Healey-Driscoll Administration Proposes Higher Reimbursement Rates for Child Care Providers

Proposal boosts payment rates for providers with a focus on infant and toddler care

Lowell - The Healey-Driscoll Administration today made a proposal to the Board of Early Education and Care to increase the amount the state reimburses early education and care providers who accept child care financial assistance, known as rates. The proposed increase would invest $22.5 million provided in the fiscal year 2025 budget to continue the state’s progress on moving toward a rate structure and payment levels informed by the cost of providing care,?with a particular focus on adjusting rates for infant and toddler care for center-based programs, while also addressing increased operational costs for all providers.

“Our administration is committed to making child care more affordable and accessible. These proposed rates build on the transformational changes we made last year for our hardworking providers, while increasing affordability for our low-income families,” said?Governor Maura Healey. “We’re proud that Massachusetts continues to lead the way in setting rates that better reflect the cost of care so our providers can invest in their educators and programming, families can continue to access care that meets their needs, and we can reduce child care costs for families.”?

“In Massachusetts, we are investing in child care so that regardless of zip code or economic background, our youngest learners receive the high-quality education they need to succeed in school and life. Improving child care financial assistance – from rates, policies and regulations and IT systems – is an essential part of this work,” said?Lieutenant Governor Kim Driscoll. “I am excited to see more about the impact these important proposed changes could bring to our state, making Massachusetts a more affordable place to live, learn and work.”?

The Department of Early Education and Care (EEC) reimburses providers of child care and out-of-school time programs that serve families receiving child care financial assistance with a daily per child reimbursement rate. These rates provide direct needs-based financial assistance to increase families’ purchasing power in the market and help pay for the cost of care. The proposed rates package includes:

• A 1-2 percent cost of living adjustment to rates for all child care financial assistance providers to address increasing operational costs,
• Targeted increases to infant and toddler center-based rates in specific regions, the age groups where the rates are farthest from the cost of providing care, and
• Raises center-based program rates to at least 73% of the cost of care based on a 2024 updated cost analysis.

Last year, EEC, with approval from the Board, used the cost of care for the first time to inform adjustments to rates and earlier this calendar year was one of the first six states in the country federally approved to move forward with an alternative methodology when setting rates for child care financial assistance.?The transformational changes made to rates last year were based on an analysis done by the Center for Early Learning Funding?Equity (CELFE) to understand the extent to which the state’s rates covered the cost of care and ways the agency could simplify the rate structure and address geographic inequities.?

Today’s proposal continues the administration’s progress on using the cost of care to bring all rates closer to the true cost of care. This past spring, EEC contracted with the American Institutes for Research (AIR) to update, refine, and expand the cost models, which informed this year’s proposal. Updated cost data reveal that program costs increased significantly over the past two years. One key finding is that almost all FY24 center-based infant and toddler rates are now below 80 percent of the 2024 cost of care. 

“Our administration believes that expanding access to more affordable, high-quality early education and care is the first step to ensuring every child has access to the education they deserve, regardless of their circumstances or background,” said?Secretary of Education Patrick Tutwiler.?“These proposed rate changes continue our efforts to transform the state’s child care financial assistance system to be the system that our students, families and early education and care providers deserve.”?

“We have been focused on making our child care financial assistance?programs family focused, accessible, dignified and equitable,” said?Early Education and Care Commissioner Amy Kershaw.?“By continuing to make progress on our rates better reflect the cost of care, with an intentional focus on equity through targeted increases that focus on closing the biggest gaps between our rates and the cost of care, we are enabling our providers to better recruit and retain their staff and invest in high-quality initiatives without transferring those costs onto families.”?

“I am grateful for the Board and the Healey-Driscoll administration’s partnership and continued efforts to promote, and support programs to provide equitable, affordable and accessible, high-quality early education and care across Massachusetts. Together last year, and with support from the Legislature, we made transformational changes to how the state thinks about and sets rates. Thank you to Commissioner Kershaw and her team for their thoughtful, data driven rate proposal this year that builds off those changes. The Board looks forward to this continued conversation and work ahead,” said?Paul?Belsito, Chair of the Board of Early Education and Care.?

The full list of proposed rates can be?found online. The Board of Early Education and Care plans to vote on this proposal this winter.

Relatedly, Boston University?and Brandeis University, in partnership with EEC, received a federal research grant to study child care financial assistance rates and the impact of rates on family access to care and program participation in the child care financial assistance system. As part of this work, they conducted focus groups last spring with early education and care programs on the impact of the rate changes over the past two years. Many participating programs were appreciative of the new higher rates, especially for those whose reimbursement rates are now much closer to their private pay prices. Programs indicated that they used the increases for operational expenses, necessary program improvements or increased staffing. While a step in the right direction, some providers did note the increases were not yet close enough to the true price of providing care. Here is a sampling of the feedback?received:

“Last year’s [reimbursement rate increase], for us, was really helpful. To the point that the finance director for our agency said to me, ‘Is this right?’. You know this is way more than what we’ve experienced.” (Participating Center)

“For us, [the reimbursement rates] are so much better. You know, which is great. I think for toddler or preschoolers we’re at like […] 73% or 72% of […] what our private pays. And with infants and toddlers, it’s in the 90s, which is great.” (Participating Center)

“We have actually increased our staffing. You know, we initially had [increased our staffing] during COVID for health and safety […] reasons. And we’ve kept that, which I guess, indirectly, might enable us to be more effective with high needs children.” (Participating Center)