Office of Child Care finalizes their rule on the Child Care and Development Funds

The heavily anticipated CCDF Final Rule regulating Child Care and Development Funds became public on February 29, 2024. The Office of Child Care has a page outlining the changes and will be offering a webinar to the field on March 7 from 3:30 to 4:30 p.m. EST.

The rule creates new conditions under which all states and tribes utilizing CCDF funds must operate. Perhaps appropriate for a Leap Day, the rule represents significant advances for the field, including: 

• Ensuring agencies pay providers for services ahead of service provision (known as prospective payment) to align more with how private providers get paid


• Paying providers based on enrollment rather than attendance, or a similar approach


• Capping family co-pays at 7 percent of income levels. The rule mentioned that about 22 states still charge some family co-pays above the 7 percent cap. States must report on how they will  take on any additional costs from the new policy rather than passing those costs on to providers accustomed to the larger co-pay amounts.


• Emphasizing the use of grants and contracts to build supply and increase slots, specifically stating these must be used for infants and toddlers, grants to underserved areas, and children with disabilities


• Clarifying that quality funds can be used to actively engage parents, providers, and staff in supporting subsidy policy and quality recommendations

The final rule details the Office of Child Care’s responses to the comments they received on the draft rule made public last August. The agency’s comments specifically mention receiving a number of comments from the school-age care community, and as a result, they did change the preamble of the final rule to communicate that school-age families also struggle with affordability and access to care.

The school-age field may need to ramp up work at the state level to promote the importance of understanding and responding to school-age supply issues, including in underserved areas. (Parent advocates in need of care can be particularly strong voices!) The focus on mandating state grants and contracts for identified supply issues in infant and toddler spaces, underserved geographic areas, and children with disabilities is critical. However, the field is aware of many school-age deserts where parents in need of school-age care cannot make use of their subsidy dollars, and states have effectively brought high-quality programming to high-need areas with specific school-age grant programs.

The language on grants and contracts in the final rule remains open to all types of grants and contracts: “Lead Agencies shall increase parent choice by providing some portion of the delivery of direct services via grants or contracts, including at a minimum for children in underserved geographic areas, infants and toddlers, and children with disabilities.” 

Additionally, in its responses to comments, the agency also reiterates its point of view: “ACF strongly encourages Lead Agencies to use grants or contracts for additional groups recommended by commenters” and provides a list that includes out-of-school time care/school-age providers.   

Afterschool programs and other programs that serve school-age students can remind state child care agencies that, in addition to the three mandated areas, grants and contracts that support school-age/afterschool providers are equally important to the mission of supporting children and families with high-quality access to care and development.

The final rule is expected to take effect within 60 days of the notice’s publication. The plan does provide flexibility. For example, in areas such as establishing the systems for prospective pay, the Office of Child Care is allowing states to apply for up to a two-year waiver to give states the time they need to bring the policy into effect.

The timing of the final rule is especially welcome, given that states are now in the process of preparing their three-year CCDF Plans for 2025-2027. The new plan pre-print draft, which was released in January, accounts for the majority of the changes that are seen in the final rule. States will now be considering both how to implement any changes in the rule and how to integrate those changes into their state planning vision, policies, and procedures for the next three years as they engage with interested parties in the state planning process. Learn more about the ongoing CCDF planning process requiring stakeholder involvement, and make sure to review the new draft of the pre-print released in January. Comments on the pre-print were due February 21, and a final version is expected soon.