2023 SEF Issues Forum, Nov. 14-17 in Charlotte, NC

Steps toward more affordable child care

By Allison Boyle, SEF Research and Policy Specialist

The Southern Education Foundation (SEF) and our allies are pushing hard to make child care more affordable – especially as pandemic relief funding comes to an end.

Child-care stabilization funding from the American Rescue Plan Act begins to expire at the end of September 2023.

That’s why SEF submitted comments in August to the federal Administration for Children and Families (ACF) on proposed rule changes to the Child Care and Development Fund (CCDF), the primary federal funding source for low-income families’ access to high-quality child care.

CCDF funding is distributed by the U.S. Department of Health and Human Services (HHS) on a formula basis to states, tribes, and territories to subsidize child-care costs through reimbursements to child care providers and improve the quality of early learning programs.

CCDF remains critical to child-care access for low-income families, who spend a significantly higher portion of their income on child care than higher-earning families. SEF supported the following changes proposed by ACF to strengthen CCDF and better fulfill its goal of supporting children, families, and providers.

Lower families’ child care costs: SEF supports ACF’s proposal to limit the copayments of CCDF participants to 7% of each eligible family’s total income, a benchmark set by HHS in 2016. Copayment rates for certain families are currently higher than 7% in several states across the South, including Florida (11%), North Carolina (10%), and Texas (12.5%). Lowering copayments of eligible participants to 7% of a family’s total income would be a significant step forward in addressing the disproportionate costs for child care faced by low-income families.

We also urged ACF to require higher reimbursement rates for child-care providers to better cover their costs and ensure access for low-income families. Many states’ current reimbursement levels for providers participating in CCDF are too low and often result in families being charged more than their established copayment.

SEF also supports ACF’s proposal to allow state agencies that administer CCDF to waive copayments altogether for families earning less than 150% of the federal poverty level and those with children with a disability. In addition, SEF asked for additional flexibility to waive copayments for families with somewhat higher incomes and for vulnerable populations such as children with incarcerated parents and children experiencing homelessness.

Increase families’ child-care options and strengthen payment practices: Some states use grants and contracts with child-care providers to designate slots for subsidy-eligible children. SEF supports a proposal by ACF to require the use of grants and contracts to increase the supply of child care, particularly for three groups facing serious shortages: children with disabilities, infants and toddlers, and children requiring care during nontraditional hours. We recommended that these grants and contracts include family child care and family-friend-neighbor care, because these populations frequently use these types of care.

Lastly, SEF supports ACF’s proposal to pay providers before the delivery of care and based on the number of subsidized children enrolled rather than each child’s attendance rate. Child-care providers operate on thin budget margins and many cannot afford delays or decreases in payments. These changes will help align CCDF with the practices of the private-pay child care system, support the stability of providers, and encourage more providers to accept subsidy-eligible children.