U.S. Department of Health and Human Services 
Office of Inspector General 
 
States Payment 
Rates Under the 
Child Care and 
Development Fund 
Program Could 
Limit Access to Child 
Care Providers 
 
OEI-03-15-00170 
Suzanne Murrin 
August 2019 
Deputy Inspector General 
 
for Evaluation and Inspections 
oig.hhs.gov  Report in Brief  U.S. Department of Health and Human Services 
August 2019 
Office  of Inspector General 
OEI-03-15-00170 
 
 
States Payment Rates Under the Child Care and 
Why OIG Did This Review 
The Child Care and Development  Development Fund Program Could Limit Access 
Fund (CCDF) program, for which 
to Child Care Providers 
fiscal year (FY) 2018 Federal funding 
totaled $8.2 billion, provides child 
What OIG Found 
care subsidies for 1.4 million eligible 
The majority of child care providers charge more for full-time infant care than States 
children.  CCDF program payments, 
CCDF payment rates.  As a result, CCDF families access to care may be limited unless 
which are administered by States, 
they can pay the difference between provider prices and State payment rates.   
allow eligible low-income parents to 
Operating with finite resources, States 
work or pursue training or education 
while their children attend child care.   must balance competing priorities and  Key Takeaways 
perform tradeoffs between raising   
If States set CCDF payment rates too   The majority of child care providers 
payment rates, serving eligible families, 
low, families may not have access to  charge more for infant care than 
and ensuring compliance with program 
child care providers.  The  States payment rates, which could 
requirements.  ACF does not evaluate 
Administration for Children and  limit access to care for CCDF 
States CCDF payment rates, nor does it 
Families (ACF) is responsible for  families  
overseeing States CCDF payment  determine whether States have ensured    Operating with finite resources, 
equal access to child care services for 
rates and ensuring that eligible  States must balance competing 
eligible families.  We found that only 
families have equal access to child  priorities when setting payment 
seven States have set their CCDF 
care services.  The only proxy for  rates 
payment rates at the level that ACF 
ensuring equal access that ACF has   
 ACF does not evaluate States 
recommends for ensuring equal access. 
recommended to States is setting 
compliance with the Federal 
CCDF payment rates at a level that  The majority of States have implemented 
equal-access provision 
covers 75 percent of child care  provider-friendly payment practices,   
 Only seven States set payment rates 
provider pricesreferred to as the  such as paying providers timely, to 
at the level that ACF recommends 
75th percentile.    incentivize providers to participate in the 
for ensuring equal access 
CCDF program and ensure access for 
How OIG Did This Review 
eligible families.  However, some 
We surveyed a nationwide sample of  providers still report concerns about payment amounts, payment frequencies, and 
licensed child care providers,  other administrative burdens associated with CCDF program participation. 
including centers and family child 
What OIG Recommends  
care homes, to obtain child care 
As only seven States set payment rates at the level ACF recommends, ACF should 
pricing for an infant with no special 
evaluate whether States are ensuring equal access for CCDF families, as required.  
needs.  We compared providers 
ACF should consider developing additional proxies for equal accessapart from 
prices to States CCDF payment rates 
setting rates at the 75th percentile of provider pricesthat would allow it to evaluate 
and estimated the difference 
States progress toward meeting the requirement.  Additionally, ACF should ensure 
between these amounts.  We 
that States comply with the new requirement to use the results of the most recent 
surveyed States to examine how 
market-rate survey, or alternative methodology, to set CCDF payment rates.  
they determine that their CCDF 
To encourage States to learn about and potentially adopt successful practices, ACF 
payment rates are sufficient to 
should establish a forum for States where, at regular intervals, they can share 
ensure equal access to child care 
strategies regarding how they set payment rates to ensure equal access for eligible 
services for eligible families.  Lastly, 
families while balancing competing program priorities.  Lastly, ACF should encourage 
we interviewed ACF staff responsible 
States to minimize administrative burdens for CCDF providers, with a goal of 
for CCDF plan oversight to review 
encouraging provider participation and expanding access for eligible families.  ACF 
how ACF ensures that States CCDF 
concurred with all of our recommendations. 
provider payment rates are sufficient 
to ensure equal access for eligible  Full report can be found at http://oig.hhs.gov/oei/reports/oei-03-15-00170.asp
families.   
TABLE OF CONTENTS 
BACKGROUND  1 
Methodology  6 
   
FINDINGS   
The majority of child care providers charge more for infant care than States payment rates,  9 
which could limit access to care for CCDF families  
When setting CCDF payment rates, States face budgetary constraints and competing priorities     10 
ACF does not evaluate States payment rates to ensure compliance with the CCDF     
equal-access provision  12 
Some providers report concerns about CCDF payment practices, despite States efforts to  14 
incentivize providers to accept CCDF families 
   
CONCLUSION AND RECOMMENDATIONS   
Conclusion  17 
ACF should evaluate whether States are ensuring equal access for CCDF families, as required  17 
ACF should ensure that States comply with the new requirement to use the results of the most  17 
recent market-rate survey, or alternative methodology, to set CCDF payment rates   
 
ACF should establish a forum for States to share strategies regarding how they set payment  18 
rates to ensure equal access for eligible families while balancing competing program priorities   
 
ACF should encourage States to minimize administrative burdens for CCDF providers, with  18 
a goal of expanding access for eligible families   
 
AGENCY COMMENTS AND OIG RESPONSE  19 
 
APPENDICES   
A: Detailed Methodology    20 
B: Child Care Provider SurveyStatistical Estimates and Confidence Intervals    24 
C: CCDF Infant-Care Payment Rate Percentiles by State, Fiscal Years 2016-2018    27 
D: Agency Comments  29 
 
ACKNOWLEDGMENTS  32 
 
   
BACKGROUND 
OObbjjeeccttiivveess  
  
11..   TToo  ccoommppaarree  CChhiilldd  CCaarree  aanndd  DDeevveellooppmmeenntt  FFuunndd  ((CCCCDDFF))  pprroovviiddeerr  
ppaayymmeenntt  rraatteess  ttoo  tthhee  pprriicceess  cchhaarrggeedd  bbyy  cchhiilldd  ccaarree  cceenntteerrss  aanndd  
ffaammiillyy  cchhiilldd  ccaarree  hhoommeess..  
22..   TToo  reexvaimewin eef fhoorwts  Sbtya tSetsa tdeest eanrmd itnhee t Ahadtm thineiisrt rCaCtiDonF  pforro Cvihdieldr ren 
panadym Faemnti lriaetse tso a eren ssuurfefi ceiqenuta lt oa cecnessus rteo e cqhuiladl  caacrcee ssse rtvoi ccehsi ldfo cr are 
seelirgviibclees  ffaomr ielileigs.i ble families.  
33..   TToo  rideevnietwify h cohwa ltlehneg Aeds mthinatis ctrhaitldio cna froer  pCrhoivldidreerns  &fa cFea mini lies (ACF) 
epnasrtuicreipsa tthinagt  Sinta tthees  CCCCDDFF  pprroogvriadmer.  p ayment rates are sufficient to 
ensure equal access to child care services for eligible families. 
Child Care and Development Fund Program 
The CCDF program is a partnership between the Department of Health and 
Human Services (HHS) Administration for Children and Families (ACF) and 
 
CCDF Program Snapshot  States to provide child care subsidies to eligible low-income families.  It is the 
  third-largest block grant program that the Federal government administers, 
 CCDF is the 
with fiscal year (FY) 2018 Federal funds totaling $8.2 billion.1  CCDF funding is 
third-largest Federal 
made up of Federal funds and State matching funds.  The Child Care and 
block grant program. 
Development Block Grant Act of 2014 (the Act), signed into law on 
 CCDF funds help pay for  November 19, 2014, reauthorized the CCDF program through FY 2020. 
1.4 million children to 
Under the block grant, States have flexibility in the design and administration 
participate in child care 
of their CCDF programs and policies, which essentially leads to a different 
every month. 
program in each State.  States establish their own payment rates for 
 305,524 child care  providers that serve CCDF families, and these rates are highly variable both 
providers care for  within and across States.  If States set rates too low, they may be insufficient 
CCDF-eligible children.  to ensure equal access to child care for low-income families.2 
 Nearly half of the families 
CCDF Eligibility  
receiving CCDF subsidies 
States CCDF programs serve low-income families.  For purposes of CCDF, 
reported income below the 
the definition of low income is capped at 85 percent of State median 
Federal poverty level. 
income, adjusted for household size.  However, States generally set the 
  income-eligibility ceilings lower for their CCDF programs.  Children under 
age 13 in low-income families qualify for the CCDF program if their parents 
are working or pursuing education or training.3 
 
1 ACF, Final FY 2018 CCDF Allocations (Including Redistributed Funds), December 2018.  
Accessed at https://www.acf.hhs.gov/occ/resource/final-fy-2018-ccdf-allocations-including-
redistributed-funds on March 7, 2019. 
2 81 Fed. Reg. 67438, 67561 (Sept. 30, 2016). 
3 To qualify for the program, children also must be U.S. citizens or qualified aliens. 
States Payment Rates Under the CCDF Program Could Limit Access to Child Care Providers  1 
OEI-03-15-00170   
CCDF-eligible children are cared for in a variety of provider settings.  
Seventy-five percent of children are cared for in child care centers, 21 percent 
are cared for in family child care homes4, and 3 percent are cared for in their 
own home.5 
State CCDF Plans 
Every 3 years, States are required to submit a comprehensive CCDF plan to 
ACF for review and approval.  The plan serves as a States application for 
CCDF funds and an outline of how the program and funds will be 
administered.  Each State must ensure that its CCDF program complies with 
its approved CCDF plan and all Federal requirements.6 
In the section of the CCDF plan regarding States payments to child care 
providers, States must report provider payment rates and the percentage of 
providers that charge prices at or below the States payment rate.7  States 
report these percentiles for certain categories of child care in the geographic 
area of the State that serves the highest number of children.8  States provide 
information including increased payment rates for children with special 
needs and higher quality providers, and policies regarding additional fees 
that providers are permitted to charge to CCDF families.  In addition, States 
are required to describe in their CCDF plans their policies to ensure the 
timeliness of payments to providers. 
As reported in their FY 20162018 CCDF plans, 42 States have implemented 
a CCDF payment rate add-on, also called a tiered rate, for child care 
providers that meet higher quality standards, as defined by the State.9 
Equal Access to Child Care Services 
Federal statutes include an equal-access provision that requires States to 
 
4 As defined in the CCDF regulations, a child care center is a provider licensed or otherwise 
authorized to provide child care services for fewer than 24 hours per day per child in a 
non-residential setting.  A family child care provider is one or more individual(s) who provide 
child care services for fewer than 24 hours per day per child, in a private residence other than 
the child's residence.  45 CFR  98.2. 
5 ACF, FY 2017 Preliminary Data Table 3 - Average Monthly Percentages of Children Served by 
Types of Care, February 2019.  Accessed at https://www.acf.hhs.gov/occ/resource/fy-2017-
preliminary-data-table-3 on April 23, 2019.  For the remaining 1 percent of children, 
information on the type of care was invalid or missing.  
6 Section 658E of the Child Care and Development Block Grant Act of 2014; 45 CFR  98.16. 
7 45 CFR  98.16(r). 
8 For example, Nevada establishes CCDF provider payment rates for each of four market areas 
across the State.  However, in its CCDF plan for FYs 20162018, Nevada reported to ACF the 
payment rates and corresponding percentiles only for Clark Countythe area serving the 
highest number of children. 
9 Tiered or differential provider payment rates could include higher payment rates for child 
care programs that (for example) meet certain quality standards, have nontraditional hours, 
and/or serve children with special needs. 
States Payment Rates Under the CCDF Program Could Limit Access to Child Care Providers  2 
OEI-03-15-00170   
certify to ACF in their CCDF plans that their CCDF provider payment rates are 
sufficient to ensure that eligible children have equal access to child care 
services that are comparable to services provided to children whose parents 
are not eligible to receive child care assistance.10  The Federal equal-access 
provision specifically refers to the role of States payment rates in ensuring 
equal access for CCDF-eligible families.  States are required to describe in 
their CCDF plans how their provider payment rates are adequate to ensure 
equal access.11   In addition, Federal law establishes requirements regarding 
access to child care in States CCDF programs, including minimum 12-month 
eligibility periods,12 affordable family copayments,13 and timely payments to 
child care providers.14, 15  
ACFs Recommended Level of Payment To Ensure Equal Access.  Historically, 
ACF has designated setting CCDF provider payment rates at the 
75th percentile of the child care provider prices found in a States 
market-rate survey as a proxy for equal access.16  Setting payment rates at 
this level would mean that CCDF families may access three out of four child 
care providers without paying additional money out of pocket, apart from 
any family copayment.  ACF has encouragedbut has not requiredStates 
to set their payment rates at this level.  In the introduction to a regulation 
issued in 2016, ACF noted that CCDF payment rates below this 
recommended level are of great concern to ACF both because inadequate 
rates may violate the statutory requirement for equal access and because 
CCDF is serving a large number of vulnerable children who would benefit 
from access to high-quality care and for whom payment rates even higher 
than the 75th percentile may be necessary to afford access to such care.17 
Setting CCDF Payment Rates 
States establish their own CCDF payment rates for child care services, and 
these rates are highly variable across, and sometimes within, States.  Within 
a State, provider payment rates may vary based on geographical area; the 
type and quality of child care provider; and the age and needs of the child.  
 
10 Section 658E(c)(4)(A) of the Child Care and Development Block Grant Act of 2014. 
11 Section 658E(c)(4) of the Child Care and Development Block Grant Act of 2014. 
12 Section 658E(c)(2)(N)(i)(I) of the Child Care and Development Block Grant Act of 2014. 
13 45 CFR  98.16(k). 
14 Section 658E(c)(4)(B)(iv) of the Child Care and Development Block Grant Act of 2014. 
15 ACF has incorporated requirements related to affordable family copayments and timely 
payments to child care providers in the equal-access section of the CCDF regulations.   
45 CFR  98.45(k) and 98.45(l)(1). 
16 81 Fed. Reg. 67440, 67512 (Sept. 30, 2016); ACF, Program Instruction CCDF-ACF-PI-2018-01, 
February 2018. 
17 81 Fed. Reg. 67512 (Sept. 30, 2016).  
States Payment Rates Under the CCDF Program Could Limit Access to Child Care Providers  3 
OEI-03-15-00170   
CCDF payment rates include the family contribution toward the cost of child 
care.  This family contribution is also referred to as a copayment.  Each State 
determines its own formula for purposes of calculating the family 
copayment, and may choose to waive the copayment in special 
circumstances.18  In cases where States CCDF payment rates (including the 
family copayment) do not cover a providers price of child care, families may 
elect to pay this difference out of pocket if they wish to enroll with the 
provider. 
Effective October 1, 2018, States are required to set their CCDF provider 
payment rates in accordance with the results of their most recent child care 
market-rate survey or an alternative methodology.19, 20  Previously, States had 
to conduct a market-rate survey (or alternative methodology), but they were 
not required to base their payment rates on the most recent results.  A child 
care market-rate survey is a study that collects and analyzes information on 
child care providers prices within the State, across geographic areas, different 
provider types, and for children of varying ages.  An example of an alternative 
methodology for setting CCDF payment rates is a cost-estimation model that 
takes into account child care providers operating costs.  States must conduct 
a market-rate survey, or an alternative methodology, every 3 years, but no 
earlier than 2 years before submitting a CCDF plan.21    
ACF Oversight of States CCDF Plans 
Reviewing and approving States CCDF plans is the primary mechanism by 
which ACF works with States to ensure that CCDF program implementation 
meets Federal requirements.22  According to ACF, it uses States CCDF plans 
to track and assess progress, determine [the] need for technical assistance 
and [CCDF] plan amendments, and ultimately determine compliance with 
specific requirements and deadlines.23  In an April 2015 program instruction, 
ACF indicated that it will determine States compliance with requirements in 
 
18 States must establish a sliding fee scalebased on income and family sizeto be used in 
determining the family copayment.  ACF suggests that copayments that are no more than 
7 percent of a familys income would generally be considered affordable.  81 Fed. Reg. 67440 
(Sept. 30, 2016). 
19 81 Fed. Reg. 67438 (Sept. 30, 2016).  Section 658E(c)(4)(B)(iii) of the Child Care and 
Development Block Grant Act of 2014.  The statute does not define alternative methodology. 
20 In States FY 20162018 CCDF plans, only the District of Columbia reported to ACF that it 
used an alternative methodology in lieu of a market-rate survey. 
21 45 CFR  98.45(c). 
22 ACF, CCDF Reauthorization Frequently Asked Questions, March 2015.  Accessed at 
https://www.acf.hhs.gov/occ/resource/ccdf-reauthorization-faq-archived on May 29, 2018. 
23 ACF, Draft CCDF Preprint for Public Comment, CCDF Plan for FY 2016-2018.  Accessed at 
https://www.acf.hhs.gov/sites/default/files/occ/final_fy2016_2018_ccdf_plan_preprint_for_public
_comment_12_17_15.pdf on October 11, 2018. 
States Payment Rates Under the CCDF Program Could Limit Access to Child Care Providers  4 
OEI-03-15-00170   
the Act, in part, through submission and approval of States CCDF plans for 
FYs 20162018.24  
States submit their CCDF plans electronically through the Form ACF-118 
online submission portal.  Electronic submission allows for review and 
approval of the plans, both by ACF regional offices and ACF central office 
staff.25  ACFs 10 regional offices serve as liaisons between States CCDF 
programs and ACFs central office, and the regional offices participate in 
reviewing and approving States CCDF plans and plan amendments.  The 
regional offices also provide technical assistance to States and serve as 
points of contact for States requests for such assistance.   
Related OIG Work 
A July 2016 OIG report evaluated States CCDF program integrity efforts and 
their subsequent results.26  OIG found that States differed in the scope of 
their respective CCDF program integrity activities and varied substantially in 
the degree to which they conducted specific program integrity activities.  Not 
all States performed important antifraud activities, and few States notified 
ACF and other States about suspected fraud.  ACF concurred with all four of 
OIGs recommendations and has implemented the recommendations for it to 
establish routine communication with States to share program integrity and 
fraud fighting best practices; determine the feasibility of requiring all States 
to report information about the results of their program integrity and fraud 
fighting activities; and request that States examine the effectiveness of their 
program integrity and fraud fighting activities.  ACF concurred withbut has 
not yet implementedOIGs recommendation to examine with States the 
benefits of expanding program integrity and fraud-fighting activities. 
In a 2013 report, OIG found that all States complied with the Federal 
requirement to have health and safety requirements for licensed child care 
providers that receive CCDF payments.27  However, States monitoring 
requirements were not always in line with ACFs recommendations for criminal 
background screenings.  ACF has implemented all five of OIGs 
recommendations regarding the development of health and safety standards 
and States compliance with health and safety requirements.  OIG has also 
 
24 ACF also will use other appropriate meansincluding site visits to Statesto determine 
compliance with CCDF requirements.  ACF, CCDF Reauthorization Frequently Asked Questions, 
March 2015.  Accessed at https://www.acf.hhs.gov/occ/resource/ccdf-reauthorization-faq-
archived on May 29, 2018.  Also see 45 CFR  98.90 authorizing ACF to monitor States 
compliance with CCDF statute, regulations, and States plans. 
25 ACF, The Fundamentals of CCDF Administration Resource Guide, August 2018, pp. 93-95.  
Accessed at https://ccdf-fundamentals.icfcloud.com/fundamentals_tools on January 25, 2019. 
26 OIG, More Effort Is Needed To Protect the Integrity of the Child Care and Development Fund 
Block Grant Program, OEI-03-16-00150, July 2016. 
27 OIG, Child Care and Development Fund: Monitoring of Licensed Child Care Providers, 
OEI-07-10-00230, November 2013. 
States Payment Rates Under the CCDF Program Could Limit Access to Child Care Providers  5 
OEI-03-15-00170   
conducted indepth audits of child care providers in 10 States, including 
center-based and family home providers, to determine their compliance with 
State licensing requirements related to the health and safety of children.  OIG 
found that of the child care providers inspected in unannounced site visits, 
96 percent had one or more instances of potentially hazardous conditions 
and noncompliance with State health and safety requirements, including 
requirements for criminal-records checks and for licensing.  The reports 
contained a number of recommendations to States, including that States: 
  ensure through effective monitoring that providers comply with all 
health and safety requirements;28 
  ensure adequate oversight by reducing licensing inspectors' 
caseloads;29 and 
  develop a mandatory training program to improve provider 
compliance with health and safety regulations.30 
 
 
Methodology  There are many factors that may impact access to child care, but this report 
focuses on States payment rates because of the explicit link that the Federal 
equal-access provision makes between payment rates and equal access for 
CCDF-eligible families. 
Data Collection and Analysis 
States FY 20162018 CCDF Plans.  We obtained all States provider payment 
rates from the information that each State provided for Section 4.3.1 of its FY 
20162018 CCDF plan.  If States had amended their FY 20162018 plans with 
updated provider payment rates, we used the latest rates in our comparison 
to surveyed providers prices.   
To examine how States have demonstrated to ACF that payment rates are 
sufficient to ensure equal access to child care services for eligible families, we 
reviewed information in Section 4.4.1 of States FY 20162018 CCDF plans.  In 
this section, States are asked to selectfrom a list of optionsthe data and 
facts that they relied on to certify to ACF that their provider payment rates 
ensure equal access.  ACF does not require States to submit any 
documentation with their plans to support their selected data and facts. 
Survey of Child Care Providers.  To obtain information regarding child care 
providers prices, OIG surveyed a national, stratified random sample of 
2,000 licensed child care centers and family child care homes by mail.  In the 
 
28 Seven States have implemented this recommendation for centers, and six States have 
implemented this recommendation for family child care homes. 
29 Three States have implemented this recommendation for centers, and four States have 
implemented this recommendation for family child care homes. 
30 Three States have implemented this recommendation for family child care homes. 
States Payment Rates Under the CCDF Program Could Limit Access to Child Care Providers  6 
OEI-03-15-00170   
1,257 survey responses, 81 providers reported that they were not currently 
providing child care, and we therefore did not include those 81 providers in 
our review.  We received surveys from 1,176 respondents, achieving a 
weighted response rate of 61 percent.31   
Because the price of child care may vary depending on the age of the child, 
we needed to create a specific child profile for the survey.  We selected an 
infant, age 0 to 11 months, with no special needs.  The survey included 
questions about the price charged for full-time infant care and the providers 
experiences, if any, participating in the CCDF program. 
We compared providers prices to States corresponding CCDF provider 
payment rates, as displayed in Exhibit 1.  Appendix A contains a detailed 
description of our sampling methodology and analysis of child care prices.  
Appendix B contains statistical estimates and 95-percent confidence intervals 
for the child care provider survey. 
 
31 Our results pertaining to child care providers apply to the population represented by the 
survey respondents.  The survey respondents included providers that served CCDF families and 
providers that did not.  It is possible that the providers that did not respond to our survey have 
different payment rates and/or practices than the providers that did respond to our survey.  We 
did not adjust our results on the basis of any inferences about the nonrespondents. 
States Payment Rates Under the CCDF Program Could Limit Access to Child Care Providers  7 
OEI-03-15-00170   
Survey of States CCDF Programs.  To examine how States determine that 
their CCDF payment rates are sufficient to ensure equal access to child care 
services for eligible families, we sent an online survey to all 50 States and the 
District of Columbia (hereafter referred to as States).  Forty-five of the 
51 States (88 percent) responded to our survey.32  We reviewed and 
aggregated States responses to the survey questions.  We did not receive 
completed surveys from Montana, New Mexico, Ohio, Oregon, Pennsylvania, 
or Rhode Island.33 
ACF Office of Child Care.  To review how ACF ensures that States CCDF 
provider payment rates are sufficient to ensure equal access to child care 
services for eligible families, we sent information requests to the Office of 
Child Care in ACFs Central Office.  We reviewed ACFs responses to the 
information request, and we followed up with ACF staff by telephone to 
clarify their responses. 
Limitations  
We based our findings regarding child care providers and States on the 
information reported by child care providers and States.  We did not 
independently verify these responses.  In addition, we achieved an overall 
weighted response rate of 61 percent for the survey of child care providers.  
Our results pertaining to child care providers apply only to the population 
represented by these respondentschild care centers and family child care 
homes that responded to the surveyand cannot be generalized to all child 
care providers.  Finally, we surveyed child care providers regarding the prices 
they charge for infant care; we did not request any information from 
providers regarding their operating costs. 
 
Standards 
We conducted this study in accordance with the Quality Standards for 
Inspection and Evaluation issued by the Council of the Inspectors General on 
Integrity and Efficiency.   
   
 
32 Using a combination of email and telephone outreach, OIG made at least three followup 
attempts to obtain responses from States that did not complete the survey. 
33 These six States served approximately 13 percent of CCDF children in 2016. 
States Payment Rates Under the CCDF Program Could Limit Access to Child Care Providers  8 
OEI-03-15-00170   
FINDINGS 
The majority of  States CCDF payment rates are an important component of ensuring that 
low-income families may access child care.  We found that States CCDF 
child care providers 
payment rates for infant care covered 41 percent of child care providers prices.  
charge more for 
Specifically, 36 percent of providers prices for full-time infant care were lower 
infant care than  than States payment rates, and 5 percent of providers prices were equal to 
States payment  States payment rates.  In contrast, the remaining 59 percent of providers 
prices exceeded States payment rates.  In these instances, the State payment 
rates, which could 
amount, including the family copayment, might not cover the cost of child 
limit access to care 
care, potentially limiting CCDF families access to these providers. 
for CCDF families 
Exhibit 2: States CCDF payment rates for infant care do not cover the 
prices charged by 59 percent of child care providers 
5% Provider Price Higher
than State Payment Rate
36% Provider Price Lower
59%
than State Payment Rate
Provider Price Equal to
State Payment Rate
Source: OIG comparison of surveyed providers prices to States CCDF payment rates in 2017. 
 
When providers prices exceeded States CCDF payment rates, 
nearly half did so by a substantial margin 
For 18 percent of providers whose prices exceeded CCDF payment rates, the 
We would like to 
prices charged by the providers were at least 50 percent higher than 
accept infants but the  corresponding State payment rates.  An additional 29 percent were between 
[CCDF] rate is just too  25 and 50 percent higher than State payment rates. 
low to pay for staff in  A family seeking to enroll a child with a provider whose price exceeded the 
[infant] room.  States CCDF payment rate would have to cover the cost of the difference 
itself if required to do so by the provider, in addition to any required 
              Child Care Provider 
copayment.  This could pose a significant financial hardship on low-income 
families or potentially prevent them from accessing child care, even with 
CCDF assistance.  For example, in one State, the difference between 
a providers price and the corresponding State CCDF payment rate was 
$376 per month.  In addition, a family of four in this State would incur 
a monthly copayment ranging from $35 to $442, depending on family 
States Payment Rates Under the CCDF Program Could Limit Access to Child Care Providers  9 
OEI-03-15-00170   
income.34  Should a family seek child care services from this provider, it may 
need to pay approximately $400 to $800 per month out of pocket to cover 
the gap between the providers price and the CCDF payment amount and 
copayment. 
 
 
When setting CCDF  Most States reported that finite resources at the State and Federal levels 
were challenges in setting payment rates that ensure equal access to child 
payment rates, 
care services.  CCDF funding is made up of Federal fundsallocated to 
States face 
States in formula block grantsand State matching funds.  Formula block 
budgetary  grants give States the flexibility to decide how to allocate the fixed amount of 
constraints and  Federal funding.  Thirty-seven States identified State budget and funding 
limitations as a challenge that they have encountered.  Similarly, 36 States 
competing priorities  
indicated that Federal funding limitations were a challenge in setting 
provider payment rates that ensure equal access for eligible families.  
In light of budgetary constraints, States must consider a number of 
competing factors and make tradeoffs when setting their CCDF provider 
payment rates, as shown in Exhibit 3.  One State explained that increasing 
payment rates may mean serving fewer families: 
The cost of [...] subsidies is driven by three things: (1) the number of children 
served, (2) the amount each child is served, and (3) the amount paid for each 
unit of care...In the absence of additional funding this presents counties with 
two primary options: (A) find other sources of funding or (B) serve fewer 
children. Thus, a focus on increasing rates to a sufficient level comes with a cost 
borne out either in more dollars or fewer children served/served for less time. 
   
Exhibit 3: States balance multiple competing priorities when setting their 
CCDF payment rates 
 
 
 
  s 
e
  at
t
S
  f 
o
r 
e
b
m
u
N
1 For example, paying for days when a child is absent. 
Source: OIG analysis of 45 States survey responses, 2017 
 
34 This copayment information was reported in the States FY 20162018 CCDF plan for the 
most populous area of the State.    
States Payment Rates Under the CCDF Program Could Limit Access to Child Care Providers  10 
OEI-03-15-00170   
There are factorssuch as the desire to increase the number of families 
[Setting rates at the  servedthat may drive States to lower CCDF payments for individual families 
75th percentile] would  in an effort to stretch the overall CCDF budget to provide child care 
assistance to more families.  Seventeen States reported that concerns over 
substantially reduce the 
having waiting lists of families requesting CCDF assistance affected their 
number of children and 
approach to setting CCDF payment rates.  As one State put it, In setting 
families who could be 
rates, we seek to support as many families while balancing demand and 
served.  resources in a way that allows us to maximize participation and avoid 
State CCDF Program Administrator  returning to a waiting list.  Similarly, seven States indicated that avoiding 
enrollment freezes factored into their decision-making about payment rates. 
Other factors may drive States to increase CCDF payment rates or establish 
tiered rates, even if this may result in serving fewer families.  One of these 
factors is that when States set CCDF payment rates, they are required to take 
into consideration the cost of providing higher quality child care.35, 36  
Offering increased, tiered rates to providers that meet higher quality 
standards is a financial consideration that a State may weigh when setting its 
CCDF payment rates.  Thirty-eight States indicated that they took the cost of 
higher quality child care services into account when setting provider 
payment rates for the FY 20162018 plan period.  Twenty-nine of these States 
noted that they have increased payment rates for higher quality providers. 
Other factors raise the overall costs of the CCDF program, which may reduce 
the amount available for direct child care assistance and thereby affect  
rate-setting.  One of these factors is the program requirement to maintain 
a minimum 12-month eligibility period for CCDF families37i.e., provide for a 
familys continuous eligibility throughout a 12-month period, regardless of 
changes in income, as long as the family does not exceed the Federal income 
threshold or experience a nontemporary change in work, education, or 
training that affects eligibility.  Seventeen States indicated that complying 
with this policy affects how they set payment rates.  One State estimated that 
implementing the 12-month eligibility policy would double its costs.  
Ten States reported that ensuring family copayments are affordable affects 
their payment rates, and nine States reported that implementing generally 
accepted payment practices affects their payment rates.  
Finally, 12 States reported that setting reasonable income-eligibility 
thresholds had an impact on rate-setting.  When setting CCDF payment 
 
35 Section 658E(c)(4)(B)(iii)(II) of the Child Care and Development Block Grant Act of 2014. 
36 Many States have implemented Quality Rating and Improvement System (QRIS) programs 
to assess the quality of child care providers and to communicate provider quality levels to the 
public.  Typically, a QRIS program assigns ratings (such as star ratings) to providers that meet 
a set of defined quality standards.  In certain States, providers that have achieved a QRIS 
rating may be entitled to a higher CCDF payment rate, also called a tiered rate or rate add-on. 
37 Section 658E(c)(2)(N)(i) of the Child Care and Development Block Grant Act of 2014; ACF, 
CCDF Reauthorization Frequently Asked Questions, March 2015.  Accessed at 
https://www.acf.hhs.gov/occ/resource/ccdf-reauthorization-faq-archived on May 29, 2018. 
States Payment Rates Under the CCDF Program Could Limit Access to Child Care Providers  11 
OEI-03-15-00170   
rates, States consider whether to have lower income thresholds that may 
reduce the number of eligible families but allow for higher provider payment 
rates, or to have higher income thresholds that may increase the number of 
eligible families but potentially reduce the subsidy amount available to each 
family. 
 
ACF does not  ACF has not evaluated whether States are ensuring equal access; 
evaluate States  instead, it relies on States to self-certify their compliance with 
the equal-access provision 
payment rates to 
Although States must provide in their CCDF plans information regarding 
ensure compliance 
payment rates and equal access, ACF does not evaluate this information.  
with the CCDF  ACF reported that staff review this information for completeness, 
equal-access  responsiveness, and clarity, but that they do not make evaluative judgements 
to determine whether States with payment rates that are below the 
provision 
recommended level have ensured equal access.  Regardless of the level at 
which States rates are set, ACF defers to States to self-certify that they have 
met the equal-access provision.  
ACF reported that 40 States self-certified in their CCDF plans that payment 
rates were sufficient to ensure equal access for the FY 20162018 plan period.   
Eleven States self-certified that they had not fully implemented the 
equal-access provision.  These States described implementation plans to 
meet the requirement and requested waivers for this provision.  ACF 
approved all of these waiver requests. 
ACF allows States to indicate, in their CCDF plans, how they met the 
equal-access provision.  States selectfrom a list of optionsthe data and 
facts they relied on to demonstrate to ACF that their provider payment rates 
ensure equal access to child care services.  In FY 20162018 CCDF plans, 
many States selected (1) the use of tiered or differential payment rates38 for 
targeted child care needs; (2) data on the percentage of families served by 
high-quality providers; and (3) data showing that families have access to the 
full range of providers.  States provided narrative descriptions, but they were 
not required to submit any documentation with their plans to support their 
selected data and facts. 
The flexibility in program administration afforded to States under the CCDF 
block grant and the lack of an operating definition for equal access make it 
difficult for ACF to evaluate whether States with rates below the 
recommended level have ensured equal access.  ACF also stated that it 
cannot review payment rates in isolation, considering that States have limited 
resources and competing factors that they must balance when setting 
 
38 Tiered or differential provider payment rates could include higher payment rates for child 
care programs that (for example) meet certain quality standards, have nontraditional hours, 
and/or serve children with special needs. 
States Payment Rates Under the CCDF Program Could Limit Access to Child Care Providers  12 
OEI-03-15-00170   
payment rates.  Going forward, a new requirement under the Act mandates 
States to set payment rates on the basis of the results of the most current 
market-rate survey or alternative methodology.39  However, ACF has not 
developed a specific review process or tool that it will use to determine 
compliance with this requirement.  
Most States do not set payment rates at the level ACF 
recommends 
Only seven States reported to ACF in their CCDF plans for FYs 20162018 that 
they set their CCDF payment rates for full-time infant care at or above the 
75th percentile of child care provider prices for their respective geographic 
areas serving the highest number of children.  The 75th percentile is the level 
that ACF recommends to ensure equal access.  The payment rates for these 
seven States ranged from the 75th percentile to the 98th percentile of child 
care provider prices for the reported geographic areas.  Across the remaining 
States that have payment rates for full-time infant care that are below the 
75th percentile, rates varied widely.  To illustrate, CCDF payment rates for 
full-time licensed center care for infants ranged from the 1st percentile of 
child care provider prices in Vermont to the 74th percentile in New Mexico.  
Appendix C provides the CCDF infant-care payment rate percentiles for each 
State. 
Only 15 States indicated that they plan to set any of their CCDF payment 
rates at ACFs recommended level for the FY 20192021 plan period.40, 41 
ACF oversight has focused on technical assistance and has been 
expanded to include onsite monitoring  
Provision of technical assistance.  States have access to technical assistance 
and guidance materials from the ACF central office, ACF regional offices, the 
National Center on Early Childhood Quality Assurance, and the National 
Center on Subsidy Innovation and Accountability.  States may access 
program instructions and technical assistance materials on ACFs website, 
and ACF operates an Announcements listserv that emails guidance, briefs, 
and materials directly to States.   
States may also request targeted guidance, potential strategies, and 
assistance as needed.  In response to these requests, ACF has provided direct 
assistance to individual States on topics including the development of a 
 
39 Previously, States routinely had to conduct a market-rate survey or an alternative 
methodology, but they did not have to base their payment rates on the results of the most 
recent version. 
40 These 15 States are out of the 45 States that responded to the OIG survey. 
41 Only 4 of the 7 States that set their rates at or above the 75th percentile in the FY 20162018 
plan period are among the 15 States that indicated that they plan to do so for the  
FY 20192021 plan period.  One of the 7 States indicated that it does not plan to set rates at or 
above the 75th percentile and the remaining 2 of 7 States did not complete the OIG survey. 
States Payment Rates Under the CCDF Program Could Limit Access to Child Care Providers  13 
OEI-03-15-00170   
market-rate survey and alternative methodology options.  For example, ACF 
reviewed a questionnaire that a State was drafting for its market-rate survey 
process, and ACF provided a presentation comparing provider cost modeling 
to child care market-price surveys during a State and Territory CCDF 
Administrators Meeting. 
Onsite monitoring.  Beginning October 2018, ACF began implementing an 
onsite monitoring system.  As part of the process, each year, ACF will 
conduct an onsite monitoring visit with one-third of States CCDF agencies.  
It expects to complete visits to all States in FY 2022.  Currently, a review of 
equal access is not part of these monitoring visits.  Rather, the focus is on 
compliance with health and safety requirements for child care providers.   
 
Some providers  The majority of States have implemented provider-friendly 
payment practices to incentivize providers to accept CCDF 
report concerns 
families 
about CCDF 
To aid in ensuring access for CCDF families, many States reported that they 
payment practices, 
have implemented numerous provider-friendly payment practices for child 
despite States  care providers, as shown in Exhibit 4.   
efforts to incentivize 
Exhibit 4: Most States implemented provider-friendly payment practices 
providers to accept 
Provider-Friendly Payment Practice  Number of States1  
CCDF families 
Pay providers within 21 calendar days of receiving invoice  44 
Use electronic payment systems (e.g., direct deposits)  43 
Promptly notify providers of changes to a familys eligibility 
42 
status that may impact payment 
Pay providers for days a child is absent  41 
Ensure timely appeal and resolution for payment disputes  35 
Use electronic billing systems (e.g., automated billing)  32 
Pay providers for enrollment/registration fees  19 
Pay providers for extra child care activities (e.g., class trips)  7 
Pay providers prospectively (e.g., at beginning of month)  6 
 
1 This column contains the number of States that implemented the provider-friendly payment 
practice for child care centers and family child care homes. 
Source: OIG analysis of 45 States survey responses, 2017. 
 
Under the Act, States are required to have in place generally accepted 
payment practices that reflect payment practices of non-CCDF providers.  
The goal of this requirement is to provide stability of funding and encourage 
States Payment Rates Under the CCDF Program Could Limit Access to Child Care Providers  14 
OEI-03-15-00170   
more child care providers to participate in the CCDF subsidy program.42  In 
the CCDF final rule, ACF stated that policies governing provider payments, 
including generally accepted payment practices, are an important aspect of 
ensuring equal access and supporting the ability of providers to provide 
high-quality care.43 
Nineteen States reported that they pay providers for child care enrollment 
fees and/or registration feessuch fees can reach several hundred dollars.44  
In the remaining States, the lack of payment for enrollment fees and/or 
registration fees may pose a financial hardship to families, as only 13 percent 
of CCDF providers waive registration fees for CCDF children.  Seven States 
reported that they pay providers for extra child care activities, such as class 
trips.  In addition, only six States reported that they pay child care centers 
and family child care homes prospectively (before services are rendered
e.g., at the beginning of the month), making it the least-implemented 
payment practice.  It is possible that States have not implemented 
prospective payments because disconnecting payment from attendance 
could leave their programs vulnerable to fraud and abuse. 
Providers that serve CCDF families cite unreliable payments and 
additional administrative work as challenges 
Providers that served CCDF families identified low payment rates from States 
I have received subsidy  and the lack of reliable or timely payments as challenges in participating in 
payments in the past,  the CCDF program.45  Although 44 States reported that they pay within 
21 calendar days of receiving an invoice, some providers remain unsatisfied 
but they are more 
with the timeliness of payment. 
paperwork and dont 
When describing the administrative burdens associated with participating in 
pay what I charge for 
the CCDF program, 51 percent of providers mentioned paperwork 
private pay, so to me, 
requirements and overall program administration requirements.  
its not worth the extra 
Thirty-four percent of providers cited the reporting of attendance and billing, 
work for less pay. 
 
            Child Care Provider 
42 Per ACF guidance, provider-friendly payment practices are practices that align with the 
private-paying child care market in order to encourage providers to accept children who 
receive CCDF assistance and enable families to retain child care services.  ACF, What is meant 
by generally accepted payment practices?  Accessed at 
https://www.acf.hhs.gov/occ/faq/what-is-meant-by-generally-accepted-payment-practices on 
June 25, 2018. 
43 81 Fed. Reg. 67516 (Sept. 30, 2016). 
44 ACF considers State payment to providers for child care enrollment fees or registration fees 
as a provider-friendly payment practice because private-pay families typically pay for these 
fees and extracurricular activities.  According to OIGs survey of child care providers, center 
registration fees (when not waived), ranged from $10 to $350, and family care registration fees 
ranged from $10 to $375.  Some providers charged registration fees annually, while others 
charged the fees only at the time of initial enrollment.   
45 In response to OIGs survey, 58 percent of child care providers indicated that they care for 
children enrolled in their States CCDF programs. 
States Payment Rates Under the CCDF Program Could Limit Access to Child Care Providers  15 
OEI-03-15-00170   
including the added responsibility of ensuring attendance is properly 
recorded.  For example, States may use electronic cards that CCDF families 
swipe at the child care provider to record attendance.  Because payment is 
linked to attendance, providers must become vigilant in overseeing that 
parents swipe their cards consistently.  One respondent explained this by 
stating, The major burden I face is parents not swiping the card... With over 
90 percent of my [enrollees using the attendance card], it hurts when they 
dont swipe. 
Concerns over payment and administrative burdens discourage 
providers from participating in the CCDF program 
Non-CCDF providers stated that low payment rates, infrequent payment, and 
perceived administrative burdens discouraged them from participating in the 
CCDF program.  Of the 42 percent of providers that did not provide care to 
CCDF families at the time of our review, 34 percent would not be willing to 
provide care to CCDF families in the future.46  While the reasons for not 
participating varied, they commonly included the providers belief that 
States payments are too low or not frequent enough, and concerns about 
the administrative burdens and program requirements associated with being 
a CCDF provider.  For example, one former CCDF provider said, I started in 
this field because I love working with kids. The amount of calls and 
paperwork took time from my own children during nights and weekends.  
Another reason providers offered for not participating included the lack of 
prospective payment in State CCDF programs.  One CCDF provider stated, 
We cannot bill until the end of the month, but have to cover payroll and 
overhead costs all month.  Accepting these subsidy payments is financially 
difficult for the day care providers having to wait so long to get their tuitions 
paid.  I can understand why more centers don't accept [CCDF families]. 
   
 
46 Thirty-nine percent of providers would be willing to provide care to CCDF families and the 
remaining 27 percent expressed lack of familiarity with the CCDF program.   
States Payment Rates Under the CCDF Program Could Limit Access to Child Care Providers  16 
OEI-03-15-00170   
CONCLUSION AND RECOMMENDATIONS 
Federal law recognizes that CCDF provider payment rates are an important 
aspect of ensuring that eligible children have access to child care services.  
We found that CCDF payment rates for infant care provide access to only  
41 percent of child care providers.  When setting their CCDF payment rates, 
States have to factor in numerous competing priorities, including the desire 
to help as many families as possible.  States reported wrestling with the 
question of whether it is better to set CCDF payment rates lower and serve 
more children, or to set payment rates higher and potentially serve fewer 
children.   
States also implement provider-friendly payment practices to encourage 
providers to accept CCDF program payments and help ensure access for 
eligible children.  However, providers report that more could be done to 
ease the burden of accepting CCDF payments for eligible children. 
With respect to oversight, ACF relies on States to self-certify that their 
payment rates for CCDF providers are sufficient to ensure that eligible 
children have equal access to child care services comparable to services 
provided to children whose families are not eligible to receive child care 
assistance. 
To promote States compliance with the Federal equal-access provision, we 
recommend that ACF take a number of practical steps, as outlined below. 
ACF should evaluate whether States are ensuring equal access 
for CCDF families, as required 
ACF should consider developing additional proxies for equal accessapart 
from setting rates at the 75th percentile of market pricesthat would allow it 
to evaluate States progress towards ensuring equal access to child care 
services for eligible families.  Additional proxy measures would allow ACF to 
evaluate whether, and how, States have ensured equal access when payment 
rates are lower than the 75th percentile of market prices, and when States 
are employing an alternative methodology, in lieu of a market-rate survey.  
This will become increasingly important as States move toward alternative 
rate-setting methodologies that collect and assess child care costs rather 
than market prices. 
ACF should ensure that States comply with the new requirement 
to use the results of the most recent market-rate survey, or 
alternative methodology, to set CCDF payment rates  
Prior to the FY 20192021 plan period, States were permitted to use outdated 
market-rate survey results in setting CCDF payment rates, even though more 
recent results were available.  Effective October 1, 2018, the Act requires 
States Payment Rates Under the CCDF Program Could Limit Access to Child Care Providers  17 
OEI-03-15-00170   
States to set their CCDF provider payment rates in accordance with the 
results of their most recent child care market-rate survey or alternative 
methodology.  This does not mean that States must set their CCDF payment 
rates at the 75th percentile, but rather that the new percentiles that States 
report to ACF will represent up-to-date child care provider prices. 
ACF currently is implementing an onsite monitoring system with States that 
focuses on States compliance with health and safety requirements for child 
care providers.  ACF could incorporate into this onsite monitoring of States 
CCDF programs an evaluation of States compliance with the requirement to 
use the results of the most recent survey (or alternative methodology).  
Another option would be to conduct desk reviews of States payment-rate 
information compared to the results of their market-rate surveys.  This 
information is readily available to ACF, as States provide links to CCDF 
payment rates and market-rate survey reports in their CCDF plans. 
ACF should establish a forum for States to share strategies 
regarding how they set payment rates to ensure equal access for 
eligible families while balancing competing program priorities  
States reported encountering challenges in setting payment rates that ensure 
equal access for eligible families.  ACF should work with States to identify and 
share strategies across States for setting payment rates to ensure equal 
access while taking into account other competing program priorities and 
funding limitations.  To encourage States to learn about and potentially 
adopt strategies that have worked for their peers, ACF should establish 
a forumsuch as an interactive webinarthat is held at least once per year. 
ACF should encourage States to minimize administrative 
burdens for CCDF providers, with a goal of expanding access for 
eligible families 
Under ACF guidance, States must implement generally accepted payment 
practices that reflect payment practices of non-CCDF providers, to 
encourage more child care providers to participate in the CCDF program. 
Although numerous States are currently implementing many of the payment 
practices that OIG evaluated, some providers remain unsatisfied with CCDF 
payments and administrative burdens.  Therefore, ACF should encourage 
States to continue implementing practices that streamline administrative 
processes and reduce CCDF providers administrative burdens, while also 
keeping in mind the need for appropriate program oversight and 
accountability. 
   
States Payment Rates Under the CCDF Program Could Limit Access to Child Care Providers  18 
OEI-03-15-00170   
AGENCY COMMENTS AND OIG RESPONSE 
ACF concurred with all four of our recommendations. 
In response to our first recommendation to evaluate whether States are 
ensuring equal access for CCDF families, ACF described steps it has taken to 
ensure compliance with the equal-access requirement.  These include 
prioritizing the review of the equal-access requirement as part of the 
FY 20192021 CCDF plan review and placing 33 States on corrective action 
plans for not demonstrating compliance with this requirement.  ACF stated 
that if these States are unable to come into compliance by 
September 30, 2019, they will be subject to a penalty pursuant to the CCDF 
regulations.  ACF reported that it is providing intensive technical assistance 
to these States.  ACF also issued a number of guidance documents to 
highlight the importance of the equal-access requirement.   
In response to our second recommendation to ensure that States comply 
with the new requirement to use the results of the most recent market-rate 
survey, or alternative methodology, to set CCDF payment rates, ACF 
reported that it placed 18 States on corrective action plans for data collection 
issues, including not completing market-rate surveys within the required 
timeframe and not using the market-rate surveys to set payment rates. 
In response to our third recommendation to establish a forum for States to 
share strategies regarding how they set payment rates to ensure equal 
access for eligible families while balancing competing program priorities, ACF 
stated that it is planning a set of activities to implement this 
recommendation.  These activities include analyzing States market-rate 
survey methodologies, convening a roundtable with key stakeholders, and 
using the results of those efforts to develop and execute a technical 
assistance strategy to support States in setting adequate payment rates while 
balancing other factors.  
Lastly, in response to our fourth recommendation to encourage States to 
minimize administrative burdens for CCDF providers, with a goal of 
expanding access for eligible families, ACF stated that it believes the 
stakeholders roundtable it is planning will provide input from providers on 
the administrative burdens they face in serving CCDF families.  In addition, 
ACF stated that it will analyze and summarize States strategies to minimize 
administrative burden and include this in its technical assistance strategy. 
For the full text of ACFs comments, see Appendix D. 
 
   
States Payment Rates Under the CCDF Program Could Limit Access to Child Care Providers  19 
OEI-03-15-00170   
APPENDIX A: Detailed Methodology
 
Child Care Provider Sample 
We contacted the CCDF agencies in all States to request lists of all licensed 
child care centers and family child care homes, including the providers 
address; contact information; and QRIS rating and accreditation status, if 
applicable.  On receipt of this information, we combined the lists of providers 
into a single sampling frame.  
Because States and providers may have different payment and price levels 
depending on the age of the child, we needed to create a specific child 
profile for our review.  We selected an infant, age 0 to 11 months, with no 
special needs.  Because infants need a higher level of care, not all child care 
providers offer infant care.  Some States lists of providers distinguished 
between those that served infants and those that did not.  Therefore, when it 
was possible to do so, we removed providers thataccording to 
State-submitted datadid not serve infants to create a sampling frame of 
providers who potentially served infants. 
We grouped providers into four strata by type of care and State payment 
rate percentile for infant care, as displayed in Exhibit A-1.  We stratified 
providers in this manner to ensure that the sample included centers and 
family child care homes located in States with both lower and higher 
payment rate percentiles.  We used the payment rate percentilesthe 
percentage of providers that charge prices at or below a States payment 
ratethat States reported in their FY 20162018 CCDF plans to identify States 
with infant-care payment rates above or at/below the 33rd percentile.47  We 
selected a stratified random sample of 2,000 providers from the sampling 
frame500 providers from each stratum.   
To obtain additional information regarding accreditation status for child care 
centers and family child care homes, we contacted five national child care 
accreditation organizations that were cited in States CCDF plans.48  We 
compared our lists of child care providers against the lists obtained from the 
accreditation organizations to ensure that we applied payment rate add-on 
amounts for accredited providers, if applicable, when comparing surveyed 
providers prices to the corresponding State CCDF payment rates. 
 
47 States FY 20162018 CCDF plans, Section 4.3.1.  The State-by-State data for payment rate 
percentiles are presented in Appendix C. 
48 The five accrediting organizations were the Council on Accreditation; the National 
Accreditation Commission for Early Care and Education Programs; the National Association for 
the Education of Young Children; the National Association for Family Child Care; and the 
National Early Childhood Program Accreditation. 
States Payment Rates Under the CCDF Program Could Limit Access to Child Care Providers  20 
OEI-03-15-00170   
Exhibit A-1: National, random sample of child care providers that potentially served infants 
Number of 
Number of   Number  Providers 
Providers in  of  Currently  Number 
Study  Sampled  Providing  of Survey  Response 
Strata Descriptions  Population  Providers  Care  Responses  Rate 
Stratum 1: Licensed child care centers in 
States with payment rate percentiles (for 
22,377  500  492  331  67% 
full-time infant care) at or below the 33rd 
percentile 
Stratum 2: Licensed child care centers in 
States with payment rate percentiles (for 
39,911  500  484  296  61% 
full-time infant care) above the 33rd 
percentile   
Stratum 3: Licensed family child care 
homes in States with payment rate 
24,284  500  475  260  55% 
percentiles (for full-time infant care) at or 
below the 33rd percentile 
Stratum 4: Licensed family child care 
homes in States with payment rate 
99,760  500  468  289  62% 
percentiles (for full-time infant care) above 
the 33rd percentile   
Total  186,332  2,000  1,9191  1,176   61% 
Source: OIG analysis of providers survey responses. 
1 Of the sample of 2,000 licensed providers, 81 providers reported not providing child care at the time of the survey.  
To examine the extent of potential nonresponse bias, we compared whether 
survey respondents and nonrespondents differed with regard to provider 
type.  We did not find a significant difference at the 95-percent confidence 
level.  We found that, for center-based providers, the weighted response rate 
was 63 percent.  For family child care home providers, the weighted response 
rate was 60 percent.  We found no evidence that these response rates were 
statistically different (p=0.22).  
We also explored the potential effects that nonresponse may have had on 
the results of our comparison of providers prices for full-time infant care to 
the corresponding State payment rates.  If all nonresponding child care 
providers had reported prices that were lower than State payment rates, we 
would have found that 70 percent of providers prices were lower than or 
equal to corresponding State payment rates.  On the other hand, if all 
nonrespondent providers had reported prices that were higher than 
corresponding State payment rates, we would have found that 21 percent of 
providers prices were lower than or equal to the payment rates. 
Child Care Provider Survey 
In September 2017, OIG sent its survey to sampled providers through UPS 
and included a prepaid business reply envelope to facilitate survey response.  
States Payment Rates Under the CCDF Program Could Limit Access to Child Care Providers  21 
OEI-03-15-00170   
We sent two follow-up requests to providers that had not responded to the 
initial mailing, for a total of three outreach attempts for each provider.  
Providers had the choice to respond online or by returning the survey by 
mail.  We received responses from 1,176 child care providers for an overall 
weighted response rate of 61 percent.  The response rates by stratum ranged 
from 55 percent in Stratum 3 to 67 percent in Stratum 1.  The provider survey 
estimates are weighted to reflect the stratified sample design and the 
population of responding providers. 
Child Care Provider Prices 
OIG asked surveyed providers to report the total amount charged to 
a private-pay, nonsubsidized family for full-time weekday care of an infant 
with no special needs and the accompanying unit of time (i.e., hourly, daily, 
weekly, monthly).49   
Using the CCDF payment rates that States submitted to ACF with their 
FY 20162018 CCDF plans, we identified the payment rate for full-time infant 
care corresponding to the type and location of each sampled provider.  We 
included any additional payments that States implemented for child care 
providers that met higher quality standards.  The payment rate add-on 
amount was applied for providers that met specified quality rating levels or 
achieved child care accreditation status.50   
To ensure that our comparisons of provider prices to State payment rates 
were based on the same unit of time, we performed calculations to convert 
provider prices when necessary.  We used the following conversion formulas: 
9 hours equals 1 day; 5 days equals 1 week; and 4.33 weeks equals 1 month. 
We computed the difference between providers prices for full-time infant 
care for private-pay families and the corresponding State payment rates.  We 
estimated the direction and extent of the difference and examined the 
differences by type of child care provider. 
Price Comparison for Providers Serving CCDF Families.  We examined the 
full-time infant care prices reported by 601 providers that served CCDF 
families.  We compared these providers prices to corresponding State 
payment rates.  The results of the price-to-rate comparison did not differ 
substantially from the overall results described in the Findings section of this 
report.  Specifically, 55 percent of CCDF providers prices exceeded States 
payment rates; 38 percent were lower than States payment rates; and 
7 percent were equal to the corresponding payment rates. 
Providers that served CCDF families were given an opportunity to indicate 
whether they charged these families a different price for full-time infant care 
 
49 Because the price of child care may vary depending on the age of the child, we needed to 
create a specific child profile for the provider survey.   
50 Each State may designate its own add-on amount for specific criteria that a provider meets. 
States Payment Rates Under the CCDF Program Could Limit Access to Child Care Providers  22 
OEI-03-15-00170   
than their private-pay price.  For almost all of these providers, the price 
charged for full-time infant care was the same across both CCDF and 
private-pay families.  Only 5 percent of providers charged a lower price to 
CCDF families, while another 3 percent of providers charged a higher price to 
CCDF families.   
Price Comparison by Provider Type.  We observed only small percentage 
differences in the results of our comparison of providers prices to 
corresponding State payment rates when analyzing by provider type.  For 
child care centers, 65 percent of prices for full-time infant care exceeded 
States payment rates; 31 percent of prices were lower than payment rates; 
and 4 percent of prices equaled the corresponding payment rates.  For 
family child care homes, 56 percent of prices for full-time infant care 
exceeded payment rates; 39 percent of prices were lower than payment 
rates; and 5 percent of prices were equal to States corresponding payment 
rates. 
Survey of States CCDF Programs 
OIG sent an online survey to all States and the District of Columbia (hereafter 
referred to as States).  Forty-five States responded to the survey, a response 
rate of 88 percent.  The survey included questions about whether and how 
States ensure that their payment rates are sufficient to ensure equal access; 
how States incorporate considerations of program policies (e.g., family 
copayments) and provider quality into their processes for setting payment 
rates; and whether States have implemented provider payment practices 
similar to those in the private-pay market that may incentivize providers to 
accept CCDF families.  In addition, we asked States to identify the challenges 
that they face when setting their CCDF payment rates.  We also requested 
the policies, procedures, and/or calculations that States use to determine 
their CCDF payment rates and to set payment rates that are sufficient to 
ensure equal access for eligible families. 
ACF Survey 
For this review, OIG sent information requests to the Office of Child Care in 
ACFs central office.  We requested copies of any policies, procedures, and 
guidelines that ACF uses to monitor whether States CCDF payment rates are 
sufficient to ensure equal access for eligible families.  We inquired about 
how, and the degree to which, ACF assesses whether States payment rates 
are sufficient to ensure equal access.  We asked about the nature and extent 
of documentation that States submit to ACF regarding their payment rates 
and the types of specific guidance and/or technical assistance that ACF 
provides to States regarding payment rates and equal access.  In addition, 
we inquired about steps that ACF has taken to hold States accountable for 
establishing payment rates that are sufficient to ensure equal access.  Lastly, 
we asked about the challenges that ACF faces in monitoring and overseeing 
States payment rates.   
States Payment Rates Under the CCDF Program Could Limit Access to Child Care Providers  23 
OEI-03-15-00170   
APPENDIX B: Child Care Provider Survey
Statistical Estimates and Confidence Intervals 
Exhibit B-1: Child Care Provider SurveyStatistical estimates and confidence intervals 
95-Percent 
Sample  Point  Confidence 
Estimate Description  Size  Estimate  Interval 
 
Percentage of providers whose prices for full-time infant care 
950  59.0%  55.1%62.8% 
exceeded corresponding CCDF payment rates 
 
Percentage of providers whose prices for full-time infant care 
950  36.4%  32.7%40.2% 
were lower than corresponding CCDF payment rates 
 
Percentage of providers whose prices for full-time infant care 
950  4.6%  3.2%6.7% 
were equal to corresponding CCDF payment rates 
Of providers whose full-time infant care prices exceeded 
corresponding CCDF payment rates, percentage of providers 
626  53.4%  48.6%58.2% 
whose prices were up to, but not including, 25 percent higher 
than CCDF payment rates 
Of providers whose full-time infant care prices exceeded 
corresponding CCDF payment rates, percentage of providers 
626  28.8%  24.6%33.3% 
whose prices were from 25 percent to up to, but not 
including, 50 percent higher than CCDF payment rates 
Of providers whose full-time infant care prices exceeded 
corresponding CCDF payment rates, percentage of providers 
626  17.8%  14.5%21.6% 
whose prices were at least 50 percent higher than CCDF 
payment rates 
 
Percentage of providers that serve CCDF families  1,163  57.6%  54.2%61.0% 
Of providers that serve CCDF families, percentage of 
713  13.1%  10.3%16.5% 
providers that waive registration fees for CCDF children 
Of CCDF providers that described challenges/issues faced in 
participating in their States CCDF program, percentage that 
394  17.4%  13.2%22.5% 
identified the lack of reliable or timely payments as 
a challenge 
Of CCDF providers that described challenges/issues faced in 
participating in their States CCDF program, percentage that 
394  19.5%   15.3%24.7% 
identified low payment rates (and not being paid for absent 
days) as a challenge 
States Payment Rates Under the CCDF Program Could Limit Access to Child Care Providers  24 
OEI-03-15-00170   
Exhibit B-1: Child Care Provider SurveyStatistical estimates and confidence intervals (continued) 
95-Percent 
Sample  Point  Confidence 
Estimate Description  Size  Estimate  Interval 
Percentage of CCDF providers that indicated they were not 
678  21.2%  17.8%25.2% 
satisfied with the timeliness of CCDF payments 
Of CCDF providers that described administrative burdens 
associated with participating in their respective States CCDF 
444  51.2%  45.6%56.8% 
programs, percentage that identified paperwork requirements 
and overall program administration requirements as burdens 
Of CCDF providers that described administrative burdens 
associated with participating in their respective States CCDF 
444  33.6%  28.7%38.9% 
programs, percentage that identified the reporting of 
attendance and billing as burdens 
Of CCDF providers that offered full-time infant care to CCDF 
families, percentage of providers whose prices exceeded  601  55.4%  50.5%60.2% 
corresponding CCDF payment rates 
Of CCDF providers that offered full-time infant care to CCDF 
families, percentage of providers whose prices were lower  601  37.8%  33.2%42.7% 
than corresponding CCDF payment rates  
Of CCDF providers that offered full-time infant care to CCDF 
families, percentage of providers whose prices were equal to  601  6.7%  4.6%9.7% 
corresponding CCDF payment rates 
 
Percentage of providers that do not serve CCDF families  1,163  42.4%  39.0%45.8% 
Of providers that do not serve CCDF families, percentage of 
providers that would not be willing to provide care for CCDF  431  33.8%  28.8%39.3% 
children 
Of providers that do not serve CCDF families, percentage of 
providers that would be willing to provide care for CCDF  431  39.0%  33.6%44.7% 
children 
Of providers that do not serve CCDF families, percentage of 
providers that expressed lack of familiarity with the CCDF  431  27.1%  22.6%32.2% 
program 
Of CCDF providers that offered full-time infant care to CCDF 
families, percentage of providers that charged CCDF families  601  4.9%  3.2%7.4% 
a lower price than their private-pay price 
Of CCDF providers that offered full-time infant care to CCDF 
families, percentage of providers that charged CCDF families  601  3.4%  1.9%6.0% 
a higher price than their private-pay price 
States Payment Rates Under the CCDF Program Could Limit Access to Child Care Providers  25 
OEI-03-15-00170   
Exhibit B-1: Child Care Provider SurveyStatistical estimates and confidence intervals (continued) 
  95-Percent 
Sample  Point  Confidence 
Estimate Description  Size  Estimate  Interval 
For child care centers, percentage of providers whose prices 
for full-time infant care exceeded corresponding CCDF  475  65.1%  60.5%69.5% 
payment rates 
For child care centers, percentage of providers whose prices 
for full-time infant care were lower than corresponding CCDF  475  31.3%  27.1%35.8% 
payment rates 
For child care centers, percentage of providers whose prices 
for full-time infant care were equal to corresponding CCDF  475  3.6%  2.2%5.8% 
payment rates 
For family child care homes, percentage of providers whose 
475  56.2%  51.0%61.3% 
prices exceeded corresponding CCDF payment rates 
For family child care homes, percentage of providers whose 
prices for full-time infant care were lower than corresponding  475  38.7%  33.7%43.9% 
CCDF payment rates 
For family child care homes, percentage of providers whose 
prices for full-time infant care were equal to corresponding  475  5.1%  3.2%8.0% 
CCDF payment rates 
Source: OIG analysis of providers survey responses and comparison of providers prices to States CCDF payment rates, 2017. 
   
States Payment Rates Under the CCDF Program Could Limit Access to Child Care Providers  26 
OEI-03-15-00170   
APPENDIX C: CCDF Infant-Care Payment Rate 
Percentiles by State, Fiscal Years 20162018 
Exhibit C-1 contains payment rate percentiles data that States reported in their FY 2016-2018 CCDF plans. 
The percentiles reflect States measurements of the percentage of child care providers that charge prices for 
infant care at or below the States CCDF payment rates, based on each States market-rate survey.  Payment 
rate percentiles below are for full-time infant care in the geographic area of the State that serves the 
highest number of children.  
Exhibit C-1: States CCDF infant-care payment rate percentiles reported in FY 20162018 CCDF 
plans 
CCDF Infant-Care Payment Rate Percentile1 
State  Full-Time Licensed Center Care  Full-Time Licensed Family Child Care 
Alabama   46  22 
Alaska   11  45 
Arizona   8  70 
Arkansas   80  98 
California   55-60  50-55 
Colorado   10-25  <10 
Connecticut2   4  72 
Delaware   65  65 
District of Columbia3  n/a  n/a 
Florida   25  13 
Georgia   50  50 
Hawaii   56  42 
Idaho   40  40 
Illinois   31  72 
Indiana   32  47 
Iowa   40  60 
Kansas   15  50 
Kentucky   33  39 
Louisiana4  50  25 
Maine   50  50 
Maryland   8  15 
Massachusetts   58  33 
Michigan   71  83 
Minnesota   26  39 
Mississippi   54  52 
States Payment Rates Under the CCDF Program Could Limit Access to Child Care Providers  27 
OEI-03-15-00170   
Exhibit C-1: States CCDF infant-care payment rate percentiles reported in FY 20162018 CCDF 
plans (continued) 
 
  CCDF Infant-Care Payment Rate Percentile1 
State  Full-Time Licensed Center Care  Full-Time Licensed Family Child Care 
Missouri  46  49 
Montana   75  75 
Nebraska   60  60 
Nevada   8  18 
New Hampshire   50  50 
New Jersey   19  58 
New Mexico   74  47 
New York   69  69 
North Carolina   56  58 
North Dakota   33  24 
Ohio   16  16 
Oklahoma   36  52 
Oregon   75  75 
Pennsylvania   22  17 
Rhode Island   12  55 
South Carolina5  75  75 
South Dakota   80  75 
Tennessee6  21  7-33 
Texas   57  49 
Utah   69  71 
Vermont   1  3 
Virginia   18  35 
Washington   8  39 
West Virginia   75  75 
Wisconsin   53  53 
Wyoming   15  11 
Source:  OIG review of States FY 20162018 CCDF plans, Section 4.3.1. 
1 OIG rounded States reported percentiles to the nearest whole number. 
2 Connecticut indicated in its CCDF plan that the reported percentiles are for the north central region. 
3 The District of Columbia is the only State that used an alternative methodology in lieu of a market-rate survey for its FY 20162018 
CCDF plan.  As such, it did not provide percentiles in Section 4.3.1 of its plan. 
4 The center care percentile in the table is based on this information reported by Louisiana in its CCDF plan: Near the 50th percentile 
rate of $125.  In addition, Louisiana reported that family child care is not licensed. 
5 South Carolina indicated in its CCDF plan that the reported percentiles are for Level B of the States five-tier provider-quality rating 
system. 
6 Tennessees percentile range for family child care encompasses both of the States percentile ranges for its two categories of family 
child care: group and family homes. 
 
States Payment Rates Under the CCDF Program Could Limit Access to Child Care Providers  28 
OEI-03-15-00170   
APPENDIX D: Agency Comments 
States Payment Rates Under the CCDF Program Could Limit Access to Child Care Providers  29 
OEI-03-15-00170   
 
States Payment Rates Under the CCDF Program Could Limit Access to Child Care Providers  30 
OEI-03-15-00170   
   
States Payment Rates Under the CCDF Program Could Limit Access to Child Care Providers  31 
OEI-03-15-00170   
ACKNOWLEDGMENTS 
Amy Sernyak served as the team leader for this study.  Others in the Office of 
Evaluation and Inspections who conducted this study include Karolina Hill, 
Tara Bernabe, San Le, and Maura Lavelle.  Office of Evaluation and 
Inspections staff who provided support include: Althea Hosein, Seta 
Hovagimian, and Christine Moritz.    
This report was prepared under the direction of Linda Ragone, Regional 
Inspector General for Evaluation and Inspections in the Philadelphia regional 
office, and Joanna Bisgaier, Deputy Regional Inspector General.  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
To obtain additional information concerning this report or to obtain copies,   
contact the Office of Public Affairs at Public.Affairs@oig.hhs.gov.  
States Payment Rates Under the CCDF Program Could Limit Access to Child Care Providers  32 
OEI-03-15-00170   
ABOUT THE OFFICE OF INSPECTOR GENERAL 
The mission of the Office of Inspector General (OIG), as mandated by Public 
Law 95-452, as amended, is to protect the integrity of the Department of 
Health and Human Services (HHS) programs, as well as the health and 
welfare of beneficiaries served by those programs.  This statutory mission is 
carried out through a nationwide network of audits, investigations, and 
inspections conducted by the following operating components: 
Office of Audit  The Office of Audit Services (OAS) provides auditing services for HHS, either 
by conducting audits with its own audit resources or by overseeing audit 
Services 
work done by others.  Audits examine the performance of HHS programs 
and/or its grantees and contractors in carrying out their respective 
responsibilities and are intended to provide independent assessments of 
HHS programs and operations.  These assessments help reduce waste, 
abuse, and mismanagement and promote economy and efficiency 
throughout HHS. 
Office of Evaluation  The Office of Evaluation and Inspections (OEI) conducts national evaluations 
to provide HHS, Congress, and the public with timely, useful, and reliable 
and Inspections 
information on significant issues.  These evaluations focus on preventing 
fraud, waste, or abuse and promoting economy, efficiency, and effectiveness 
of departmental programs.  To promote impact, OEI reports also present 
practical recommendations for improving program operations.   
Office of  The Office of Investigations (OI) conducts criminal, civil, and administrative 
investigations of fraud and misconduct related to HHS programs, operations, 
Investigations 
and beneficiaries.  With investigators working in all 50 States and the District 
of Columbia, OI utilizes its resources by actively coordinating with the 
Department of Justice and other Federal, State, and local law enforcement 
authorities.  The investigative efforts of OI often lead to criminal convictions, 
administrative sanctions, and/or civil monetary penalties. 
Office of Counsel to  The Office of Counsel to the Inspector General (OCIG) provides general legal 
services to OIG, rendering advice and opinions on HHS programs and 
the Inspector 
operations and providing all legal support for OIGs internal operations.  
General 
OCIG represents OIG in all civil and administrative fraud and abuse cases 
involving HHS programs, including False Claims Act, program exclusion, and 
civil monetary penalty cases.  In connection with these cases, OCIG also 
negotiates and monitors corporate integrity agreements.  OCIG renders 
advisory opinions, issues compliance program guidance, publishes fraud 
alerts, and provides other guidance to the health care industry concerning 
the anti-kickback statute and other OIG enforcement authorities.   
States Payment Rates Under the CCDF Program Could Limit Access to Child Care Providers  33 
OEI-03-15-00170