ACF takes action to increase support for child care providers

Each month, 1.3 million children participate in child care programs with support from the Child Care and Development Fund (CCDF), which helps working families afford child care. The child care subsidy system relies on over 200,000 participating child care providers that enroll eligible children in their programs, enabling parents to go to work or attend school or job training. Policies that bolster the financial stability of child care providers promote a strong subsidy system and have an added benefit of stabilizing the child care sector as a whole.

Last April, President Biden signed the Executive Order on Increasing Access to High-Quality Care and Supporting Caregivers , which instructed federal agencies to undertake a comprehensive set of executive actions to improve care across the lifespan. Over the last year, the Department of Health and Human Services has taken several important steps to improve payment practices in the federal child care subsidy program to implement the Executive Order.

In March 2024, ACF published new rulesfor CCDF that requires better state payment practices for child care providers that receive federal subsidies. This includes paying child care providers when services begin rather than weeks or even months later. Child care providers, most of which are small business, often have immediate expenses and need payment to make payroll and pay bills. In addition, subsidy payments will need to cover temporary absences, as child care providers incur expenses even if a child misses a day. These changes will help make sure that more than 140,000 child care providers receiving federal funding are paid more fairly and on-time.

In April 2023, ACF notified states that they must meet minimum thresholds when setting payment rates for providers caring for children participating in the subsidy program. ACF now requires that child care payment rates are set no lower than a level that reflects the 50^th percentile of child care prices in an area, which allows families receiving subsidies to access at least half of the child care providers in their area. Before this enforcement action, more than 18 states set child care reimbursement rates so low that parents in the subsidy program couldn't afford tuition in over half of the child care providers in their state. Over the past year, all these states have made progress: increasing payment rates to providers, improving access for families and ensuring providers receive more funding to support their employees. When fully implemented, this action will increase child care payments for nearly 47,000 center- and home-based child care providers. The higher payments have allowed child care providers to invest in their staff, continuing to fuel overdue increases in wages across the sector.

ACF is also partnering with states to use an improved methodology when setting provider payment rates for the CCDF program so rates will reflect child care operating costs and pay providers based on the cost of providing high-quality care, rather than setting rates based on tuition prices. With support from ACF's Office of Child Care, 12 states have been approved to use an approach to setting payment levels that reflects the cost of quality and paying higher salaries. As more states adopt this strategy, ACF will continue to ensure federal child care subsidies are part of the sector-wide solution to help address the long-standing compensation challenges facing the early care and education workforce.

While these executive actions are important steps, the Biden-Harris Administration has also called on Congress to fully fund child care with an investment of $600 billion over ten years so that more families can access affordable and high-quality child care and preschool. This proposal would ensure that the average family pays $10 per day for child care and defray child care costs for 16 million children. Importantly, this proposal includes fair compensation for child care staff by creating a wage floor that covers basic living expenses and pay parity with public school teacher for those with similar qualifications.

As we celebrate Care Workers Recognition Month , we acknowledge the important progress to date and the need for continued investment and improvement for the child care workforce that supports children, families, communities, and our economy.

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