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This final rule would update the Child Care and Development Fund (CCDF) regulations to ease eligible families’ enrollment in the child care subsidy system and increase participating families’ access to a range of high-quality child care options for which they may use child care subsidies. The changes would address: (1) Family copayments; (2) provider payment rates and practices; (3) child eligibility determination and re-determination; and (4) technical changes. 

Statement of Need:

This final rule amends Child Care and Development Fund (CCDF) regulations in four areas: (1) family co-payments; (2) provider payment rates and practices; (3) child enrollment and eligibility determination; and, (4) technical changes. These changes will lower child care costs for families, increase parent’s child care options, reduce barriers to receiving child care assistance, increase payments to providers, support higher program quality, and improve child care stability.

The Child Care and Development Block Grant (CCDBG) Act, together with Section 418 of the Social Security Act, authorize the CCDF, which is the primary Federal funding source devoted to supporting families with low incomes access child care and to increasing the quality of child care for all children.  Fiscal year (FY) 2023 funding was over  $11 billion by formula to states, territories, and tribes.  CCDF child care subsidies support children’s positive and healthy development and family economic wellbeing, enabling parents to pursue employment, education, and training opportunities.  More than 900,000 families and 1.5 million children benefit from CCDF financial assistance each month.  

Congress last authorized the CCDBG Act in 2014, and the Department of Health and Human Services (HHS) published final regulations clarifying the new provisions of the Act in September 2016.  These statutory and regulatory actions included significant changes to the CCDF program.  In the years since 2016 Final Rule, CCDF agencies have taken significant steps to implement the requirements, but child care remains a broken system in crisis due to chronic underinvestment. Parents struggle to find affordable high-quality child care that meets their needs, and the system relies on a poorly compensated workforce and unaffordable parent fees.

This final rule builds on the 2016 final rule and to create a stronger child care assistance program that will better meet the needs of children, families, and child care providers. It provides additional clarity around key policies that are needed to provide more help for families so they can find child care that meets their families’ needs and for the continued stabilization of the child care sector.

Summary of the Legal Basis:

ACF publishes this final rule under the authority granted to the Secretary of Health and Human Services (the Secretary) by the Child Care and Development Block Grant (CCDBG) Act of 1990, as amended (42 U.S.C. 9857, et seq.) and section 418 of the Social Security Act (42 U.S.C. 618).

Alternatives:

Alternative 1: One alternative is to publish this final rule, which will lower family costs, increase parent’s options for child care, help families receive more timely assistance, increase payments to child care providers, incentivize child care providers to accept CCDF subsidies, help stabilize the child care sector, and improve child care quality.   

Alternative 2: Another alternative is to keep the status quo, which will continue current fees and policies that limit a family’s ability to participate in the CCDF program and access child care, payment practices that limit parent choices and undermine child care provider stability, and eligibility processes that create barriers to the child care subsidy. 

Anticipated Costs and Benefits:

Changes made by this final rule would have the most direct benefit for the over 900,000 families and 1.5 million children who use CCDF assistance to help pay for child care each month. Families who receive CCDF assistance will benefit from lower parent co-payments, more parental options for child care arrangements, expanded and easier access to child care which could improve the ability of families to participate in the labor market, and improved eligibility determination processes.

Providers will benefit from fairer payment practices that support their financial stability, including payments that more accurately reflect the cost of providing high quality care, which can lead to higher wages for providers and their staff.

The cost of implementing these changes would vary based on a state, territory, or Tribe’s specific situation and implementation choices. Some states may also need to invest in IT and systems changes.

Risks:

None.