State child care subsidy system reimburses center-based child care at or above the 75th percentile of current market rates

State child care subsidy system reimburses center-based child care at or above the 75th percentile of current market rates

Higher-quality child care and early education has been found to benefit low-income children in promoting positive child development outcomes to a greater extent than their more affluent peers. In response to federal efforts to expand high-quality child care to more children, some states have begun to reimburse center-based child care for children receiving a child care subsidy at or above the 75th percentile of the current market rates.
Increasing the state reimbursement percentile allows more families to access higher-quality child care using a child care subsidy. Additionally, higher reimbursement rates allow providers to serve more families receiving a subsidy, since the cost for serving those families is covered.
The National Women’s Law Center reports whether state payment rates are at or above the 75th percentile of current market rates in Table 4b of the source document. Payment rates are considered to be at this level if rates in all (or nearly all) categories—such as different regions, age groups, types of care, and quality levels (including the base rate)—are at or above the 75th percentile of current market rates. Data are current as of 2020.

Greenberg, E., Isaacs, J. B., Derrick-Mills, T., Michie, M., & Stevens, K. (2018). Are higher subsidy payment rates and provider-friendly payment policies associated with child care quality? Urban Institute Center on Labor, Human Services, and Population. https://www.urban.org/sites/default/files/publication/96681/are_higher_subsidy_payment_rates_and_provider-friendly_payment_policies_associated_with_child_care_quality_1.pdf
Child Care Aware of America. (2019). 2019 CCDBG state snapshots. https://info.childcareaware.org/ccdbg-2019-state-snapshots

Source:
Schulman, K. (2020). On the precipice: State child care assistance policies 2020. National Women’s Law Center. https://nwlc.org/wp-content/uploads/2021/05/NWLC-State-Child-Care-Assistance-Policies-2020.pdf

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