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Funding Principles

Support Early Healthy Development

Funding Principles

In order to ensure that state policies are sustainable it is important to consider ways to develop state funding strategies, maximize federal and state resources and develop partnerships. To that end, there are several opportunities, expected and unexpected, to support state efforts to support children’s early healthy development. For example:

State Funding Strategies

  • Establish Infant Toddler set-Asides. Infant and Toddler Set-asides are used by some states to allocate funds within block grants to improve early developmental health by designating a given percent of the funds exclusively for use in providing services targeting young children and their families.  Illinois has used a set-aside to successfully fund services to families with infants and toddlers to promote early developmental health. The Illinois State Board of Education’s (ISBE) Early Childhood Education Block Grant funds a range of services for children age birth to five and their families by setting aside a portion of a block grant funded through state general revenue funds.
  • Establish Paid Family Leave. Paid family leave has been funded through payroll taxes in California, Rhode Island and New Jersey. Similar to the way that Unemployment Insurance is financed, states can utilize payroll tax revenue to assist working families and make maintaining stable employment less difficult for working parents of young children.
  • Establish an Early Childhood Endowment.  The state of Nebraska established the Nebraska Early Childhood Educational Endowment Fund, which is an innovative public/private venture.  The Nebraska Department of Education provides $40 million dollars from the Permanent School Fund and an additional 20 million dollars was raised privately. The programs funded through the endowment are administered through the Nebraska Children and Families Foundation. The programs are either family engagement, center-based or a combination of the two and are required to meet Quality Criteria that ensure children are in settings that will provide maximum benefit for their positive development.
  • Develop Tax Incentives. The state of Louisiana established a package of refundable state tax credits designed to enhance the quality of early education in the state, the School Readiness Tax Credit. Through the program businesses with a Louisiana Tax ID can receive a dollar-for-dollar refundable tax credit up to $5,000 for donations to Child Care Resource and Referral Agencies that hold a contract with the Department of Children and Family Services. Families with a child under 6 who is enrolled in a child care program that participates in Quality Start, the state’s QRIS, are eligible for a refundable tax credit based on the star rating of the program. Child care providers that participate in Quality Start are eligible to receive a refundable tax credit based on the number of stars they earn and on the number of children they serve in the Child Care Assistance Program or in foster care. Child care teachers and directors are eligible for a refundable tax credit if they teach in a center that participates in Quality Start.  The credit is based on the level of education the individual has attained, rather than the star level of the program in which she teaches.

 Maximize Federal Funds

  • Child Care Development Block Grants (CCDBG).  CCDBG can be used to supplement state general revenue funds for child care assistance for low-income families. Funds may be used for child care services on a sliding fee scale basis, activities that improve the quality or availability of such services, and other activities that realize the goals of the CCDBG. Certain amounts of provided funds must be used for specific purposes: quality expansion; infant and toddler quality improvement; and child care resource and referral, including a national toll-free hotline; and school-age child care activities.
  • Strong Start for Mothers and Newborns. The Strong Start for Mothers and Newborns initiative, an effort by the Department of Health and Human Services, aims to reduce preterm births and improve outcomes for newborns and pregnant women.
  • Medicaid’s Early and Periodic Screening, Diagnosis and Treatment (EPSDT).  The EPSDT benefit requires states to fund developmental screening, early intervention services and treatment for more serious health conditions.[1]  For children enrolled in Medicaid, EPSDT also can finance case management, developmental services, maternal depression screening and a continuum of other services and supports.  States can clarify for families and providers the range of services that can be reimbursed to target the impact of Medicaid funds on the developmental health of young children and their families.
  • Title V/Maternal and Child Health Program (MCH).  MCH funds can be used to finance a wide range of maternal and child health services and programs. Some states use Title V funds to support family support services and to promote the development of comprehensive, coordinated systems of care for children and their families. 
  • Maternal, Infant, and Early Childhood Home Visiting (MIECHV).  This program facilitates collaboration and partnership at the federal, state, and community levels to improve health and development outcomes for at-risk children through evidence-based home visiting programs.
  • Family Violence Prevention Grants. The Family and Youth Services Bureau (FYSB) provides Family Violence Prevention and Services Act (FVPSA) grants for states in support of emergency shelter and related assistance for victims of domestic violence and their children.  
  • Systems of Care Grants. The Department of Justice offers Systems of Care Expansion Implementation Agreement grants to help states improve outcomes for children and families receiving child welfare services through better access to mental health services.
  • Child Abuse Prevention Treatment Act. The Basic State Grant program under Child Abuse Prevention and Treatment Act (CAPTA) includes the recommendation that states refer children under age 3 involved in a substantiated abuse or neglect report to IDEA Part C Early Intervention Programs.  In most states, this means that referred infants and toddlers receive a comprehensive evaluation to determine whether or not they are eligible for Part C. 
  • Head Start.  The Head Start program grantees are required to assure that children receive developmental screenings and are linked to follow-up testing and treatment for children with development delays or suspected disabilities.  Head Start and Early Head Start funding can be used to support this requirement in various ways, including trainings for practitioners and building systems of coordination with mental health, Part C and the child welfare agencies.
  • Race to the Top Early Learning Challenge.  The Race to the Top Early Learning Challenge provides awards for states leading the way with ambitious yet achievable plans for implementing coherent, compelling, and comprehensive early learning education reform. Some states have received supplemental grants, bringing the total funding per state to between $10million and $22 million.
  • Temporary Assistance for Needy Families (TANF).  States can use TANF dollars to fund preventive programs, such as assessments, that support children’s healthy social, emotional and behavioral development while reducing out-of-home placement.
  • Community Services Block Grant.  The Community Service Block Grant is a formula grant available to states through a Department of Health and Human Services application process.  Funds can be used, in part, for strengthening educational opportunities and providing services and activities that help low-income individuals achieve greater participation in the affairs of the community.

Partner with Foundations

  • The Commonwealth Fund. The Commonwealth Fund’s Assuring Better Child Health and Development (ABCD) Program funds efforts aimed at improving the delivery of early child development services for low-income children and families, particularly those whose health care is covered by state health care programs such as Medicaid.  The National Academy for State Health Policy administers the funds and provides technical assistance to states in their creation of models of service delivery and changes to financing of screenings, assessments and care for young children. 
  • The Foundation for Child Development (FCD).  FCD supports the restructuring of preschool through third grade into a well-aligned first level of public education for children (age three to eight). FCD awards an average of 14 grants per year to support research, policy development, advocacy, and communications strategies related preschool-third grade education. New American Children grants focus on stimulating basic and applied research on children (birth through age ten) living in low-income immigrant families.
  • Ounce of Prevention Fund.  In 15 states, the Ounce of Prevention Fund invests private dollars in innovative programs to support healthy child development and works with states to leverage public funding for replication and expansion of these programs. 
  • March of Dimes. The March of Dimes state chapters fund grants for programs to improve the health and well-being of pregnant women and their babies.
  • The W.K. Kellogg Foundation.  The Kellogg Foundation provides grants based on their programming framework for educated kids, healthy kids, secure families, racial equity, and civic engagement.


[1]Johnson, K., & Knitzer, J. (2005). Spending smarter: A funding guide for policymakers and advocates to promote social and emotional health and school readiness.  New York City: National Center for Children in Poverty. Available online.


The Kentucky Department of Public Health worked in collaboration with the March of Dimes and the Johnson & Johnson Pediatric Institute to launch a community-based preterm birth prevention initiative called Healthy Babies are Worth the Wait to help improve birth outcomes and reduce infant mortality in the state.