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). 7/1/2024 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 were 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) 110.25 Per Day 100.00 551.25 147.00 Per Day 75.00 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? Family Child Care for Infants (6 months) 59.03 Per Day 100.00 295.15 73.54 Per Day 80.00 Center Care for Toddlers (18 months) 85.97 Per Day 100.00 429.85 114.00 Per Day 75.00 Family Child Care for Toddlers (18 months) 59.03 Per Day 100.00 295.15 73.54 Per Day 80.00 Center Care for Preschool ers (4 years) 59.09 Per Day 100.00 295.45 61.00 Per Day 97.00 Family Child Care for Preschool ers (4 years) 49.15 Per Day 100.00 245.75 73.54 Per Day 67.00 Center Care for School- Age (6 years) 51.38 Per Day 100.00 256.90 47.00 Per Day 109.00 Family Child Care for School- Age (6 years) 49.15 Per Day 100.00 245.75 73.54 Per Day 67.00 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) 110.25 Per Day 100.00 551.25 147.00 Per Day 75.00 Family Child Care for Infants (6 months) 59.03 Per Day 100.00 295.15 73.54 Per Day 80.00 Center Care for Toddlers (18 months) 85.97 Per Day 100.00 429.85 114.00 Per Day 75.00 Family Child Care for Toddlers (18 months) 59.03 Per Day 100.00 295.15 73.54 Per Day 80.00 Center Care for Preschool ers (4 years) 59.09 Per Day 100.00 295.45 61.00 Per Day 97.00 Family Child Care for Preschool ers (4 years) 49.15 Per Day 100.00 245.75 73.54 Per Day 67.00 Center Care for School- Age (6 years) 52.81 Per Day 100.00 264.05 49.00 Per Day 108.00 Family Child Care for School- Age (6 years) 49.15 Per Day 100.00 245.75 73.54 Per Day 67.00 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: Through the implementation of the priority populations contracts on October 1, 2024, contract providers and FCC systems who were awarded DCF, Families Experiencing Homelessness, and Parent Under 24 contract slots were issued a support services cost reimbursement contract. This support services contract replaces the former ￿add-on￿ support services daily reimbursement rate. The former add-on rate is used to calculate the maximum amount of the reimbursement a program may receive to provide additional services to support priority populations. The new Priority Populations contracts allow contract providers and FCC systems to plan their budgets for family services, staffing models, and administrative expectations to fulfill contract needs. Cost reimbursement contract payments are made on a monthly basis through a request for funds process. Through this process, the contracted providers report the funds used to provide additional services and are reimbursed for that month’s expenses. EEC also offers a transportation add-on rate of $12 one-way and $18 two-ways per day, per child paid monthly based on enrollment for child care services. [ ] No. b. Has the Lead Agency chosen to implement tiered reimbursement or differential rates? [ ] Yes. [x] 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. [ ] Differential rate for non-traditional hours. Describe: ii. [ ] Differential rate for children with special needs, as defined by the Lead Agency. Describe: 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. [ ] Differential rate for higher quality, as defined by the Lead Agency. Describe: 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? In January 2025, EEC’s Board voted to approve adjusted rates based on the execution of the pre-approved alternative methodology. EEC prioritized increasing rates for different age groups, regions, and/or provider types based on the findings from the alternative methodology and made targeted adjustments to the rates that were furthest from the cost of care. Center-based infant and toddler rates and FCC over age 2 rates were a particular focus. EEC also incorporated a cost-of-living adjustment for all child care financial assistance rates regardless of setting type, age group, and region to reflect significant increases in overall costs in recent years. b. How did the Lead Agency determine that the rates are adequate to meet health, safety, quality, and staffing requirements under CCDF? The alternative methodology resulted in updated and refined cost models that estimate the cost of care to meet health, safety, quality, and staffing requirements under current licensing regulations by age group, program type, and region. For example, staffing assumptions are aligned with EEC regulations including required teacher-to-child ratios. Paid planning time is also included in the current cost of care model. Non-personnel costs include (and are not limited to) facility-related costs, necessary educational materials and equipment, child assessment and screening, staff training and professional development, other professional supports, and necessary fees, permits, and insurance. 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? EEC used findings from the alternative methodology to inform rate setting in fiscal year 2025. As a result, all of EEC’s child care financial assistance rates are at least 67 percent of the current cost of care. The cost models generated by the execution of the alternative methodology enable EEC to also consider additional program revenue to providers, such as C3 (which is operational grant funding based on a per child formula that allocates additional resources to programs that serve infants and toddlers and those utilizing CCFA; funding is provided monthly to approximately 90% of all licensed and funded programs). EEC will monitor progress toward covering an increasing percentage of the cost of care over time, accounting for both child care financial assistance rates and other program revenue sources such as C3. d. How did the Lead Agency account for the cost of higher quality while setting payment rates? EEC used findings from the alternative methodology to inform rate setting. Findings from the cost models enabled EEC to understand the extent to which child care financial assistance rates cover the current cost of care and the cost of higher quality care, which includes increased compensation, higher staffing levels, greater resources for materials and equipment, and staff training and education. EEC will monitor progress toward covering an increasing percentage of the cost of higher quality care over time through child care financial assistance rates and other revenue sources such as C3. 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. In addition to executing the cost-based alternative methodology, EEC’s external research partner conducted an analysis of tuition prices to understand trends in the market over time and the potential impact to families’ access to care, which were considered in determining payment rates in addition to costs. EEC also distributes state funding to almost 90% of all licensed programs and 98% of programs that serve children receiving Child Care Financial Assistance (CCFA) (also known as subsidies) through the Commonwealth Cares for Children (C3) program. Participating programs receive monthly funding based on a formula that incorporates a program’s licensed capacity, enrollment, setting type (center-based or family child care), ages served, hours of operation (full-time or part-time) as well as a tiered adjustment for programs that serve specific populations (e.g., children receiving child care financial assistance or subsidies). Additional information on average C3 payments is included in the table below. Between November 2024 and June 2025, a total of 1,107 center-based (CBC) programs were in tier 1 (which includes programs serving 25% or more children receiving CCFA) and received an average of $14,800 a month through C3. During the same period, a total of 3,695 family child care (FCC) programs were in tier 1 and received an average monthly payment of $1,885 through C3. The average monthly payment for all programs (FCC and CBC) in tier 1 was $4,916. Between November 2024 and June 2025, a total of 843 CBC programs were in tier 2 (which includes programs serving 1-24% children receiving CCFA) and received an average of $13,325 a month through C3. During the same period, a total of 274 FCC programs were in tier 2 and received an average monthly payment of $1,567 through C3. The average monthly payment for all programs (FCC and CBC) in tier 2 was $10,944.