2024 Child Care and Development Fund Final Rule: Frequently Asked Questions
The 2024 Child Care and Development Fund (CCDF) Final Rule updated regulations (45 CFR Part 98) to help working families afford child care and broadly support child care quality and accessibility in communities. These are Frequently Asked Questions about this final rule .
More information about the final rule can be found on the 2024 CCDF Final Rule Resource page.
Co-payments
Are there changes to whether child care providers may charge parents additional amounts above the required co-payment?
No, the 2024 final rule does not change the existing flexibility that allows Lead Agencies to decide whether to permit child care providers to charge parents above the amount of the subsidy payment and family co-payment, as long as the Lead Agency has demonstrated that the policy promotes affordability and access for participating parents. If a Lead Agency allows providers to charge additional amounts above the required co-payment, the 7 percent cap requirement applies to the Lead Agency required co-payment only.
Because this flexibility to Lead Agencies and child care providers impacts affordability for families and may present a barrier to child care access, we strongly encourage Lead Agencies to set child care provider payment rates to cover the cost of care to minimize providers’ need for such policies.
What is a sliding fee scale?
The CCDBG Act requires states and territories to have a sliding fee scale for determining family co-payments that is not a barrier to families receiving CCDF child care assistance (42 U.S.C. 9858c(5)). The sliding fee scale must, at a minimum, be based on income and family size, and cannot exceed 7 percent of family income, regardless of the number of children participating in CCDF (45 CFR 98.45(l)). States and territories have flexibility to determine how many tiers are included in their sliding fee scale but must have at least two tiers.
Can states and territories set the lowest tier of their sliding fee scale at $0 or 0 percent of family income?
Yes, states and territories have flexibility to determine the tiers of their sliding fee scale, as long as they have at least two tiers that are based on income and family size. Lead Agencies may set their lowest tier at $0 or 0 percent of family income.
What if a state or territory would like to charge a flat co-payment amount to families (e.g., $1 per week)?
States and territories have the flexibility to set the lowest tier of their sliding fee scale at a flat co-payment amount but are still required to have at least one additional tier as part of their sliding fee scale that is based on income and family size. If a state or territory sets their lowest tier above $0 (e.g., $1 per week), that co-payment amount must not be more than 7 percent of the family’s income.
Can a state or territory establish a sliding fee scale that only has flat co-payments for each tier? For example, the lowest tier is $1 per week and the second tier is $5 per week.
The sliding fee scale must take into account income and family size (45 CFR 98.45(l)(2)). If a state uses tiers that establish a flat co-payment that increases depending on the family’s income, there must also be a mechanism to account for differences in family size. For example, a state may establish flat co-payments by tiers based on percentage of the federal poverty level. Since the federal poverty level accounts for both family size and income, this approach meets CCDF requirements.
What does it mean to waive co-payments for families?
The 2024 CCDF Final Rule made it easier for states and territories to waive co-payments for more families. The Final Rule clarified that states and territories may waive co-payments for families based on the family’s income (e.g., families with incomes under 150% FPL) and/or based on characteristics of the family (e.g., families with a child in foster care or kinship care, families experiencing homelessness, families with a child with a disability, families with a child enrolled in Head Start) (45 CFR 98.45(l)(4). Policies that states and territories may have regarding waiving co-payments are distinct from their established sliding fee scale. When a state or territory is waiving a family’s co-payment, the state or territory is waiving its established co-payment rate based on the sliding fee scale for that family.
For example, a Lead Agency may establish a sliding fee scale with two tiers. The lowest tier is a co-payment of $1 per week per family for families with incomes up to 200% of FPL and the highest tier is capped at 1% of the family’s income for the rest of families being served. If the Lead Agency has a policy in place to waive co-payments for families with incomes up to 150% of FPL, the state could choose not to assess the $1 per week co-payment for families at or below that income threshold. (To comply with CCDF requirements, the Lead Agency must also ensure that no family is paying more than 7% of their income as a co-payment).
If the Lead Agency also has a policy in place to waive co-payments for families based on a child’s or family’s characteristics (e.g., a family with a child with a disability), the Lead Agency would be able to waive the co-payment established by the sliding fee scale (regardless of the family’s income) and assess a co-payment of $0 to the family.
How does waiving co-payments interact with a sliding fee scale if the lowest tier is $0 or 0 percent of family income?
Any policies that the Lead Agency may have in place to waive co-payments are separate from establishing a family’s co-payment based on the sliding fee scale. If a Lead Agency chooses to set their lowest tier of the sliding fee scale at $0 or 0 percent of family income, that does not mean that the Lead Agency is waiving co-payments for all families that fall within that tier. Instead, the Lead Agency will establish a family co-payment amount in accordance with its sliding fee scale at eligibility determination or redetermination, which would then be $0 or 0 percent of a family’s income. Therefore, in practice there is no cost to the family.
What if a Lead Agency’s lowest tier of its sliding fee scale is above 7 percent of a family’s income?
Lead Agencies are not allowed to charge a co-payment amount greater than 7 percent of a family’s income (45 CFR 98.45(l)(3)). If the Lead Agency’s minimum co-payment amount, as established by their sliding fee scale, is more than 7 percent of the family's income, the Lead Agency is out of compliance with CCDF regulations and must revise their policies so that no family is assessed a co-payment of more than 7 percent of a family’s income because that is a barrier to accessing and participating in CCDF.
Prospective Payments
Can a Lead Agency provide the subsidy payment to a parent, such as through an EBT card, that the parent then uses to pay the child care provider?
Yes, Lead Agencies may provide the subsidy payment to the parent, such as through an EBT card, as long as the funds are easily available for the parent to pay the provider in advance of or at the beginning of the delivery of child care services. While this practice is allowable under CCDF, OCC does not encourage it because it may be difficult for Lead Agencies to track funds and ensure they are used for child care services with an eligible child care provider.
If the Lead Agency chooses to provide the subsidy payment to a parent, the Lead Agency is responsible for ensuring funds are used for allowable purposes in line with their approved CCDF Plan (45 CFR 98.15(a)(1)), and it must be able to demonstrate that (1) CCDF funds provided to parents are used for child care and (2) child care providers meet all applicable health and safety standards (45 CFR 98.41). Lead Agencies must address these through internal controls as required at 45 CFR 98.68(a), including processes to ensure sound fiscal management, processes to identify areas of risk, processes to train child care providers and Lead Agency staff, and regular evaluation of the internal controls related to providing subsidy funds directly to parents.
If a Lead Agency provides the subsidy payment to a parent, are there additional considerations in addition to required internal controls?
Since Lead Agencies are responsible for meeting all CCDF requirements, including prospective payments to providers, but can’t reasonably control the parent’s actions to pay prospectively, we recommend, but do not require, Lead Agencies establish agreements that clarify expectations and facilitate timely parent payments, such as:
- a written agreement with the child care provider that includes information for the provider about how they will receive payment and what recourse they have if there is a problem with receiving payment on time;
- a written agreement with the parent that outlines expectations for when the parent will pay the provider; and/or
- an agreement between the provider and parent outlining when the parent will pay the provider based on the provider’s private pay practices.
There may be delays in payment delivery after the State issues the subsidy payment. Does a provider have to receive the payment by the beginning of service delivery? Or is it enough for the State to have sent the payment by the start of service delivery?
The Lead Agency must issue the payment in advance of or at the beginning of service delivery through a process by which there is a reasonable expectation for payment delivery at the beginning of services, but the actual payment does not have to be delivered by the first day of service delivery.
For children new to the subsidy program, there may be delays in getting payments to providers because of the time needed to set them up in the system. Is it ok to pay providers serving children new to CCDF after they have started services?
For the first service period for a child new to CCDF, Lead Agencies may pay the provider on a timely reimbursement basis to avoid delays in the child starting care. For the first service period only, payment does not need to be prospective.
Do the changes to how child care providers are paid impact the limitation on paying two child care providers for the same hours of care for the same child?
No. The 2024 Final Rule did not change the prohibition on paying two child care providers for the same hours of care for the same child. Additional assistance on ways to navigate these policies is forthcoming.
Can Lead Agencies limit how often a child can switch child care providers during the service period to ensure that two providers are not being paid for the same hours of care for the same child?
Lead Agencies may limit how many times a child can switch providers in a service period. Lead Agencies are encouraged to provide sufficient flexibility to support parent choice in changing child care providers.
Paying Based on Enrollment
Can we require a child to attend up to 8 hours during the service period to establish they still need care?
While Lead Agencies cannot reduce provider payments for occasional absence days, they may require a child to attend a minimum number of hours during the service period to ensure that the child still needs care.
The 2024 CCDF Final Rule requires states and territories to base a child care provider’s payment on a child’s authorized enrollment. What does ACF mean by “authorized enrollment”?
Authorized enrollment is the amount of time the Lead Agency has authorized a subsidy payment for the week, two weeks, month, or other service period.
If Lead Agencies are paying based on enrollment instead of attendance, can Lead Agencies still require the collection of attendance information?
Yes, all Lead Agencies still have the option to collect attendance information to ensure children are still participating in the program, but this must not impact the provider’s payment unless the child fails to meet a minimum requirement, as set by the state.
The 2024 CCDF Final Rule requires states and territories to base a child care provider’s payment on a child’s authorized enrollment. What does ACF mean by “authorized enrollment”?
Authorized enrollment is the amount of time the Lead Agency has authorized a subsidy payment for the week, two weeks, month, or other service period.
If Lead Agencies are paying based on enrollment instead of attendance, can Lead Agencies still require the collection of attendance information?
Yes, all Lead Agencies still have the option to collect attendance information to ensure children are still participating in the program, but this must not impact the provider’s payment unless the child fails to meet a minimum requirement, as set by the state.
Is it an improper payment if we pay a child care provider for the full authorized enrollment but the child does not attend every day?
No. If the Lead Agency’s policy is to pay the child care provider for absences, then the Lead Agency is following its own policies and it would not be considered an improper payment.
There are many reasons why children participating in CCDF may have extended absences from child care, such as illness or disruptions in transportation. These absences do not mean the child no longer needs care, and, when considered over the 12 months of a child’s CCDF eligibility, they often only make up a small portion of that time. Further, child care providers must still cover the fixed costs of providing child care, including personnel, rent, and utilities, whether the child is in attendance or not. Penalizing child care providers by not covering absence days may lead to providers choosing to no longer care for that child, disrupting the parent’s ability to work or attend school.
As noted above, Lead Agencies may track attendance and require certain minimum attendance requirements per service period to ensure that a child still needs care, but paying providers for full enrollment despite occasional absences is not an improper payment.
Grants or Contracts
Do children have to be eligible for CCDF in order to be served through a grant or contracted slot?
Yes. These are considered direct services, therefore, children must meet CCDF eligibility requirements. Also, providers must meet CCDF requirements in order to have a grant or contract to serve a child participating in CCDF.
What requirements about grants or contracts for direct services were added in the 2024 CCDF Final Rule?
To promote parent choice, the CCDBG Act requires states to provide families with the option of enrolling the child with a provider that has a grant or contract to provide child care services or a certificate (i.e. voucher) (42 U.S.C. 9858c(c)(2)(A)). The 2024 CCDF Final Rule amended the CCDF regulations to reflect the CCDBG Act and require Lead Agencies provide direct services through grants or contracts for infant and toddler care, for children with disabilities, and for families in underserved geographic areas (45 CFR 98.16(y); 45 CFR 98.30(b); 45 CFR 98.50(a)).
45 CFR 98.30(b) mentions the use of “some portion of the delivery of direct services” to be through grants or contracts. Can you define “some”?
OCC has not defined what “some” means. OCC recommends a reasonable number of slots proportional to the total number of slots that are CCDF funded in the state or territory.
Do states and territories have to use CCDF direct services funds to support grants or contracted slots in order to meet the requirements in the rule?
Yes, at least some portion of the funds contributing to the grant or contract must be from CCDF direct services funding.
45 CFR 98.30(b)(1) specifies that Lead Agencies must provide “some portion of the delivery of direct services via grants or contracts”. 45 CFR 98.50(a)(3) specifies that direct services must be provided using funding for CCDF direct services as described at 45 CFR 98.30(b)(1), including grants or contracts for slots for children in underserved geographic areas, for infants and toddlers, and children with disabilities. In addition, 45 CFR 98.50(b)(4) clarifies that CCDF funds used to meet the minimum quality spending requirements cannot be used to meet the requirement at 45 CFR 98.30(b)(1) to provide some direct services through grants or contracts. In other words, quality funds cannot be used to meet the grant or contracts requirements.
Do grant or contracted child care slots that are not funded by CCDF (e.g., only funded by state general revenue funds) meet the CCDF requirements to provide some direct services through grants or contracts?
No, grant or contracted slots that are not funded by CCDF do not meet the CCDF requirements. 45 CFR 98.30(b)(1) and 45 CFR 98.50(a)(3) require states and territories to use some CCDF funds toward providing direct child care services through grants or contracts. Therefore, only funding grant or contracted slots with non-CCDF funds is not compliant.
Are states and territories required to provide direct services through grants or contracts to each of the populations included in the CCDF regulations: infants and toddlers, children with disabilities, and children in underserved geographic areas?
Yes, states and territories must provide direct services through grants or contracts to infants and toddlers, children with disabilities, and children in underserved geographic areas (45 CFR 98.16(y); 45 CFR 98.30(b)(1); 45 CFR 98.50(a)). Providing direct services through grants or contracts for only one of the populations specified in the CCDF regulations is not sufficient to meet the CCDF requirements.
There may be overlap between the populations served by grants or contracts for CCDF services. For example, a Lead Agency may fund contracted slots for infants and toddlers in underserved areas. Is some overlap between the populations allowed?
Yes, some overlap is allowed between the three required categories of care: infants/toddlers, children with disabilities, and families in underserved geographic areas. However, there cannot be complete overlap between all three populations.
How do the requirements to pay providers prospectively (45 CFR 98.45(m)(1)) and based on enrollment (45 CFR 98.45(m)(2)(i)) interact with the requirement to provide some direct services through grants or contracts?
States and territories must pay providers in advance of or at the beginning of service delivery and based on authorized enrollment rather than attendance. The provider payment practices apply regardless of whether a provider is being paid through a certificate or voucher or through a grant or contract.
There may be times when a grant or contract child care slot is vacant. Can states and territories continue to pay the child care provider with CCDF direct services funds during an occasional vacancy of the contracted slot?
Yes, the lead agency may continue pay a child care provider with CCDF direct services funds when there are fluctuations in enrollment or when a contracted slot is occasionally, temporarily vacant. Lead Agencies have flexibility to determine how long a contracted slot can be vacant before they terminate payments. OCC encourages Lead Agencies to balance the need to provide stability to child care providers during fluctuations in enrollment with the need to ensure that limited CCDF funds are being used to provide care for children.
If a Lead Agency chooses to pay providers regardless of slight fluctuations in enrollment, how does this affect the improper payment requirement at 45 CFR 98.100(d)?
Lead Agencies may choose to pay providers a set amount for their contracted slots even if there are slight variations in enrollment during the contract period, and this will not be considered an error or improper payment under Subpart K — Error Rate Reporting.
What does “underserved geographic areas” mean?
OCC does not define “underserved geographic area” so it should be reasonably defined by the state or territory. States and territories should evaluate the distribution of child care availability across their state or territory and determine areas that have lower supply than demand, based on data and other factors considered by the Lead Agency. “Underserved geographic areas” may include neighborhoods, zip codes, or any other type of geographic regional metric.
How should Lead Agencies think about where their grants or contracts should be located across the state or territory?
States and territories need clear data and strategies to understand and address gaps in the supply of child care. The CCDF regulations at 45 CFR 98.16 (x) and (y) require states and territories to collect information about the data states and territories use to identify supply shortages and the strategies used to address them. The 2024 CCDF Final Rule added the requirement at 45 CFR 98.16(z) that states and territories use grants or contracts for direct services as one of the strategies to address supply shortages for children with disabilities, infants and toddlers, and children in underserved geographic areas.
OCC encourages states and territories to be thoughtful in their placement of grants or contracted slots. One of the required populations for grants/contracts is “children in underserved geographic areas” and OCC expects Lead Agencies to use existing data or other collected information to find providers in areas that are underserved and build supply using grants or contracts in those areas.