Inexpensive kids bikes use a traditional quill stem to hold the handlebars. There should be a bolthead at the top of the stem that extends into the fork. This is probably what you loosened. There is a wedge at the bottom of the stem connected to that bolt. After you loosen it up a bit, take a hammer and tap it down and the wedge will release and let you raise the stem up.

Two cautions. Don't unscrew the bolt all the way or you'll have to remove the stem completely and fish out the wedge to rethread it back on the bolt. And make sure you do not raise the stem up too far. there is a minimum insertion line scribed around the stem. Keep that line inside the fork.