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Excerpt from introduction: To support low-income parents moving into the workforce, welfare reform established the Child Care and Development Fund (CCDF). In fiscal year 2000, states spent $5.3 billion in federal CCDF to subsidize child care for low-income families. Out of concern for the quality of care supported by CCDF funds, welfare reform legislation also required states to set aside at least 4 percent of the total grant to improve the quality and availability of child care. Department of Health and Human Services (HHS) regulations provide examples of allowable activities, such as providing child care providers with financial incentives for meeting state and local standards, improving the compensation of child care staff, and offering resource and referral services. However, the regulations do not limit states' use of funds to these activities; rather, the fund's block grant structure allows states considerable flexibility in choosing appropriate quality and availability improvements to pursue. As Congress considers the CCDF's structure and funding level in preparation for reauthorization in 2002, interest has increased in the types of quality improvement initiatives 4 percent set-aside funds are supporting, the estimated percentage of federal and state funds being spent on such initiatives, and the extent to which states are assessing the initiatives' effects. Accordingly, in preparation for CCDF's reauthorization, you asked us to examine (1) what quality improvement initiatives states have undertaken with the 4 percent set-aside and other funding sources and (2) what evidence has been gathered, if any, about the effectiveness of states' initiatives. Also note the interesting appendices in report: - Appendix II: State-initiated studies of quality improvement - Appendix III: Child care quality research findings