Public Statement
On Proposed Federal Changes to the Child Care and Development Fund (CCDF)
January 2026
Background and ContextÂ
In 2024, the District finalized its three-year Child Care and Development Fund (CCDF) State Plan, which governs how DC administers the child care subsidy program from 2024-2027. The plan was developed with input from the early childhood community and District agencies, and was approved by the federal government. The State Plan is a formal agreement that reflects policies DC committed to improve affordability for families and financial stability for providers.Â
Given this, Under 3 DC is deeply concerned by the recent federal proposal that could allow states to walk back many of these hard-won improvements.Â
Overview of the Federal ProposalÂ
On January 5, 2026, the Trump Administration released a Notice of Proposed Rulemaking that, if adopted, would change federal rules governing the Child Care and Development Fund (CCDF). The proposal begins a federal rulemaking process and is not currently in effect. The 30-day public comment period, which precedes the rule becoming final, ends February 4, 2026. Even if the rule is finalized, states would not be required to adopt the changes.Â
The proposed rule changes would allow states to roll back several important protections and improvements that were finalized at the federal level in 2024, and were incorporated into DC’s current CCDF State Plan.
What the Proposed Changes Are and Why They Are Harmful
The 2024 federal rules strengthened the child care subsidy program by making care more affordable for families and more financially stable for providers. The proposed federal changes would allow states to undo that progress by permitting them to:Â
- Eliminate the 7% cap on family copays
- This would allow family payments to rise above the federal definition of affordable child care (spending no more than 7% of household income on care), forcing families to make impossible choices and limiting access to early education opportunities at a child’s most critical developmental stage.Â
- Stop paying providers based on enrollment, instead allowing for payment based on attendance
- This would shift financial risk onto providers, who must cover fixed costs like educator wages and rent regardless of daily attendance. Enrollment-based payments reflect standard business practices and private-pay tuition practices and ensures providers can reliably keep classrooms open when children are temporarily absent due to illness or other disruptions.
- Remove the requirement for prospective subsidy payments to providers, instead enshrining the reimbursement model which makes retroactive payments Â
- Without predictable, upfront payments – payment schedules that would align with tuition requirements for non-subsidy families – providers struggle to make payroll and cover rent, increasing risk of closures and creating instability for working families.
- Remove the requirement to use some grants and contracts to boost the supply of infant and toddler care and to address other unmet needs
- This would weaken a key tool for increasing the quantity of infant and toddler care, of which there are shortages in the DistrictÂ
If the rule is finalized and adopted by states (which states will not be required to do), these changes would shift costs and risk onto families and child care providers – precisely the opposite of what the child care system needs during a workforce shortage and affordability crisis.
What this Means for the District
DC has been a national leader in strengthening its child care subsidy program and has implemented nearly all of the 2024 federal reforms through its approved 2024-2027 CCDF State Plan. Our Coalition has not heard that the Office of the State Superintendent of Education (OSSE) plans to roll back existing subsidy improvements in response to this proposal. We urge OSSE to make public commitments on this matter through official statements. Â
However, one critical improvement included in the 2024 federal rules – and reflected as a future commitment in DC’s State Plan – has not yet been implemented by the agency: prospective payments to providers. Prospective payments are essential to ensuring providers can meet payroll, pay rent, deliver high quality early learning experiences, and keep their doors open in service of the District’s earliest learners and working parents and their employers. OSSE previously received a waiver to delay prospective payments, estimating implementation would take at least two more years due to administrative and technology challenges. Given the clear benefits, we encourage OSSE to continue taking steps to implement prospective payments regardless of changes to federal requirements.Â
Notably, these proposed federal changes do not address DC’s current subsidy underfunding challenges and will not prevent a potential waitlist. Rolling back protections would only make the early learning system more fragile.
Our Ask of District PolicymakersÂ
Under 3 DC urges DC leaders to:
- Maintain and defend DC’s strong child care subsidy policies, regardless of federal rollbacks;
- Reject any effort to weaken affordability for families or payment stability for providers;
- Move forward with implementing prospective payments, so that child care providers have the predictable funding they need to pay staff and keep programs open – and so more providers are willing and able to accept subsidies, strengthening and expanding the supply of affordable child care in the District;
- Make these commitments a matter of public record
At a time when families are struggling with rising cost pressures on their budgets and child care providers are operating on razor-thin margins, DC must honor the commitments it made and continue building a subsidy system that embodies the District’s leading edge in early learning policy and practice.