4.3 Adequate Payment Rates

The Lead Agency must set CCDF subsidy payment rates in accordance with the results of the current MRS or ACF pre-approved alternative methodology and at a level to ensure equal access for eligible families to child care services comparable with those provided to families not receiving CCDF assistance. Lead Agencies are also required to provide a summary of data and facts to demonstrate how payment rates ensure equal access, which means the Lead Agency must also consider the costs of base level care and higher quality care as part of its rate setting. Finally, the Lead Agency must re-evaluate its payment rates at least every 3 years. The ages and types of care listed in the base payment rate tables are meant to provide a snapshot of the categories of rates and are not intended to be comprehensive of all categories that might exist or to reflect the terms used by the Lead Agency for particular ages. If rates are not statewide, please provide all variations of payment rates when reporting base payment rates below. Base rates are the lowest, foundational rates before any differentials are added (e.g., for higher quality or other purposes) and must be sufficient to ensure that minimum health, safety, quality, and staffing requirements are covered. These are the rates that will be used to determine compliance with equal access requirements. 4.3.1 Payment rates a. Are the payment rates that the Lead Agency is reporting in 4.3.2 set statewide by the Lead Agency? [x] Yes. i. If yes, check if the Lead Agency: [ ] Sets the same payment rates for the entire State or Territory. [x] Sets different payment rates for different regions in the State or Territory. [ ] No. ii. If no, identify how many jurisdictions set their own payment rates: b. Provide the date the current payment rates became effective (i.e., date of last payment rate update based on most recent MRS or ACF pre-approved alternative methodology as reported in 4.2.1). 7/1/2025 c. If the Lead Agency does not publish weekly rates, then how were the rates reported in 4.3.2 or 4.3.3 calculated (e.g., were daily rates multiplied by 5 or monthly rates divided by 4.3)? Daily rates multiplied by 5 4.3.2 Base payment rates a. Provide the base payment rates in the tables below. If the Lead Agency completed a market rate survey (MRS), provide the percentiles based on the most recent MRS for the identified categories. If the Lead Agency sets different payment rates for different regions in the State or Territory (and checked 4.3.1aii), provide the rates for the most populous region as well as the region with payment rates set at the lowest percentile. Percentiles are not required if the Lead Agency also conducted an ACF pre-approved alternative methodology but must be reported if the Lead Agency conducted an MRS only. The preamble to the 2016 final rule states that a benchmark for adequate payment rates is the 75th percentile of the most recent MRS. The 75th percentile benchmark applies to the base rates. The 75th percentile is the number separating the lowest 75 percent of rates from the highest 25 percent. Setting rates at the 75th percentile, while not a requirement, would ensure that eligible families can afford three out of four child care providers. In addition to reporting the 75th percentile in the tables below, the Lead Agency must also report the 50th percentile and 60th percentile for each identified category. If the Lead Agency conducted an ACF pre-approved alternative methodology, provide the estimated cost of care for the identified categories, as well as the percentage of the cost of care covered by the established payment rate. If the Lead Agency indicated it sets different payment rates for different regions in the State or Territory in 4.3.1.a, provide the estimated cost of care and the percentage of the cost of care covered by the established payment rate for the most populous region as well as the region with rates established at the lowest percent of the cost of care. For each identified category below, provide the percentage of providers who are receiving the base rate without any add-ons or differential payments. Provide the full-time weekly base payment rates in the table below. If weekly payment rates are not published, then the Lead Agency will need to calculate its equivalent. i. Table 1: Complete if rates are set statewide. If rates are not set statewide, provide rates for most populous region. Percentiles are not required if the Lead Agency also conducted an ACF pre-approved alternative methodology but must be reported if the Lead Agency conducted an MRS only. Care Type Base payment rate (specify unit, e.g., per day, per week, per month) % of providers receiving Base rate Full-Time Weekly Base Payment Rate What is the percentile of the rate? (MRS) What is the 50th percentile of the rate? (MRS) What is the 60th percentile of the rate? (MRS) What is the 75th percentile of the rate? (MRS) What is the estimated cost of care? (Alternative Methodology) What percent of the estimated cost of care is the rate? Center Care for Infants (6 months) 67.00 Per Day 64.00 335.00 50.30 67.00 71.71 79.00 Family Child Care for Infants (6 months) 56.05 Per Day 84.00 280.25 89.60 45.89 45.89 47.96 Center Care for Toddlers (18 months) 67.00 Per Day 64.00 335.00 50.30 67.00 71.71 79.00 Family Child Care for Toddlers (18 months) 56.05 Per Day 84.00 280.25 89.60 45.89 45.89 47.96 Center Care for Preschool ers (4 years) 46.00 Per Day 64.00 230.00 40.60 50.00 59.00 65.00 Family Child Care for Preschool ers (4 years) 47.51 Per Day 84.00 237.55 79.70 38.90 40.00 40.65 Center Care for School- Age (6 years) 46.00 Per Day 64.00 230.00 49.00 47.00 52.25 59.20 Family Child Care for School- Age (6 years) 47.51 Per Day 84.00 237.55 79.70 38.90 40.00 40.65 ii. Table 2: Do not complete if rates are set statewide. If rates are not set statewide, provide rates for region with payment rates set at the lowest percentile. Percentiles are not required if the Lead Agency also conducted an ACF pre-approved alternative methodology but must be reported if the Lead Agency conducted an MRS only. Care Type Base payment rate (specify unit, e.g., per day, per week, per month) % of providers receiving Base rate Full-Time Weekly Base Payment Rate What is the percentile of the rate? (MRS) What is the 50th percentile of the rate? (MRS) What is the 60th percentile of the rate? (MRS) What is the 75th percentile of the rate? (MRS) What is the estimated cost of care? (Alternative Methodology) What percent of the estimated cost of care is the rate? Center Care for Infants (6 months) 67.00 Per Day 64.00 335.00 50.30 67.00 71.71 79.00 Family Child Care for Infants (6 months) 56.05 Per Day 84.00 280.25 89.60 45.89 45.89 47.96 Center Care for Toddlers (18 months) 67.00 Per Day 64.00 335.00 50.30 67.00 71.71 79.00 Family Child Care for Toddlers (18 months) 56.05 Per Day 84.00 280.25 89.60 45.89 45.89 47.96 Center Care for Preschool ers (4 years) 46.00 Per Day 64.00 230.00 40.60 50.00 59.00 65.00 Family Child Care for Preschool ers (4 years) 47.51 Per Day 84.00 237.55 79.70 38.90 40.00 40.65 Center Care for School- Age (6 years) 46.00 Per Day 64.00 230.00 49.00 47.00 52.25 59.20 Family Child Care for School- Age (6 years) 47.51 Per Day 84.00 237.55 79.70 38.90 40.00 40.65 b. Does the Lead Agency certify that the percentiles reported in the table above are calculated based on their most recent MRS or ACF pre-approved Alternative Methodology? [x] Yes. [ ] No. If no, what is the year of the MRS or ACF pre-approved alternative methodology that the Lead Agency used? What was the reason for not using the most recent MRS or ACF pre-approved alternative methodology? Describe: 4.3.3 Tiered rates, differential rates, and add-ons Lead Agencies may establish tiered rates, differential rates, or add-ons on top of their base rates as a way to increase payment rates for targeted needs (e.g., a higher rate for serving children with special needs). a. Does the Lead Agency provide any rate add-ons above the base rate? [x] Yes. If yes, describe the add-ons, including what they are, who is eligible to receive the add-ons, and how often are they paid: Site administered contracted providers may receive a 20% add-on to their payment rate for children who have a demonstrated disability. The additional funds are used by the provider for supports such as the purchase of adaptive equipment and securing specialized training for the caregiver. This differential rate was established when the site- administered contracts were first created. Illinois’ Quality Rating and Improvement System, ExceleRate Illinois, is accessible for licensed child care centers and licensed family/group child care homes. Licensed programs that have a Silver (10%) or Gold (15%) Circle of Quality receive an add-on for each CCAP child in care; license-exempt family child care providers completing Training Tiers receive an add-on for each CCAP child in care. The percentage ranges from 10%-20% depending on the tiers completed. [ ] No. b. Has the Lead Agency chosen to implement tiered reimbursement or differential rates? [x] Yes. [ ] No. Tiered or differential rates are not implemented. If yes, identify below any tiered or differential rates, and, at a minimum, indicate the process and basis used for determining the tiered rates, including if the rates were based on the MRS or an ACF pre-approved alternative methodology. Check and describe all that apply: i. [x] Differential rate for non-traditional hours. Describe: When care is provided more than 12 hours but fewer than 17 hours in a day, providers will use the full day rate for the first 12 hours of care and the part day rate for the remainder. When care is provided is for between 17 to 24 hours in a day, providers will use the full day rate for the first 12 hours and the full day rate for the remainder. ii. [x] Differential rate for children with special needs, as defined by the Lead Agency. Describe: Site administered contracted providers may receive a 20% add-on to their payment rate for children who have a demonstrated disability. The additional funds are used by the provider for supports such as the purchase of adaptive equipment and securing specialized training for the caregiver. This differential rate was established when the site- administered contracts were first created. iii. [ ] Differential rate for infants and toddlers. Note: Do not check if the Lead Agency has a different base rate for infants/toddlers with no separate bonus or add-on. Describe: iv. [ ] Differential rate for school-age programs. Note: Do not check if the Lead Agency has a different base rate for school-age children with no separate bonus or add-on. Describe: v. [x] Differential rate for higher quality, as defined by the Lead Agency. Describe: Illinois Quality Rating and Improvement System, ExceleRate Illinois, is accessible for licensed child care centers and licensed family/group child care homes. Licensed programs that have a Silver (10%) or Gold (15%) Circle of Quality receive an add-on for each CCAP child in care; license-exempt family child care providers completing Training Tiers receive an add-on for each CCAP child in care. The percentage ranges from 10%-20% depending on the tiers completed. These differential rates were established when the ExceleRate Illinois system was established. vi. [ ] Other differential rates or tiered rates. For example, differential rates for geographic area or for type of provider. Describe: vii. If applicable, describe any additional add-on rates that you have besides those identified above. Does the Lead Agency reduce provider payments if the price the provider charges to private-pay families not participating in CCDF is below the Lead Agency’s established payment rate? [ ] Yes. If yes, describe: [x] No. 4.3.4 Establishing payment rates Describe how the Lead Agency established payment rates: a. What was the Lead Agency’s methodology or process for setting the rates or how did the Lead Agency use their data to set rates? The former Lead Agency's Market Rate Survey calculates market rates based upon the daily full-time price of child care for the given child care market. As a result, we further selected only those active providers accepting children on a full-time (or both full and part-time) basis and those who provide care during the school year or year round. Additionally, the sample was limited to those providers who gave valid enrollment/capacity data and valid rate information for at least one primary shift so that slot availability could be determined. Finally, the sample was limited to those providers who worked more than 35 hours a week and who indicated that their shift ran four or more days a week. This final sample includes 4,239 providers, which were further refined based on the analysis conducted. The Lead Agency relies on findings from the Market Rate Survey, combined with labor contract negotiations and the state's budget process, to set rates. b. How did the Lead Agency determine that the rates are adequate to meet health, safety, quality, and staffing requirements under CCDF? On April 20, 2023 the former lead agency was notified of non-compliance with the equal access provision of 45 CFR 98.45(a) due to Illinois rates for infants and pre-school age children cared for in centers. Illinois requires additional time to explore the best way to leverage both our recently submitted Narrow Cost Analysis and an updated MRS to ensure that we are paying rates that will allow for equal access to care by families receiving child care assistance. We have contracted with Afton Partners to assist us with identifying and implementing improvements to our cost modeling efforts. In addition to a review of the current market, and alternative cost modeling, Smart Start Child Care was introduced as part of Governor Pritzker’s SFY 2024 budget proposal. Smart Start proposes to increase State funding to provide additional supports for the child care market. Illinois will update its State Plan to reflect how new funding models may have an impact on this non-compliance finding. Although as a result of union negotiations, home providers are receiving rate increases effective in January and July of 2025, budget constraints prohibited an increase for center rates. The lead Agency continues to increase base payments rates based on the most recent Market Rate Survey and based on labor contract negotiations for home providers, toward the cost of providing high-quality child care services above and beyond basic health, safety, quality, and staffing requirements. c. How did the Lead Agency use the cost of care, either from the narrow cost analysis or the ACF pre-approved alternative methodology to inform rate setting, including how using the cost of care promotes the stabilization of child care providers? The current increases to daily rates were set through contract negotiations (for home providers) and the State budget process (for center providers). The narrow cost analysis helped to confirm adequacy of reimbursement rates for centers to meet basic licensing and federal CCDF requirements. As a result of union negotiations, home providers are receiving rate increases effective in January and July of 2025, however, budget constraints prohibited an increase for center rates. d. How did the Lead Agency account for the cost of higher quality while setting payment rates? The cost of higher quality is acknowledged with a percentage above the base payment rate for child care providers participating in the ExceleRate Illinois Quality Recognition and Improvement System. There are two circles of quality within the QRIS system that are linked to a higher quality rating. These circles are recognized as providing high quality care and are provided a percentage amount above the base in order to support the cost of providing higher quality care. e. Identify and describe any additional facts (not covered in responses to 4.3.1 – 4.3.3) that the Lead Agency considered in determining its payment rates to ensure equal access. NA