Funding for Ohio’s childcare system is complicated, even to the most seasoned advocates. It became even more so in Fiscal Year (FY) 2024-25 budget, when House Bill 33[1] created a new Department of Children and Youth (DCY), changing federal and state funding streams for Publicly Funded Child Care (PFCC) and early education programs.

Using the FY2024-25 budget, the legislature made multiple changes to Ohio’s childcare system.[2] The new Department of Children and Youth (DCY) was formed by splitting off some child- and family-related programming from the Ohio Department of Job and Family Services (ODJFS), which received a major cut to their state-share operating budget as a result.[3] Many of the ODJFS programs in early childhood and childcare were consolidated in the newly created DCY.

For the department’s first year of operation, FY24, the legislature appropriated $753.4 million from the Main Operating Budget, increasing to $761.8 million in FY25. In total (state, dedicated purpose funds, and federal funds), the new department will operate at $2.25 billion in FY24 and $2.26 billion in FY25, nearly half of which goes to childcare.[4]

DCY will house PFCC and other child- and youth-related services, such as kinship care,[5] the Ohio Children’s Trust Fund,[6] and foster care programs[7] taken from other departments. These include the Ohio Department of Health (DOH), Ohio Department of Education and Workforce (ODEW), Ohio Department of Mental Health and Addiction Services (OHMAS), Ohio Department of Development (DEV), and Ohio Department of Developmental Disabilities (DODD).[8]

Ohio allocated $1.1 billion total to childcare funding in FY24 (49% of DCY’s overall budget), with state dollars accounting for less than a quarter ($265.28 million) and $834.90 million in federal funding from the Child Care Development Block Grant[9] and TANF Funds.[10]

Figure 1

State funding for PFCC comes from the General Revenue Fund (GRF) and through the Maintenance of Effort (MOE) funds attached to each federal block grant. To receive the TANF block grant from the federal government, most states must meet a MOE requirement equal to 80% of what they spent in federal FY 1994.[11] That amounts to $416.9 million for Ohio in FY23. Because some TANF funds are used for other programs still handled by ODJFS, those funds are split between ODJFS and DCY.[12]

The state combines federal funds and state dollars in MOE funds to pay for the full PFCC program. For example, the Early Care and Education line item (ALI 830500), which provides funding for families who are eligible for PFCC and have incomes ranging from 201% to 300%[13] of the federal poverty level (FPL), counts toward TANF MOE requirements.[14] These funds supplement the actual TANF Funds (ALI 830605), which only cover people whose incomes fall under 200% FPL.[15]

Childcare funding supports all parts of the system, from childcare workers' paychecks to providers’ licenses, to program administration. Ohio’s PFCC funding stream is complex, comprising seven separate line items: three drawing from the GRF, two from Dedicated Purpose Funds (DPFs),[16] and two from federal block grants.

Much of the funding pays for services, such as reimbursement for providers. The two DPFs fund specific initiatives by the administration to support infrastructure projects for programs and the Step Up to Quality Program (SUTQ).

State-share funds

• Child Care State/Maintenance of Effort (MOE)(GRF ALI 830400) is funded at $187.27 million for FY2024-25, with FY24 funding up 12.4% from the previous fiscal year. This line item provides GRF payments to PFCC. The line item is double counted toward MOE requirements for TANF and the Child Care Development Block Grant (CCDBG), which is the primary Federal funding mechanism for child care in Ohio.[17]
• Child Care Licensing (GRF ALI 830409) is funded at $6 million for FY2024-25, a 39.8% increase from FY23. These funds are used to license and inspect preschool and school-age childcare programs.[18]
• Early Care and Education (GRF ALI 830500) is funded at $282.57 million for FY2024-25. The FY24 allocation is slightly lower than in FY22-23, and a more substantial cut when inflation is considered. This line item is used to support PFCC services and payments, including for families whose income eligibility is 201% to 300% FPL.[19] The line item also includes Step Up to Quality (SUTQ) enhancements. The state counts this line item toward its MOE requirements.
• Early Childhood Education (GRF ALI 830407) is funded at $260.63 million over the biennium. This line item funds Early Childhood Education (ECE) programs — commonly referred to as ECE grants — at K-12 schools, community schools, and other licensed childcare centers for families at or below 200% of the Federal Poverty Line (FPL).[20]

State Dedicated Purpose Funds

• Child Care Infrastructure Grants (5AK1[21] ALI 830614) is funded at $30 million over FY24-25. This new line item was introduced in HB 33, targeted toward childcare for infants and toddlers in communities with high infant mortality rates.[22]
• Early Childhood Education (5KT0[23] ALI 830606) is funded at $26 million for FY24-25. The FY24 appropriation is 35.00% lower than the appropriation for FY23, because the fund does not replenish. This line item supports the Step Up to Quality program (SUTQ) and other administrative costs.[24]
  

Federal-Share Funds

• Child Care (3H70 ALI 830604) is funded at $1.19 billion over FY24-25. This federal line item is used to disperse the Child Care and Development Fund dollars. The Block grant experienced some fluctuation from FY22-23 due to federal pandemic aid changes, but is now back to comparable FY22 funding levels.[25] The fund’s MOE for the Child Care and Development Block Grant in FY23 is $45.4 million and can be double counted toward the TANF MOE (which Ohio does).[26]
• TANF Block Grant (3V60 ALI 830605) is funded at $480.26 million over FY24-25. This is the DCY portion of the TANF block grant, while the remainder of the block grant is allocated through ODJFS. The DCY TANF money is used for PFCC payments for families under 200% of FPL.[27]

Additional funding notes

• If you noticed the Early Childhood Education (ALI 830606) and Early Childhood Education (ALI 830407) had the same name – you're right! Then, Early Care and Education (GRF ALI 830500) adds a third similar name. All three of these funds cover either PFCC or ECE child care programs.
• As of 2021, the state of Ohio was reporting a TANF underspend of $619 million.[28] As of publication, the TANF underspend has not been updated for 2024.[29] The TANF underspend — which includes the previous year’s unused Block Grant funds that have accrued over time and not yet been spent or set aside for a dedicated purpose — are being used toward the state’s childcare spending.[30]

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