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www.prenatal5fiscal.org 16 child care system, including the provider autonomy in the tuiDon senng. In 2023, New Mexico increased rates based on an update to the cost model that incorporated a new salary floor of $15 per hour, and the state is planning to update the model in 2024 as part of its CCDF plan submission for FFY25-27.

Virginia Virginia developed a cost esDmaDon model and received approval from ACF in 2022 to use this model to inform subsidy rate senng. Virginia’s cost model focuses primarily on compensaDon for the ECE workforce as the primary cost driver and uses kindergarten salaries as a benchmark.lii The model aligns lead teacher salaries at 85 percent of the average kindergarten teacher salary. The model includes costs for nine geographic regions, and while rates are sDll published by county, they are grouped into these nine regions, which align with the Commonwealth’s Ready Region early learning coordinaDng hubs.

In October 2022, the Virginia Department of EducaDon began paying new rates informed by the cost model, with reimbursement rates set at 75 percent of the esDmated cost of care for centers and up to 94 percent of the cost of care for family child care homes. In most localiDes and age groups, this led to an increase in rates. In some localiDes, rates stayed the same if the esDmated cost was at or below the market rate. Center-based rates for infants and toddlers increased for over 97 percent of localiDes and in family child care homes infant, toddler, and preschool rates increased in 99 percent of counDes.liii

The move to cost-based rates was part of several policy changes and investments made to increase affordability for families and support the overall ECE system in Virginia. Virginia made it allowable for providers to receive the maximum reimbursement rate even if their tuiDon prices were lower, recognizing the limited impact increased rates would have if providers conDnued to be constrained by what families could afford to pay.liv The Commonwealth also significantly decreased co-pays for families in the subsidy system as of January 2023. ParDcipaDng families pay up to $180 per month per child as a co-payment, with a sliding fee scale for families at incomes below that level, with those at or below 100 percent of the federal poverty level not required to make a family contribuDon.lv Virginia also increased the number of days they would pay subsidy providers for planned closures such as holidays, vacaDon, professional development or planning Dme, and increased the number of child absences days paid by subsidy.lvi Capacity to serve publicly-funded children in private senngs has increased by 12 percent between 2021 and 2023. lvii