All News & StoriesOn January 2, the U.S. Department of Health and Human Services (HHS) announced a notice of proposed rule making (NPRM) entitled “Restoring Flexibility in the Child Care and Development Fund (CCDF).” The NPRM is open for public comment until February 4. We encourage you to consider the information below and submit a comment to make your voice heard.
Rulemaking basics: CCDBG, CCDF, and the NPRM
Acronym soup
Governments love acronyms, and they are sometimes difficult to decipher. Here’s a reminder of the terms we have used or will be using throughout this post:
- CCDBG – Child Care Development Block Grant: The law that establishes funding for child care and other supports
- CCDF – Child Care and Development Fund: The pool of dollars that funds child care voucher subsidies
- HHS – U.S. Department of Health and Human Services: The federal agency that poses and makes rules for CCDF
- NPRM – Notice of Proposed Rule Making: The current changes up for discussion
- OIRA – Office of Regulatory Affairs: Federal office that reviews proposed rule changes
- OMB – Office of Management and Budget: Federal office that reviews proposed rule changes
The law (CCDBG) is the basis; the rule (CCDF Final Rule) supports it
The first step in the U.S. rulemaking process begins with a law; in our case, that’s the Child Care Development Block Grant (CCDBG). The CCDBG law authorized CCDF, which is the actual “pot of money” the federal government sends to states. CCDBG is very broad, giving much of the decision making about individual rules to each state.
The federal government can institute formal “rules” associated with a law that provide more structure. The HHS, under the Biden administration, passed the 2024 CCDF Final Rule which laid out rules for states to follow as they determined and implemented their own CCDF rules.
Implementing and revising a rule (NPRM)
To begin the process of implementing or revising a rule (like the 2024 CCDF Final Rule), an agency (like the HHS) develops a proposed rule. The proposed rule may go through a number of internal channels such as the Office of Regulatory Affairs (OIRA), Office of Management and Budget (OMB), and other federal agencies to determine significant effect on the economy and other policies.
When the proposed rule is determined to be significant, then the agency publishes the NPRM in the Federal Register, which is where you can currently see NPRM 0970-AD20. This is where the public can review the details of the NPRM and submit their comments.
The agency will review comments and consider them as they develop their final regulation. Then, internal agencies will again review and approve. Lastly, it is published as a final rule. While rare, Congress may choose to issue a joint resolution of disapproval of the published rule, or, affected parties may seek judicial review.
What NPRM 0970-AD20 means for child care
The NPRM proposes to rescind or modify some of the rules published in 2024. Implementation of these proposed changes would mean that, while the state of Indiana may choose to continue to follow some of the 2024 rules, they would no longer be required to follow certain rules by federal rule. The proposed changes include:
Eliminating caps on family copayments
2024 Rule: Says that CCDF families should not be required to pay more than 7% of their family income towards child care, after their CCDF vouchers kick in.
Proposed Changes: Revert back to 2016 language that simply states that copayments should not be a barrier to families.
Our take: Considering that average central Indiana families are paying anywhere from 14.7% to 22.6% for an infant in high-quality care, we know all families are struggling, CCDF families have a particularly tough situation to navigate; we need to protect them with clear, objective guidelines. The definition of what a “barrier” is to families is too vague to ensure families are protected.
Removing requirements for grants and contracts to support infants, toddlers, children with disabilities, and underserved geographies through direct services
2024 rule: Includes a mandate that states must use some grants or contracts specifically for infants, toddlers, children with disabilities, and underserved geographic areas. An example of how states can implement this includes grants to child care programs to guarantee spots for these groups of children. Indiana has not yet made significant progress towards this requirement.
Proposed changes: Remove the 2024 requirement.
Our take: Without this rule, Indiana has no obligation to implement a tool that could finally provide child care businesses the financial stability and predictability to expand options for children most in need. Child care programs frequently lose money on children who often cost more to serve than they bring in from vouchers and tuition payments. This forces child care programs to prioritize less-expensive preschool-aged care just to survive, leaving our most vulnerable children behind and the workforce struggling with unreliable care. We cannot afford to lose a solution that promises a high return on investment and a more stable future for Indiana’s families before it even begins.
Removing the requirement to adhere to pay by enrollment rather than by attendance
2024 rule: Simplified payment processes for child care programs in order to receive payment based on the number of children who were enrolled in their program. This was a change from the previous process which linked payments to child attendance. This process required families to swipe a card as they arrived and left their child care program each day, which was understandably an administrative burden for all.
Proposed changes: Repeal the pay by enrollment requirement for states and revert back to the 2016 rule. While states may continue to use pay by enrollment, they would no longer be required to do so under federal rule.
Our take: Indiana already spent a lot of time, money, and energy into switching to pay by enrollment policies…and child care programs tell us that it’s working. Child care programs already have a heavy burden to run their businesses on tight margins. By receiving payments based on a child’s enrollment they are able to better plan and accommodate fixed costs that do not necessarily go away when a child is absent, including staff pay, rent, and utilities. Pay by enrollment does NOT mean that child care programs are no longer tracking absences. They are required to continue to track and report this information to ensure that families are appropriately using the CCDF subsidies as designed.
Repealing requirement to pay child care programs at time of service
2024 rule: Requires that states pay child care programs at the beginning of the delivery of service, with limited exceptions. Indiana has not yet implemented this rule and continues to follow the 2016 rule which allows states to instead reimburse child care programs for services already provided.
Proposed changes: Remove the 2024 requirement.
Our take: In the private market, child care is not a “service now, pay later” business; in fact, 77% of directors and administrators require private-pay families to pay in advance to cover the immediate costs of staffing and resources. Yet, Indiana’s reimbursement model forces programs to float the costs of care for weeks before seeing a dime. When you combine the deep cuts recently enacted to reimbursement rates with delayed payments, it creates a liquidity crisis that many small businesses simply cannot survive. By making prospective payment optional rather than a requirement, we are choosing to maintain a broken status quo that punishes the very child care businesses who are trying to serve our state’s most vulnerable children.
Take action
It’s important for the HHS Administration for Child and Families Office of Child Care to hear from YOU by their February 4 deadline! There’s power in numbers and diversity of stories, whether you are a running a child care business, a working parent, a community leader, an employer, or simply a concerned citizen. To comment, you have two options:
- Comment online – you can type up to 5,000 characters and attach up to 20 documents or photos.
- Email OCCPolicyInfo@acf.hhs.gov – IMPORTANT: Make sure to include the Department of Health and Human Services and RIN0970-AD20 in your submission.
