The funds would go to setting up detention space for the children as well as preventing any further undocumented children from entering the country.
The president also plans to ask Congress to amend existing statutes to allow for the increase in speed of screening and deporting unaccompanied child migrants who aren't from Mexico.
Such measures are already in place for young migrants from Mexico due to its proximity to the United States.
Obama will also ask for stiffer penalties for people who smuggle children and other vulnerable migrants into the United States.
The announcement comes days after Obama warned Central American parents not to send their unaccompanied children to the United States.
He has called the current influx of undocumented children a humanitarian crisis.