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EEC presents two FY25 reimbursement scenarios to narrow gap with cost of care
Summary
EEC staff laid out two options for distributing $20M (plus a $2.5M center-based supplemental) for childcare reimbursement increases: Option 1 favors targeted increases to rates farthest below cost-of-care; Option 2 gives a slightly larger across‑the‑board COLA. Staff recommended Option 1 but the board will vote in early 2025 after stakeholder feedback.
The Department of Early Education and Care presented two options for using FY25 appropriations to increase childcare financial assistance reimbursement rates, aiming to bring rates closer to the updated 2024 cost-of-care estimates.
Commissioner Kershaw told the board the FY25 budget includes $20,000,000 for subsidized early education and care and family childcare providers, plus an additional $2,500,000 in a supplement restricted to center-based providers. "Because we're in FY25, these funds are effective July 1 last year," she said, noting any adjustments will be retroactive for the first quarter.
The options: EEC staff (Amy Checkaway, Ashley/Leigh White and Paul Ward) presented two staff options that allocate the $20M with a choice between (1) a smaller across-the-board cost-of-living adjustment (COLA) and larger targeted increases for rates farthest below the updated cost-of-care thresholds, and (2) a larger across-the-board COLA with smaller targeted adjustments. Under Option 1, many center-based rates would be raised to at least about 75% of the updated cost of care; Option 2 yields a roughly 73% threshold while providing a slightly larger uniform COLA.
Why staff favor Option 1: the agency said Option 1 better targets regions and age groups whose current rates fall the furthest below the cost of care (examples cited: certain infant/toddler rates in the Northeast and Southeast regions). Staff also proposed a 50-cent-per-day retroactive increase to a comprehensive‑services add-on for July–September.
Data and methodology: EEC contracted the American Institutes for Research (AIR) to update cost models to 2024 prices and to refine center-based and family childcare cost estimates; staff also noted a federal CCDF approval to use a cost‑based alternative methodology. The AIR work showed center-based per-child costs rose by 14–26% between 2022 and 2024, with major cost drivers in compensation, facilities and food.
Board response and next steps: Board members discussed equity versus equality tradeoffs, encouraged more field consultation and asked staff to return for a vote in early 2025 after additional stakeholder feedback and SEIU 509 negotiations for family childcare rates. No vote was taken at the December meeting.
