Your Guide to Understanding Indiana’s CCDF Voucher Changes

You’ve likely been hearing a lot in the news lately about the crisis surrounding CCDF vouchers and its effect on Hoosier families and child care programs. There are many moving parts and complicated pieces – we hope the below information makes things clearer for you.

What is CCDF?

Let’s start with the basics. The federal government funds the Child Care and Development Fund (CCDF) through the Child Care and Development Block Grant (CCDBG). The federal level awards these funds to state governments who distribute the dollars, with guardrails, based on their state’s needs. Indiana distributes these funds through its state agency, the Family and Social Services Administration (FSSA), which has several departments. One of these departments is the Office of Early Childhood and Out-of-School Learning (OECOSL), which oversees CCDF distribution.

The majority of CCDF funds are meant to cover tuition to licensed / regulated child care programs for low-income families. OECOSL distributes these funds via vouchers (not to be confused with the Indiana Choice Scholarship Program voucher).  OECOSL does not distribute funds directly to families. Instead, they pay eligible child care programs to cover some or all of the cost for each individual family. States may also use CCDF dollars to contract with other organizations to support families and child care programs. Some organizations help families get set up with the vouchers (such as Firefly and others across the state). Others support families and child care professionals more broadly (such as the now-defunct Child Care Resource and Referral Network and SPARK Learning Lab).

How do CCDF vouchers work for families and programs?

Eligible families must first apply for CCDF. This involves submitting a questionnaire and documents like pay stubs and proof of child citizenship / qualified legal alien status. Families are eligible if they:

• Earn less than 135% of the federal poverty level ($43,403 annually for a family of four)
• Are currently employed or actively working in an education/training program
• Have children that meet these requirements:
  • Are under 13 years old or under 19 years old if they have a documented special need
  • Are a U.S. citizen or qualified legal alien
• Choose a child care program that is eligible to accept CCDF vouchers

In order to accept CCDF vouchers, child care programs must also meet eligibility requirements. OEOCSL does not require licensed and regulated child care programs to accept CCDF. Individual programs may limit the number of children with vouchers at their discretion, based on their business needs. OECOSL has set rates at which they reimburse a child care program for each child with a CCDF voucher. This rate varies by county, child’s age, and Paths to QUALITY level. Child care programs may choose to charge families more than OECOSL reimbursements if their actual cost of providing care is higher than what OECOSL reimburses them.

What has changed with CCDF in the past year?

OECOSL implemented a number of changes to funding for CCDF recently:

• CCDF voucher waitlist: In December 2024, OECOSL implemented a waitlist for families applying to receive new CCDF vouchers. There are now approximately 29,000 low-income children who qualify for CCDF but are waiting to receive a voucher.
• Tightened CCDF eligibility: State legislators passed a bill in April that lowered a family’s income requirements from 150% of federal poverty level ($48,225 for a family of four) to 135% ($43,403 per year for a family of four). Families actively looking for work also no longer qualify for vouchers.
• Cuts to reimbursement / payment rates: Effective October 5, 2025, Indiana reduced how much it reimburses child care programs per child under the voucher program. The infant/toddler rate decreased by 10%, preschool rates went down by 15%, and school-aged children will see a 35% decrease.
•  On My Way Pre-K program separation from CCDF funding: Indiana’s financial supports for low-income four-year-olds will no longer be funded through CCDF dollars. As program costs move to OECOSL, they implemented caps of 2,500 children enrolled and $6,800 per child annually.  Income eligibility now stands at 140% of the federal poverty level, down from 150%. Similar to CCDF, job search is no longer a qualifying activity for eligibility. Learn more about On My Way Pre-K.
• Reduction in support services for families and child care programs: OECOSL sunset several contracts with support organizations, including Child Care Answers, who provided much-needed individualized support for families and child care programs, especially those in marginalized and immigrant communities. Read more about alternate supports for families and child care professionals.

How do these changes affect Hoosiers?

The combination of all of the above changes has ripple effects throughout the entire state. We are hearing stories directly from families and child care programs that reflect new hardships or exacerbate existing ones. Here are just a few:

Families and children

“The CCDF funding has truly changed my family’s life. Without it, the cost of sending just two of my children to a daycare I trust would be more than double my rent. As a nursing student, trying to balance school, work, and the rising cost of everything, I would never be able to give my kids the safe, quality care they deserve. Because of CCDF, my children have access not only to a safe environment but also to real learning opportunities. My oldest started kindergarten already knowing how to read and so much more, and I know that came from being in a high-quality early learning program. If these cuts happen, families like mine will be left with heartbreaking choices including unsafe, low-cost unlicensed care, or giving up school and work altogether. Childcare isn’t just babysitting; it’s an investment in our children’s future.” – Jasmine Johnson, Marion County Parent

• Fewer families are eligible to receive financial supports. Because of the tightened eligibility requirements, the definition of “low-income” has shifted. If a family of four earns just $43,404 per year, they make too much to receive CCDF vouchers. If a parent loses a job, they will also lose their CCDF voucher while they are job hunting.
• Families who do qualify must wait to receive benefits. OECOSL does not release data on the average length families must wait to receive a voucher. Waitlist numbers more than quadrupled to over 29,000 children since Early Learning Indiana reported 7,600 in January.
• Most families with CCDF vouchers will pay more out-of-pocket for child care. Because of the reimbursement rate cuts, many child care programs may be forced to pass the cost along to families.
• Cost increases for all families. As child care programs lose revenue, they may increase tuition rates for all families across the board. This allows them to recover shortfalls from CCDF reimbursements to keep their programs afloat.
• As child care costs go up, many families choose to stay home or find alternate care arrangements. Many times, the cost of child care and costs associated with working end up being more than a parent’s paycheck. Some families may choose to stay home with their child instead, stalling career growth and opportunities for future employment. Others may choose to rely on child care through an unlicensed caregiver. This could affect child safety, kindergarten readiness, and development socially, emotionally, physically, or academically.
• Increased difficulty finding a child care program. The financial impact of CCDF reimbursement rate cuts will likely lead to closures of classrooms or entire child care programs. That means that families will have less choice and may need to travel farther. These changes also may lead many child care programs to not accept CCDF, lessening the options for families with vouchers.

Child care programs

“The recent reductions in CCDF funding have had a devastating effect on our childcare center. With many families no longer able to afford care without this critical support, we have experienced a significant drop in enrollment. In order to keep our doors open, we have been forced to raise tuition rates, which places an additional burden on working families. These funding cuts have also created a strain on staffing. We have already reduced the number of staff members, including essential educational support staff, and have been unable to maintain the same level of in-house professional development. In addition, we will soon be required to implement provider overage charges, further impacting affordability for families. As a direct result of these challenges, we were left with no choice but to close our school-age classroom. This loss not only disrupts continuity of care for children but also impacts the trust and stability families once relied on. If the funding situation does not improve soon, we are facing the very real possibility of closing our center entirely in the coming months. CCDF funding has been a lifeline for both childcare providers and the families we serve. Without immediate changes to restore or stabilize funding, the future of our center—and many others like it—is at risk”.  – Holly Maxwell, Boone County Child Care Provider

• Impact to child care programs’ bottom line. Child care programs operate on razor-thin margins just to keep their doors open. Loss of income from CCDF reimbursements may force programs to make hard decisions to stay in the black:
  • Laying off staff
  • Shuttering classrooms
  • Discontinuing service to much-needed but more expensive care for infants, school-agers, and children with special needs
  • Increasing tuition rates
  • Requiring CCDF families to make up the difference in lost costs
  • Discontinuing support of CCDF families
• Decreased enrollment. As families are increasingly less likely to use licensed / regulated child care programs, programs lose income which perpetuates the cycle.
• Struggle to maintain quality care. A quality child care program’s budget includes room for a respected curriculum and learning materials for children. Programs may may need to scale back purchases of these items due to lost revenue.
• Strain on child care staff.  Finding qualified, dedicated child care professionals has always been a struggle; tightened budgets may lead to lower pay and increased child-teacher ratios. In addition, child care professionals often take on the emotional burdens of the families and children as they struggle to pay increased rates.

Communities and employers

“The reduction of funding for childcare vouchers poses a risk at multiple levels to our community, but especially to working-class lower-income individuals… Feedback from last week in our neighborhood center is that individuals are increasingly presenting for assistance with eviction notices because their financial troubles have escalated to that level. I fear we are on the precipice of a cliff and we are about to fall off of it….Decreasing voucher support increases expenses on these individuals. Since expenses increase, they will either need to increase revenue to offset the added cost (but they have already maximized this because they are struggling AND are working to try and improve their lives)…Many families will decide that they are better off pulling their child from early childhood education. That means many will choose to stay home with their child and will quit working. Many will choose to revert to non-educational oversight for their child… Fewer people working result[s] in a decrease in GDP and an increase in reliance on limited charity available…Net result is a worsening of childcare deserts which we just started making ground on. The next generation of citizens will have worse outcomes because of a lack of early childhood education… The ROI on sending a child to early childhood education is off the charts when compared to the ROI of so many of the drugs we take and see as critical….So, in my opinion, this reduction in funding is particularly harmful. It harms us in the short term by causing educational centers to close, force families to choose if they will work or stay home to watch their child, and those families will have less money overall to spend in our community and will instead seek charitable shelter (which is not keeping up). In the long-term, we will fail to capitalize on a relatively inexpensive means (from a community impact standpoint) to improve the trajectory of the next generation of citizens and make our communities strong.” Mark Herriman, President & CEO of United Way of St. Joseph County

• Fewer parents in the workforce: When families lose or can’t access child care vouchers, many parents are forced to cut back hours, turn down promotions, or leave their jobs altogether. As a result, Indiana’s already tight labor market could see even fewer available workers.
• Strain on local businesses: Employers across Indiana already cite child care challenges as a major barrier to attracting and retaining workers. These new voucher cuts will intensify that pressure: Workers who can’t find or afford care are more likely to miss shifts, quit, or turn down job offers. Employers may face increased absenteeism, lower productivity, and higher turnover costs.
• Economic ripple effect: Child care is an economic driver.  Parents and child care programs who have tightened budgets spend less in their communities. Tax revenues decline when incomes decline and proceeds from sales tax decrease when families and child care programs are spending less.
• Future strain on K-12 education: Children who lose access to quality early care and education may start kindergarten behind their peers in language, social skills, and literacy. This increases the responsibility of K-12 educators to support children to ensure graduation and success beyond,
• Decreased equity across communities: Early educators, often women of color, face instability, worsening the gender and racial pay gaps in local economies. Decreased supports for those with limited English proficiency make a complicated system even more difficult to navigate. The gap in child care access for rural communities will widen even more as few child care spots are available or programs close.

So, what now?

Agents for change are already mobilizing.  A few to consider joining and/or supporting:

• Indiana Association for the Education of Young Children – Action alert and sample letters to legislators
• Hendricks County Workforce Coalition child care task force
• Invest Hamilton County Childcare Action and Investment committee
• Boone County Early Learning Coalition

Have something to share? Go straight to the source!

• Contact OECOSL via the following methods:
  • Call the child care support line at 800.299.1627
  • Email via the contact info on their website
  • Submit through the FSSA contact form
• Contact your elected officials using INAEYC’s sample templates

Keep an eye on our social media channels and sign up for our mailing list so we can share additional opportunities as they arise.