Introduction

Whether you're starting a new child care business or advancing your permit type, you'll have many expenses to consider. These may include costs for permit upgrades, materials, supplies, and marketing.

This guide is a comprehensive resource designed to support Family Child Care (FCC) providers within the Texas Family Child Care Network (Texas FCCN) with spending funds awarded through the Texas FCCN Start-Up Mini-Grant Initiative.

Planning and deciding where to spend your award funding can seem overwhelming, but it doesn't have to be. This guide offers step-by-step instructions, required recordkeeping practices, reporting timelines, and compliance procedures to ensure proper fund management and compliance.

Connection to Application Scoring

Careful planning of your funding not only ensures compliance with grant requirements but also demonstrates the financial management capabilities that are evaluated during the application scoring process. Budgeting accuracy, cash flow projection, and timeline precision are skills you’ll practice as you plan your grant spending.

Understanding Allowable Expenses – How You Can Use Your Funding

Funding can be used towards allowable business expenses and costs related to health, safety, and child learning. Examples of allowable and unallowable expenses are below. You can allocate all funds to a single category if desired; there is no requirement to spread funds across multiple categories.

• Indoor furnishings and supplies: The purchase of furniture and supplies to improve the quality of classrooms or child care spaces. Examples include child-sized tables and chairs, cribs and cots, or safety gates.

• Instructional Materials: Materials that directly support child learning and development, such as books, curriculum materials, learning manipulatives, educational toys, art supplies, assessment materials, and activity materials.

• Kitchen and household safety materials: Upgrading the kitchen to ensure age-appropriateness and child safety, such as fire extinguishers, smoke detectors, and carbon monoxide detectors.

  • Note: Food is not an allowable expense.

• Minor repairs and building modifications: Minor repairs and building modifications that are specifically required to meet licensing standards for dedicated indoor or outdoor learning areas may be allowable.

• Child Safety Items: Items that protect the health and safety of the children in your care such as safety gates, outlet covers, cabinet locks, or childproofing materials.

• Classroom supplies and instructional materials: Items that directly support child learning, health, or safety, such as children’s toys, curriculum, books, and learning materials.

• Outreach costs: Costs for both physical outreach, such as flyers or postcards, as well as the cost for digital outreach, such as online ads or job announcements. Remember, outreach can include efforts made to attract new staff to your business as well as marketing for new families.

• Permitting fees: Costs for required background checks and permit application fees may be filed for reimbursement. Payment receipts must be provided for each expense, dated within three (3) months prior to the reimbursement request.

• General liability insurance: Monthly or annual cost of required general liability insurance. Check insurance requirements here.

• Outdoor learning materials: Items necessary for your child care business to provide safe and age-appropriate outdoor learning, such as children’s toys and outdoor supplies, shade coverings and safety materials.

• Personal protective equipment: This includes cleaning and sanitization supplies and materials necessary for your child care business.

How You CANNOT Use Your Funding

Funding from a mini-grant must NOT be used for the following items:

• Down payments, security deposits, and other one-time payments associated with securing a location to provide child care;

• Construction of new facilities;

• Payments for providers and staff

• Major Renovations to existing facilities;

• Vehicles; and

• Equipment.

Equipment is defined as physical items that:

• Last more than 1 year

• Cost $5,000 or more per item, including acquisition cost

Acquisition cost means the total cost to buy the item and get it ready to use. This includes:

• The purchase price

• Any needed modifications or accessories

• Installation or setup

Important Note: Due to the federal source of funding for this program, major renovations are strictly prohibited. Major renovation is defined as:

• (1) structural changes to the foundation, roof, floor, exterior, or load-bearing walls of a facility, or the extension of a facility to increase its floor area; or

• (2) extensive alteration of a facility such as to significantly change its function and purpose, even if such renovation does not include any structural change.

How Do You Decide What to Purchase with Your Funding

Whether you're starting a new family child care program or advancing your permit type, these steps can help you make strategic decisions about your funding needs.

Step 1: Identify What You Need

Consider requirements:

• If you’re an aspiring provider: Think about everything you’ll need to establish your family child care program and obtain your initial permit from HHSC CCR.

• If you're advancing your permit type: Think about what you currently don’t have that HHSC CCR requires to become a registered or licensed family child care home.

Ask yourself:

• What items, materials, or repairs does HHSC CCR require that I currently do not have?

• What health and safety items do I need in place before my inspection?

• What learning materials and furnishings do I need to serve children?

• What outreach do I need to recruit families or expand my staff?

Make a list of everything you think you’ll need. Research the estimated costs and include the estimated cost of each item. Next, we’ll categorize your list into the categories of allowable expenses. This will give you a realistic picture from the start.

Here are some ideas to get you started:

Health and Safety Items: Items that protect children and meet HHSC CCR permit requirements:

• Fire extinguishers, smoke detectors, and carbon monoxide detectors

• Safety gates, outlet covers, cabinet locks, and other childproofing items

• Required fencing or outdoor safety materials, as required by HHSC CCR

• First aid supplies

• Cleaning and sanitization supplies

• Personal protective equipment

Learning Materials and Furnishings: Items that support child learning and create an appropriate child care space:

• Books, toys, learning manipulatives, and educational materials

• Child-sized furniture such as tables, chairs, cribs, and cots

• Outdoor play equipment and materials

• Art supplies and activity materials

• Curriculum materials

Kitchen and Household Items: Items that ensure your kitchen and living spaces are safe and appropriate for children:

• Kitchen safety modifications

• Child safety items for kitchen and household areas

Outreach and Marketing: Items and costs associated with recruiting families and staff to your program:

• Flyers, postcards, and printed materials

• Website development or online advertising

• Job posting fees

• Open house or recruitment event costs

Minor Repairs and Modifications: Minor repairs or modifications required by HHSC CCR for your permit:

• Minor interior or exterior repairs

• Lighting, plumbing, or fixture upgrades

• Flooring repairs

• Accessibility improvements such as railings or ramps

Step 2: Check Your List Against the Allowable Expenses

Now review your list against the Allowable and Unallowable Expenses sections of this guide.

For each item on your list ask:

• Is this expense on the allowable list?

• Is this expense specifically prohibited?

• Is this expense directly related to health, safety, or child learning?

As you are reviewing, organize your list by category:

• Indoor furnishings and learning materials

• Outdoor play and learning equipment

• Safety items and supplies

• Kitchen and household safety materials

• Cleaning and sanitization supplies

• Marketing/outreach materials

• Required repairs or modifications for licensing

• Permitting fees

If some items on your list are not allowable under the Texas FCCN Start-Up Mini-Grant Initiative, consider using alternative funding sources such as personal funds, loans, or other grants, for those expenses and directing your Mini-Grant funds toward your allowable expenses. Keep in mind that this funding cannot be used for expenses already funded or reimbursed through other public funding sources. There are resources at the end of the guide that can help.

Step 3: Prioritize Your Funding Request

Now you are ready to put it all together! Your funding can cover up to $15,000 of eligible expenses, but your award amount will be based on your reviewed needs. Think strategically about how to make the most of your funding.

Consider prioritizing:

• Items with the highest cost that are directly tied to meeting HHSC CCR permit requirements.

• Items that are essential to opening or advancing your program.

• Items that have the most direct impact on health, safety, and child learning in your program.

Look at any barriers you may have in opening or advancing your program and prioritize those areas with your funding. For example, if you have areas that need to be updated to meet HHSC CCR permit requirements, such as your kitchen safety setup, required fencing, or smoke and carbon monoxide detectors, prioritize those for your award funds.

As you plan your funding request, consider how your Mini-Grant works alongside other available funding sources such as personal savings, loans, or other grants. For example, if you have savings set aside for furniture and materials, you may want to direct your Mini-Grant funds toward expenses with firm deadlines like permitting fees or general liability insurance. Keep in mind that Mini-Grant funds cannot be used for expenses already covered by another public funding source, and your total request should account for any funding you have secured or have pending.

Need Additional Funding?

If your identified needs exceed your Mini-Grant award, there are several things you can do. Consider whether any items on your list could be postponed or scaled back. You may also want to take a closer look at your overall business plan and financial picture. Helpful resources:

• Accessing Capital and Loan Options: Can I Get a Loan to Support my Business?

• Setting your Rates: How Do I Set Rates For My Child Care Business?

• Six-Month Cash Flow Workbook: Six-Month Cash Flow Workbook

• Simple Monthly Budget: Monthly Budgeting

Step 4: Pulling It All Together--Building your Funding Request

You have done the hard work and are now ready to pull everything together into your funding request.

Before you submit, use the checklist below to make sure you are ready to submit your request:

• I have identified all my needs related to health, safety, and child learning.

• I have checked all expenses against the allowable and unallowable expenses in this guide.

• I have estimated realistic costs for each item.

• I have organized my expenses by category.

• I have prioritized my most essential expenses first.

• I clearly connected each item to my specific situation – whether I’m opening a new program or advancing my permit type

• My total request does not exceed $15,000.

• I have accounted for any other funding sources.

Step 5: Spending Your Texas FCCN Start-Up Mini-Grant Funds

Once your Texas funding agreement has been fully executed, you are ready to begin making purchases.

Planning your Spending Timeline

All Mini-Grant funds must be spent within six months of signing your agreement. As you begin making purchases, create a simple timeline (required as a part of the application process) of when you plan to make each purchase.

This will help you:

• Plan for items that may take longer to procure or install.

• Ensure required repairs or modifications are completed within your timeline.

• Help keep track of purchases and avoid a last-minute rush to spend remaining funds.

Creating a realistic spending timeline is not only required for compliance but also demonstrates how well your proposed purchases align with program expectations. Reviewers will evaluate Timeline Precision as a part of the application process.

Best Practices for Managing Your Records

Maintaining accurate records of your expenses is essential for reporting and monitoring requirements. For each expense paid using Mini-Grant funds, you'll need valid documentation such as receipts or invoices clearly marked "paid" that show what was purchased, the amount, and the date.

Here are some simple practices to help you stay organized:

• Create a dedicated file or folder for all your receipts and documentation

• Make digital backups of all receipts by scanning or photographing them

• Keep all documentation for at least three years from receipt of funding

• For detailed guidance on recordkeeping requirements, documentation standards, and the monitoring process, refer to our Monitoring Guide. For comprehensive strategies on maintaining your business financial records, check out our tool for “How Can I Set Up a Record Keeping System?”

Compliance

Proper documentation and compliant spending are critical. Using funds for non-approved purposes or failing to provide required documentation can result in recoupment of funds and prevention from participating in future TWC-funded initiatives.

Conclusion

Understanding what you can and cannot spend your funding on is an important part of using your funds responsibly. This spending guide is here to help you make informed decisions, stay in compliance, and use your grant in ways that support your business and meet Texas FCCN guidelines.

If you have questions or need help figuring out whether an expense is allowed, don't hesitate to reach out and contact minigrant.texasfccn@civstrat.com.