Massachusetts raises its subsidy reimbursement rate for children in child care: the state will pay a more equitable amount

Last week, Massachusetts announced great news for early education and care providers.

Starting next month, there will be at least a 5.5 percent increase in daily child reimbursement rates, the money the state pays programs to provide subsidized child care spots to children from low-income families.

The rate increase will mean “an increase of over $2,000 a year on average per child.” Programs will also receive a retroactive rate-increase payment to cover the time from July 1, 2023, to this February. 

To fund the new rate, the state will invest $65 million from the FY’24 budget, a state press release explains. This funding will address “long-standing inequities” in rate amounts by geographic region,

“Providers will also start to receive higher reimbursements for infant and toddler care to better cover the true cost of providing care to these age groups.”

The rate increase was approved by the board of the Department of Early Education and Care (EEC). 

“The vote came,” The Boston Globe reports, “after months of conversation around regional equity when it comes to reimbursing child care centers that acceptpoor children.”

The new rate draws on data that accounts for “the actual cost of caring for children, instead of relying on the current rate structure, which doesn’t capture several factors, including housing costs, staffing numbers, or child care salaries in a particular region,” the Globe adds, noting:

“The change is a departure from the traditional model where subsidyrates were set using a federal market rate survey of what programs charge private-pay families. Because the data do not account for nuances unique to different parts of the state, the rate system produced large discrepancies from region to region.

“Massachusetts is one of the first states in the country approved by the federal government to move forward with this kind of alternative methodology when setting rates for child care financial aid.”

Governor Maura Healey thanked members of EEC’s board for “their support in approving our transformational rate proposal, setting Massachusetts up to be a national leader in using the cost of care to more accurately and equitably determine reimbursements for our child care providers. These deserved increases will help providers to recruit and retain a high-quality workforce and reduce costs for families.”

Massachusetts’ Secretary of Education Patrick Tutwiler adds, “Here in Massachusetts, we don’t just want to get ‘back’ to how things were before the pandemic – we are focused on transforming our early education and care system forward towards access and equity for all families.”

And EEC Commissioner Amy Kershaw says, “Our child care financial assistance programs are a critical tool to expanding access and affordability for families. Today’s approval of our transformational rate increase, in addition to the significant reforms we rolled out in the fall to make it easier for providers to administer these programs, aims to attract more providers to participate in the state’s system.”

The rate increase will bring more economic stability to the EEC programs and build a foundation for future progress.

As Amy O’Leary, the executive director of Strategies for Children, says:

“There has never been more momentum, cooperation, and determination in Massachusetts to find effective solutions to systemic challenges.”