Are States required to take into account the cost of providing high quality child care?
Answer
Yes, the law requires States to take into account the cost of providing higher quality child care services when setting payment rates for providers serving CCDF children. The purpose of this provision is for States, when setting payment rates, to consider the level of subsidy needed to ensure that providers can afford the cost of fully implementing high quality care so that more low-income families can access that care – a purpose of the revised law. Base provider payment rates – including for those families without copayments -- should be sufficient to support quality, including compliance with all health and safety requirements, a well-trained, effective staff, a good learning environment, and the provision of age-appropriate learning activities or curricula. In addition, ACF encourages States to provide tiered payment with a sufficient rate difference between tiers to support higher quality in which teachers may meet higher education standards, more comprehensive health and family supports are offered, or particularly vulnerable populations receive more intensive development and learning supports.
Linking enhanced subsidy rates to higher quality is an important component of promoting quality, particularly when implemented in conjunction with other ongoing financial supports, assistance, and incentives. Besides tiered payment, another approach would be to set rates after considering the cost of providing quality care using a cost estimation model or other method. Another approach would be to track the participation rate of high-quality providers in the subsidy system (e.g., using indicators from a quality rating system to measure provider quality) and to adjust payment rates if necessary.
(Reference: Section 658E(c)(4)(B)(iii)(II))