Setting Child Care Subsidy Reimbursement Rates

The Child Care and Development Block Grant (CCDBG) requires Lead Agencies—states, territories and tribes—to certify that their provider reimbursement rates are sufficient to ensure that children eligible for Child Care Development Fund (CCDF) subsidies will have equal access to the child care market compared to children whose families pay for child care privately. To set provider reimbursement rates, Lead Agencies must use findings from a market rate survey or alternative methodology, such as a cost estimation model. Additionally, Lead Agencies must conduct a narrow cost analysis as part of the rate-setting process. Lead Agencies have broad latitude over the design of the methodologies they use. This report examines the different types of methodologies that can be employed to set child care subsidy reimbursement rates.