Institute for Child Success urges swift reinstatement of federal child care funds
The Institute for Child Success (ICS) has issued a statement in response to the recent federal “freeze” on child care funding.
FOR IMMEDIATE RELEASE, JANUARY 5, 2026
CONTACT: Megan Carolan, ICS Executive Vice President of Policy Research, mcarolan@instituteforchildsuccess.org.
GREENVILLE, SC, JANUARY 5, 2026 – The Institute for Child Success (ICS) urges the federal government to swiftly reinstate child care funding to states following a national “freeze” while new policies are put into place to avoid waste and fraud. ICS urges the Administration of Children and Families (ACF) within the Department of Health and Human Services (HHS) to continue using the existing robust guardrails for child care funds and clearly communicate any program changes to state agencies so that they may continue serving their constituents.
“Accountability for child care funding is crucial to the continued success of the program in serving families,” said Jamie Moon, ICS CEO and President. “However, an abrupt freeze of child care funding will cause real economic harm to the families and their employers who count on these child care providers.”
Insufficient child care to meet the needs of families already costs South Carolina $997 million annually, according to recent research from the U.S. Chamber of Commerce Foundation. Employers lose $818 million of this through turnover and absences when employees cannot find or keep affordable child care. Over 50,000 families in SC receive Working Families Child Care Scholarships through the Department of Social Services (DSS), which supports low-income families as they work or attend training programs. Both families receiving funds and participating child care providers adhere to rigorous processes to ensure eligibility and compliance with the program’s guidelines.
“Families and child care providers alike are in a difficult situation,” said Deborah DePaoli, ICS Palmetto Engagement and Policy Director. “When families don’t know if their child care scholarship will come through, they have to scramble to make back-up plans or potentially miss work. Many of these families are living paycheck-to-paycheck; missing even a day of work has huge consequences. At the same time, providers often serve scholarship and private-pay children in the same classrooms but cannot be sure they will receive payment for many of those children if scholarships are frozen.”
The child care funding freeze comes against the backdrop of reconsidering a 2024 HHS policy on “prospective payment” which requires states to pay child care subsidies based on anticipated enrollment rather than after the month ends based on attendance records. The 2024 policy was developed to help stabilize the child care field by giving providers more confidence in their month-to-month enrollment and revenue. While some have raised concerns about this method, states using this model have built safeguards to avoid fraud. South Carolina is a national leader in this system, issuing payments on a weekly basis based on initial data and requiring confirmatory data afterwards. Any payments made for enrollees later found ineligible are quickly adjusted for, ensuring a smooth process for families and children while also protecting taxpayer resources.
“We have been encouraged by South Carolina’s swift implementation of the prospective payment system, a best-practice model which improves operations for providers and families alike,” said Megan Carolan, ICS Executive Vice President of Policy Research. “Moving to these systems nationwide can be a difficult adjustment and we hope all levels of government continue to support this system which strengthens an absolutely critical sector to our economy.”
ICS urges ACF and HHS to unfreeze funding while continuing the national conversation on how to best serve families while stewarding public resources. Prompt guidance to state agencies on new requirements for reporting will be critical to help those agencies meet the needs of families, and to keep our economy moving.
About the Institute for Child Success
Based in Greenville, SC, ICS is a national research and policy organization dedicated to improving outcomes for young children. ICS partners with policymakers, practitioners, and communities to advance strategies that strengthen early childhood development, education, and family well-being. https://www.instituteforchildsuccess.org/