRA) program helps low-income families afford child care while parents work or go to school. It’s run by the Arkansas Department of Education’s Office of Early Childhood, but most of the money comes from the federal government through the Child Care and Development Fund (CCDF).[i] [ii] [iii]
CCDF dollars are complicated. They come from a few different federal streams, each with their own rules, but together they make up the backbone of Arkansas’s child care subsidy system.[iv] [v] Understanding how these dollars flow helps explain how much money Arkansas has available for the School Readiness Assistance program each year and why that amount might change over time.
Who Qualifies for SRA?
Families qualify if:
- Parents are working or in school/training, and income is below 85% of the State Median Income (SMI).[vi] [vii]
- Children are under 13, with family assets under $1 million.
- Children in or needing protective services also qualify.[viii]
Arkansas also prioritizes children with special needs, children experiencing homelessness, and families receiving Temporary Assistance for Needy Families (TANF). States have some flexibility in how they define and prioritize these groups.[ix] [x]
SRA is not the same as the Arkansas Better Chance (ABC) preschool program or Head Start. ABC is state-funded and was created to expand access to early learning, with an emphasis on preparing at-risk 3- and 4-year-olds for school success. Head Start, on the other hand, is federally funded and combines early education with comprehensive services like health, nutrition, and family supports for children in poverty. While SRA is primarily a child care subsidy program to help working parents afford care, all three programs serve vulnerable families and sometimes overlap in the children they reach. However, they operate with different funding streams, rules, and purposes.[xi]
Where Does the Money Comes From?
The Child Care and Development Fund (CCDF) is the umbrella term for federal child care subsidy dollars. It combines two main funding sources:
- CCDBG (Discretionary funds) These are decided annually by Congress. The word “discretionary” means Congress has to appropriate them each year, so the amount can go up or down depending on federal budget decisions.[xii] [xiii] [xiv] Each state’s share is based on a federal formula meant to reflect both population and need. The formula considers:
- CCES (Mandatory funds) These are guaranteed by law each year, without Congress having to re-approve them. They include:
Both discretionary (CCDBG) and mandatory (CCES) funds follow the same CCDF program rules once states receive them.[xxii]
More Money through Matching Funds
Arkansas can draw down additional federal dollars through CCES matching funds, but only if it:
- Meets the Maintenance of Effort (MOE).
- When CCDF was created in 1996, it consolidated several older federal child care programs. States were already spending their own money on those programs.[xxiii] [xxiv]
- To prevent states from pulling their money out and relying only on federal funds, Congress required each state to keep spending at least as much as they were in the early 1990s.[xxv]
- For Arkansas, this amount is about $1.9 million per year. It has stayed flat for decades and does not adjust for inflation.[xxvi] [xxvii]
- Provides a State Match alongside federal match dollars.
- For every $1 in federal matching funds, Arkansas must contribute state funds based on its Federal Medical Assistance Percentage (FMAP), the same formula used in Medicaid.[xxviii] [xxix]
- In FY2025, Arkansas’s FMAP was about 71%, meaning the state must add about $0.71 for every $1 federal match.[xxx]
- The total amount of matching funds available to a state is tied to its share of children under age 13.[xxxi]
Arkansas doesn’t have to spend its state match directly on SRA vouchers. The match only needs to fund allowable CCDF activities under federal rules. Arkansas reports using State General Revenue to meet the CCDF match and can count portions of ABC pre-K toward MOE, and within federal caps, toward match. This is common nationally.[xxxii] [xxxiii]
What About COVID and Disaster Relief?
During the pandemic, CCDF received an unprecedented inflow of short-term funds from CARES, CRRSA, and ARPA.[xxxiv] [xxxv] Arkansas received over $584 million in 2021 alone.[xxxvi] [xxxvii] These funds temporarily expanded subsidies and stabilization grants to providers, but they were only available for a short period. By 2022, Arkansas was back to its usual levels of CCDF funding.[xxxviii]
Can TANF Help?
Yes. States can transfer up to 30% of their Temporary Assistance for Needy Families (TANF) block grant into CCDF.[xxxix] [xl] [xli] Once transferred, those dollars follow CCDF rules and can be used for child care subsidies like SRA. Arkansas did not make a transfer in recent years, although some TANF supported ABC and about $35,000 supported child care assistance and home visiting in 2023.[xlii] [xliii]
How Much Money Does CCDF Allocate to Arkansas?
Table 1 shows Arkansas’s CCDF funding streams since 2018. Notice how mandatory funds, set by a historic 1990s formula, have stayed flat at about $5.3 million, while discretionary funds, appropriated by Congress each year, have grown somewhat over time. The COVID relief spike in 2021 was extraordinary, but those dollars have now expired, leaving the state dependent on its regular federal streams plus the state’s fixed MOE and match.[xliv]
Table 1. Arkansas CCDF Allocations in the Millions, 2018 – 2024.
Notes. Data from U.S. Department of Health and Human Services, Administration for Children and Families. https://acf.gov/occ/data/ccdf-state-and-territory-funding-allocations. Totals calculated by OEP.
In total, Arkansas has allocated between about $90 million and $145 million in CCDF each year over the past seven years (excluding 2021). The majority of these funds have come from the federal government, and primarily through CCDBG discretionary dollars, which do carry a 12% set-aside requirement for quality initiatives.[xlv] [xlvi] On average, Arkansas has received about $101 million annually from the federal government for CCDF (excluding COVID relief) and has contributed about $7.8 million of its own dollars to meet MOE and match requirements.[xlvii]
How does all of this matter for kids?
All of these funding rules, the flat mandatory dollars, the set-asides for quality, the way Arkansas counts ABC toward its match, and amount of federal discretionary funding, influence how many families can actually get an SRA subsidy and how much providers receive to cover the care and education of children.
When federal appropriations rise, Arkansas can serve more families and/or stabilize more providers. When they stay flat, or when one-time relief dollars expire, the state has fewer resources to put into direct assistance. For children, this translates into whether their parents can afford a slot at a safe, reliable program and whether those programs can retain qualified teachers, keep classrooms open, and even opt into serving children with SRA subsidies.
Even for families who do not qualify for SRA subsidies, these funding shifts matter. When providers lose qualified teachers, cut back on instructional materials, or operate with more children per teacher, the impact is felt by every child in the classroom. At the same time, the quality initiatives supported through CCDF, things like workforce training, credentialing, and health and safety improvements, can strengthen care for all children, not just those with subsidies.
So now that we know what it is, what’s changing right now with SRA?
This month, the Arkansas Department of Education’s Office of Early Childhood announced updates to SRA reimbursement policies. Three big issues have been raised.[xlviii] First, whether reimbursement rates, or the payments providers receive for children enrolled in SRA, are high enough to cover the cost of care. Second, providers will not continue to receive higher reimbursement rates for offering higher-quality care. Finally, more families will be required to pay copayments, meaning more parents will have to contribute a share of their child’s child care costs. These changes were announced with only a couple of weeks’ notice before going into effect, giving providers and families little time to prepare. In a follow-up announcement, ADE said the reimbursement rate changes will now take effect November 1, 2025, with a one-time “Quality Enhancement Payment” for higher levels of Better Beginning providers issued for October, while new family copayments began October 1.[xlix]
This post is the first of a two-part series on SRA and CCDF in Arkansas. Here we’ve laid out the basics of how the funding works and why it matters for children, families, and providers. In Part 2, we’ll take a closer look at the recent policy changes, what they mean for reimbursement rates, quality incentives, and family copayments, and how those shifts could shape access to child care across the state.
Coming Next in Part 2: What the New SRA Rules Actually Mean for Children, Families, and Providers
References
[i] Congressional Research Service. (2016). The Child Care and Development Block Grant (CCDBG) Act: Background and Funding. https://www.congress.gov/crs-product/IF10511
[ii] Congressional Research Service. (2023). Child Care and Development Fund (CCDF): Background and Funding. https://www.congress.gov/crs-product/R47312
[iii] Bipartisan Policy Center. (2021). Explainer: Child Care and Development Fund (CCDF). https://bipartisanpolicy.org/explainer/child-care-and-development-fund-ccdbg-cces/
[iv] Ibid.
[v] First Five Years Fund. (2024). CCDBG State Fact Sheets. https://www.ffyf.org/resources/2024/05/2024-ccdbg-state-fact-sheets/.
[vi] Congressional Research Service. (2016). The Child Care and Development Block Grant (CCDBG) Act: Background and Funding. https://www.congress.gov/crs-product/IF10511
[vii] Congressional Research Service. (2023). Child Care and Development Fund (CCDF): Background and Funding. https://www.congress.gov/crs-product/R47312
[viii] Arkansas Department of Education, Office of Early Childhood. (2024). 2025–2027 CCDF State Plan. https://dese.ade.arkansas.gov/Files/2025-2027_CCDF_State_Plan_Final_4.26.24.1REV_OEC.pdf
[ix] Congressional Research Service. (2023). Child Care and Development Fund (CCDF): Background and Funding. https://www.congress.gov/crs-product/R47312
[x] Arkansas Department of Education, Office of Early Childhood. (2024). 2025–2027 CCDF State Plan. https://dese.ade.arkansas.gov/Files/2025-2027_CCDF_State_Plan_Final_4.26.24.1REV_OEC.pdf
[xi] University of Arkansas Office for Education Policy. (2024). Arkansas Early Childhood Care and Education Federal and State Programs Funding Report. https://oep.uark.edu/arkansas-early-childhood-care-and-education-federal-and-state-programs-funding-report/
[xii] Congressional Research Service. (2016). The Child Care and Development Block Grant (CCDBG) Act: Background and Funding. https://www.congress.gov/crs-product/IF10511
[xiii] Bipartisan Policy Center. (2021). Explainer: Child Care and Development Fund (CCDF). https://bipartisanpolicy.org/explainer/child-care-and-development-fund-ccdbg-cces/
[xiv] Bipartisan Policy Center. (2021). Federal Funding for Child Care. https://bipartisanpolicy.org/download/?file=/wp-content/uploads/2021/05/B.-2-Federal-Funding-for-Child-Care.pdf
[xv] Congressional Research Service. (2023). Child Care and Development Fund (CCDF): Background and Funding. https://www.congress.gov/crs-product/R47312
[xvi] Bipartisan Policy Center. (2021). Explainer: Child Care and Development Fund (CCDF). https://bipartisanpolicy.org/explainer/child-care-and-development-fund-ccdbg-cces/
[xvii] First Five Years Fund. (2024). CCDBG State Fact Sheets. https://www.ffyf.org/resources/2024/05/2024-ccdbg-state-fact-sheets/.
[xviii] Congressional Research Service. (2016). The Child Care and Development Block Grant (CCDBG) Act: Background and Funding. https://www.congress.gov/crs-product/IF10511
[xix] Bipartisan Policy Center. (2021). Explainer: Child Care and Development Fund (CCDF). https://bipartisanpolicy.org/explainer/child-care-and-development-fund-ccdbg-cces/
[xx] Congressional Research Service. (2023). Child Care and Development Fund (CCDF): Background and Funding. https://www.congress.gov/crs-product/R47312
[xxi] Bipartisan Policy Center. (2021). Explainer: Child Care and Development Fund (CCDF). https://bipartisanpolicy.org/explainer/child-care-and-development-fund-ccdbg-cces/
[xxii] Ibid.
[xxiii] Congressional Research Service. (2016). The Child Care and Development Block Grant (CCDBG) Act: Background and Funding. https://www.congress.gov/crs-product/IF10511
[xxiv] Congressional Research Service. (2023). Child Care and Development Fund (CCDF): Background and Funding. https://www.congress.gov/crs-product/R47312
[xxv] Bipartisan Policy Center. (2021). Federal Funding for Child Care. https://bipartisanpolicy.org/download/?file=/wp-content/uploads/2021/05/B.-2-Federal-Funding-for-Child-Care.pdf
[xxvi] Arkansas Department of Education, Office of Early Childhood. (2024). 2025–2027 CCDF State Plan. https://dese.ade.arkansas.gov/Files/2025-2027_CCDF_State_Plan_Final_4.26.24.1REV_OEC.pdf
[xxvii] Arkansas Department of Education, Office of Early Childhood. (2024). 2025–2027 CCDF State Plan. https://dese.ade.arkansas.gov/Files/2025-2027_CCDF_State_Plan_Final_4.26.24.1REV_OEC.pdf
[xxviii] Congressional Research Service. (2023). Child Care and Development Fund (CCDF): Background and Funding.https://www.congress.gov/crs-product/R47312
[xxix] Bipartisan Policy Center. (2021). Federal Funding for Child Care. https://bipartisanpolicy.org/download/?file=/wp-content/uploads/2021/05/B.-2-Federal-Funding-for-Child-Care.pdf.
[xxx] Arkansas Department of Education, Office of Early Childhood. (2024). 2025–2027 CCDF State Plan.https://dese.ade.arkansas.gov/Files/2025-2027_CCDF_State_Plan_Final_4.26.24.1REV_OEC.pdf
[xxxi] Bipartisan Policy Center. (2021). Explainer: Child Care and Development Fund (CCDF).https://bipartisanpolicy.org/explainer/child-care-and-development-fund-ccdbg-cces/
[xxxii] University of Arkansas Office for Education Policy. (2024). Arkansas Early Childhood Care and Education Federal and State Programs Funding Report. https://oep.uark.edu/arkansas-early-childhood-care-and-education-federal-and-state-programs-funding-report/
[xxxiii] Arkansas Department of Education, Office of Early Childhood. (2024). 2025–2027 CCDF State Plan.https://dese.ade.arkansas.gov/Files/2025-2027_CCDF_State_Plan_Final_4.26.24.1REV_OEC.pdf
[xxxiv] Congressional Research Service. (2023). Child Care and Development Fund (CCDF): Background and Funding. https://www.congress.gov/crs-product/R47312
[xxxv] Center for American Progress. (2023). Pandemic-Era Funding for Early Learning Programs Showcases One of the Most Important Investments the United States Can Make. https://www.americanprogress.org/article/pandemic-era-funding-for-early-learning-programs-showcases-one-of-the-most-important-investments-the-united-states-can-make/.
[xxxvi] U.S. Department of Health and Human Services, Administration for Children and Families. CCDF State and Territory Funding Allocations. https://acf.gov/occ/data/ccdf-state-and-territory-funding-allocations.
[xxxvii] University of Arkansas Office for Education Policy. (2024). Arkansas Early Childhood Care and Education Federal and State Programs Funding Report. https://oep.uark.edu/arkansas-early-childhood-care-and-education-federal-and-state-programs-funding-report/.
[xxxviii] Ibid.
[xxxix] Congressional Research Service. (2023). Child Care and Development Fund (CCDF): Background and Funding.https://www.congress.gov/crs-product/R47312.
[xl] Bipartisan Policy Center. (2021). Explainer: Child Care and Development Fund (CCDF).https://bipartisanpolicy.org/explainer/child-care-and-development-fund-ccdbg-cces/.
[xli] Bipartisan Policy Center. (2021). Federal Funding for Child Care. https://bipartisanpolicy.org/download/?file=/wp-content/uploads/2021/05/B.-2-Federal-Funding-for-Child-Care.pdf.
[xlii] University of Arkansas Office for Education Policy. (2024). Arkansas Early Childhood Care and Education Federal and State Programs Funding Report. https://oep.uark.edu/arkansas-early-childhood-care-and-education-federal-and-state-programs-funding-report/
[xliii] Arkansas Department of Education, Office of Early Childhood. (2024). 2025–2027 CCDF State Plan. https://dese.ade.arkansas.gov/Files/2025-2027_CCDF_State_Plan_Final_4.26.24.1REV_OEC.pdf.
[xliv] U.S. Department of Health and Human Services, Administration for Children and Families. CCDF State and Territory Funding Allocations. https://acf.gov/occ/data/ccdf-state-and-territory-funding-allocations.
[xlv] Congressional Research Service. (2023). Child Care and Development Fund (CCDF): Background and Funding. https://www.congress.gov/crs-product/R47312
[xlvi] First Five Years Fund. (2024). CCDBG State Fact Sheets. https://www.ffyf.org/resources/2024/05/2024-ccdbg-state-fact-sheets/.
[xlvii] U.S. Department of Health and Human Services, Administration for Children and Families. CCDF State and Territory Funding Allocations. https://acf.gov/occ/data/ccdf-state-and-territory-funding-allocations.
[xlviii] Arkansas Office of Early Childhood. (2025). OEC Rate and Copay Updates. https://drive.google.com/file/d/1tyo_RM5UPeP2cthMUMJ4J0evP6QIqY1P/view.
[xlix] Arkansas Office of Early Childhood. (2025). Update on SRA Rate and Copayment (Draft Revised Provider and Family Letter).https://dese.ade.arkansas.gov/Files/OEC_SRA_Announcement_Regarding_Rates_and_Copays_Effective_November_1_OEC.pdf.