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Report to the State of Vermont Child Development Division
Op#ons for Implemen#ng Structured Changes to the Vermont Child Care Financial Assistance Program
Submi&ed by Prenatal to Five Fiscal Strategies December 2023
Execu&ve Summary
Paying for child care is o1en one of the largest expenses in a family’s budget. The Child Care Development Fund (CCDF) is a federal and state funded program that supports families with this expense, subsidizing child care tuiDon so families can work or aFend school. In Vermont, this subsidy program is called the Child Care Financial Assistance Program (CCFAP) and is administered by the Vermont Department for Children and Families, Child Development Division. The Department is responsible for collecDng data to inform the reimbursement rates that providers serving eligible families receive. This has historically taken the form of collecDng data on current market prices within the child care sector, and then rates are set at a percenDle of those market rates. However, the nature of the child care market is such that this approach o1en leaves providers with insufficient resources to provide high- quality care and pay compensaDon that enables them to recruit and retain a stable workforce.
Recognizing the gap between what most families can afford to pay and the true cost of providing high- quality child care, in recent years Vermont has made significant public investments to support the child care sector. Alongside these investments, the state is implemenDng structural changes to how the program operates to ensure it works as intended for children, families, and providers. This report discusses changes related to how subsidy reimbursement levels are determined. Specifically, the report reviews (1) how Vermont currently determines subsidy reimbursement levels, (2) alternaDve approaches allowed under federal CCDF rules, (3) the impacts of these different approaches, and (4) the programmaDc and financial implicaDons of the approaches. The report also discusses approaches to determining the family co-payment, or family share, that many eligible families are required to contribute in addiDon to the subsidy. Finally, the report provides examples of how alternaDve approaches have been implemented in Washington, DC, New Mexico, and Virginia.