Posted on August 14, 2024
By Shadaya Bennett
Senior Legislative Analyst
For more information on this topic, contact Shadaya at sbennett@acnj.org.
Congress is currently developing the Federal Fiscal Year 2025 (FY2025) Budget and updating tax policies to meet revenue and expenditure obligations, ensuring the country and programs that serve its citizens continue operating in the years to come. These financial measures dictate how resources are distributed and shape the future of vital programs, including those that support early childhood development. Understanding the evolution of funding policies can equip stakeholders with the necessary information to advocate for measures that lay the foundation for children’s growth and success, ensuring they are sustained and adequately funded.
While “a nation's budget is a reflection of its priorities and values,” it is evident that state and federal investment in early childhood development, particularly for infants and toddlers, remains alarmingly low. Federal spending on children aged 0-3 accounted for only 1.66%, 1.52%, and 1.99% of total spending in fiscal years 2023, 2024, and 2025 (projected), respectively. The first three years of life are crucial for brain development and foundational for developing skills, yet public investments for provisions that impact children during this period are most lacking. Additionally, most families lack the resources to bridge the gap between public funding and actual needs underscoring the necessity for intentional investment in early childhood development.
Understanding the Federal Budget and Tax Policy Process
The federal budget must be passed by Congress and signed by the President by September 30th each year to ensure annual spending for the next fiscal year can begin on October 1st and avoid a government shutdown. As the process for formulating the FY2025 Budget is underway, there are questions about whether lawmakers will meet this constitutionally mandated deadline. Many predict Congress will pass a temporary spending bill, known as a continuing resolution, to maintain federal programs at current funding levels, allowing the government to continue operating without formal funding legislation.
In addition to the fiscal year budget, federal tax policies dictate tax funding provisions to operate the country and support programs and services that impact citizens. These policies outline how taxes are collected, determine tax rates, define taxable income, and specify tax credits and deductions for individuals and businesses. Each year, the Federal Administration develops tax proposals, which are introduced as a bill in Congress. This bill is reviewed, debated, and modified by both the House of Representatives and the Senate. After Congress agrees on the final bill, it is sent to the President to be signed into law. Throughout the process, stakeholder input, including from advocates, industry representatives, and the general public, ensures a range of perspectives are considered in shaping the nation’s tax policies.
Pending Funding Policies and Early Childhood Development
As Congress negotiates the annual budget and tax policies, several critical early childhood development measures are at stake. Federal support for these programs is essential, as lack of investment would significantly impact children's early learning, health, and access to vital resources necessary for their development and future success.
Examples of programs under consideration in budget and tax policy negotiations, including current or projected funding provisions, include:
Child Care Development Block Grant (CCDBG):
- Currently funded at $8.75 billion for FY2024, an increase of $725 million over FY2023.
- Proposed amount in the House (of Representatives) FY2025 funding bill = $8.8 billion.
- Proposed amount in the Senate FY2025 funding bill = $10.35 billion.
Head Start and Early Head Start:
- Currently funded at $12.27 billion for FY2024, an increase of $275 million over FY2023.
- Proposed amount in FY2025 funding bill = $12.3 billion.
Preschool Development Grant (PDG):
- Currently funded at $315 million for FY2024, level funding from FY2023.
- Proposed amount in FY2025 funding bill = $250 million.
IDEA Grants for Infants and Toddlers:
- Currently funded at $540 million for FY2024, level funding from FY2023.
- Proposed amount in FY2025 funding bill = $540 million.
Maternal, Infant, and Early Childhood (MIECHV) Home Visiting
- Funded for a five-year cycle at $434.7 million in 2023, the highest level of federal investment in over a decade.
- The next funding reauthorization cycle is scheduled for 2027.
Tax Credits that Benefit Children
- The Child Tax Credit (CTC) provides direct funding to parents allowing them to afford expenses that are essential for children’s well-being.
- The Child and Dependent Care Tax Credit (CDCTC) is the only tax credit that directly helps working parents offset the cost of child care.
- There is a proposed Senate tax bill which includes expanding the CTC to help more families.
In closing, the federal budget and tax policy consist of more than just numbers—they signify our nation’s investment priorities and values. As debates and negotiations in Washington, D.C. continue, it is crucial that policy makers keep the needs of our youngest citizens at the forefront. Early childhood development is not merely an expenditure but an investment in our collective future. Nationwide advocacy efforts must persist, to push for funding policies that prioritize the well-being and development of all children, particularly during the critical first years of life.
In late July, advocates for early childhood development gathered at the Alliance For Early Success's State Fed Connects Meeting, gaining key insights from policy experts and congressional leaders. ACNJ brought these strategies to Capitol Hill, advocating for crucial investments in #early learning, #childcare, and family support programs in the #fy25budget.
For information on Congressional activity, including upcoming House and Senate sessions and access to pending legislation, visit https://www.congress.gov/.
