States have nearly $10 billion in unspent welfare reserves that could fund programs allowing low- and middle-income parents to stay home with newborns during their first year of life, according to a new report from the Niskanen Center. The analysis, titled "Bridging the Infant Care Gap," resurrects a policy model piloted successfully in Minnesota and Montana during the early 2000s called At-Home Infant Care programs, or AHICs. These initiatives gave parents who qualified for state childcare subsidies the option to receive time-limited payments to care for their infants at home instead.
The report proposes tapping unused Temporary Assistance for Needy Families (TANF) block grants to fund the revived programs. Under the plan, states would set AHIC benefit amounts as a share of their existing center-based infant care subsidies, which in every state except Wyoming exceed maximum TANF benefits. For example, if Utah provided 75% of its childcare subsidy amount through an AHIC benefit, families would receive up to $923 monthly — about $392 more than current TANF benefits — while the state would spend roughly $308 less per month per family compared to full childcare subsidies. Eligibility would mirror state childcare subsidy programs, which currently range from 30% of state median income in Georgia to no income cap in New Mexico. When Minnesota operated its AHIC program, 94% of participants were employed before joining.
The authors argue that AHICs fill a gap that paid family leave programs can't reach by design. Only about one-third of workers have access to paid parental leave through state programs, and roughly a quarter through employers. According to report co-author Sanya Bahal, even the best-designed paid leave programs would leave about a quarter of working-age residents in states with comprehensive coverage ineligible for benefits. She notes that mothers of newborns account for roughly one-third of all new TANF entrants, highlighting how parents without leave options currently turn to traditional welfare programs. "AHIC isn't paid leave or a childcare [subsidy]," Bahal explains. "Paid leave should be the foundation for caring for infants at home, and AHIC catches the families that paid leave, by design, is going to miss."
The original Minnesota and Montana pilots worked well on the ground but ended due to unstable funding because they relied on state general revenue that wasn't reappropriated. The new proposal addresses that weakness by structuring payments as "non-recurring short-term benefits," which federal rules exempt from TANF work participation rate calculations that could otherwise penalize states. To qualify for this exemption, payments must address a specific crisis or episode of need, can't cover ongoing needs, and can't last more than four months — requirements that childbirth naturally satisfies. States can launch AHICs without new federal legislation or funding by passing state laws that permanently establish the programs in statute. The report positions the policy as a way to simultaneously support parents who want to stay home during the first year, reduce pressure on expensive infant care providers, and save states money on subsidies that often serve as "loss leaders" for childcare centers.