The Office of Child Care (OCC) is pleased to announce the release of new policy resources for Child Care and Development Fund (CCDF) Lead Agencies that are implementing policies to improve payments to providers by basing subsidy payment rates on the cost of providing care and working to come into compliance with requirements included in the 2024 CCDF Final Rule published March 1, 2024.
Guidance on Cost-Based Alternative Methodologies and Evaluation Criteria for Establishing CCDF Subsidy Payment Rates
OCC published a Program Instruction, Guidance on Cost-Based Alternative Methodologies and Evaluation Criteria for Establishing Subsidy Payment Rates, for State and Territory CCDF Lead Agencies that are interested in developing and conducting cost-based alternative methodologies for CCDF provider payment rate setting. By using cost-based alternative methodologies, Lead Agencies can set payment rates that capture the costs of providing care rather than child care prices that are constrained by what parents can afford to pay. Payment rates that effectively reflect the cost of care increase parent choice in child care arrangements, improve access to high-quality care that meets family needs, improve provider operational stability, increase child care quality, and better support workforce compensation, recruitment, and retention.
The Program Instruction builds on previous guidance that outlined the option for states and territories to conduct an alternative methodology in lieu of a market rate survey to inform and set CCDF payment rates, and the requirement for OCC pre-approval of all alternative methodologies.
The new Program Instruction provides further guidance on what Lead Agencies should include in the required pre-approval submission and OCC’s expectations for assumptions included in any cost-based methodology to ensure validity; information describing what Lead Agencies will need to submit as an amendment to their FFY 2025-2027 CCDF Plan when submitting or updating their payment rates; and guidance on how OCC will assess whether payment rates set by a cost-based methodology meet the CCDF equal access requirement.
OCC encourages Lead Agencies to consider proposing cost-based alternative methodologies and hopes that this Program Instruction provides the clarity that states and territories requested to move forward with setting CCDF payment rates using already approved proposals, as well as develop new proposals during the FFY 2025-2027 CCDF Plan period.
The Program Instruction, Guidance on Cost-Based Alternative Methodologies and Evaluation Criteria for Establishing Subsidy Payment Rates, can be found here.
2024 CCDF Final Rule Frequently Asked Questions (FAQs)
In March 2024, OCC published a final rule on Improving Child Care Access, Affordability, and Stability in the Child Care and Development Fund updating CCDF regulations (45 CFR Part 98) to lower the cost of child care for families participating in CCDF, increase participating parents’ options in finding child care that meets their families’ needs, ensure child care providers are paid more fairly and on time for the essential work they do, and make it easier for families to apply for CCDF assistance.
In response to questions from CCDF Lead Agencies, OCC has published Frequently Asked Questions (FAQs) related to the 2024 Final Rule. This new resource is intended to help Lead Agencies implement their child care programs by clarifying CCDF rules and flexibilities. The FAQs cover several topics including family co-payments, prospective payments to providers, paying based on enrollment, and grants or contracts for direct services.
The FAQs can be found here. More information about the 2024 CCDF Final Rule can be found on the 2024 CCDF Final Rule Resource page.