We revised our subsidy eligibility redetermination window, extending it from 6 to 12 months. That single administrative change had a real impact: it significantly reduced the number of families who lost access to childcare due to missed paperwork or short-term income fluctuations. From an educational standpoint, it meant fewer interruptions in early learning. Providers benefited too; they could rely on more stable enrollment and revenue, enabling them to retain qualified educators and keep classrooms open in lower-income neighborhoods.
As someone who supported subsidy-dependent providers through the funding cliff, one contracting tweak that made a real difference was raising base CCDBG rates to the 75th percentile and locking them in for multi year periods. With the end of temporary funds, providers had to deal with rising wage and rental costs, while their reimbursements had not kept up with inflation. After the contract adjustment, a small center that serves primarily low income families avoided losing subsidy slots because the increased, predictable rate allowed the provider to maintain their staffing. After the adjustment, enrollment was stable after two months, and turnover was decreased. The key to the success of this change was that it addressed the fundamental issue of sustainability that is, that the reimbursement rate should reflect the true cost of providing care, not just be a short term solution.
I had the unique opportunity to work with the organizations that provide funding for early childhood programs. To be able to work with the providers throughout the funding cliff was much more than just a job for me, it was a chance to impact the family support system by making policy changes that truly kept the doors of the facilities open.One of these changes was from attendance based payments to enrollment based payments with CCDBG funds. Once stabilization funds ran out, many providers were losing a large amount of revenue because their staff and rent amounts remained unchanged, yet families were unable to send their children to the programs due to unforeseen absences from the program. By making this change, I was able to support one facility that was able to maintain usage of a full infant room because payment was determined by enrollment, rather than by daily fluctuations of headcount. This allowed the facility to keep staff employed, thus allowing them to continue serving subsidy families without having to close classrooms. By using this one policy change, we were successful because the policy change aligned the public funding to fit the real cost structure of child care, which is based upon capacity, rather than perfect attendance.
Changes giving CCDBG the flexibility to make payments prospectively based on enrollment rather than attendance helped to preserve more child care slots. I witnessed closures get averted in large part because, with payments based on enrolled children, providers were able to stabilize due to cash flow predictability and there was less reliance on attendance because of lags in payments due to absences. This, in turn, helped to reduce the cash flow shocks that served as a destabilizing threat to providers after the stabilization funds ended. This also allowed them to avoid reducing or closing classrooms and retaining the staff. This was beneficial to low-income families because they were able to retain their child care providers without significant administrative burdens. Providers were also able to stay open because the bankrupting fixed staff costs were aligned with the payment structures.