On January 5, the Department of Health and Human Services (HHS) announced a Notice of Proposed Rulemaking that would lead to the revocation of multiple child care rules featured in the 2024 Child Care and Development Fund (CCDF). Under the Biden administration, changes were made to the decades-old CCDF to help working families afford and access quality child care, while also improving payment methods for child care providers.
Enrolling one’s children in a child care program can be expensive, particularly in areas that already have a high cost of living. As of 2024, U.S. families spend anywhere between $6,552 and $15,600 per year on full-day care for one child. Consequently, the CCDF has long attempted to lessen this burden, with the recent Biden-era regulatory moves changing the assistance that providers and families receive.
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Overall, the CCDF has a proven track record of helping families access child care services who otherwise wouldn’t be able to. Through the Child Care and Development Block Grant (CCDBG), federal funding is allocated to states to cover child care subsidies for low-income families with children under age 13. States then decide how to use these funds to best support families, children, and child care providers through dedicated subsidy programs. Because states draw from their targeted funding at different times or in different amounts, changes to the CCDF can have varying impacts.
ON DECEMBER 26, RIGHT-WING YOUTUBER and content creator Nick Shirley posted a video that quickly went viral. In it, Shirley visits multiple child care facilities in Minnesota that seemed empty or unused, interviews people who claim they had never seen children at these locations, and accosts Somali employees, accusing them of receiving public funds but not providing services. Although these allegations remain unsubstantiated (a manager of one day care center said Shirley visited outside of its regular hours, and state investigators verified that all facilities featured in the video were operating normally), the Trump administration responded at top speed, striving to root out “waste, fraud and abuse.”
Long before Shirley’s video, Minnesota had been tackling documented child care fraud, with a state investigation finding a handful of centers that were billing for children to whom they were not providing services. State prosecutors charged around a dozen people and centers in the years prior to 2019. Thereafter, Minnesota reformed its oversight of the child care system, creating a department that exclusively managed providers, and passed legislation that criminalized kickbacks for program enrollment referrals.
Seizing on the opportunity provided by Shirley’s video, and as part of the Trump administration’s war on Somali immigrants, Trump’s HHS 2024 CCDF quickly singled out practices they deemed problematic: enrollment-based billing, up-front payments to providers, and avenues that helped states prioritize allocating grants and contracts to businesses. Such rules cannot be overturned overnight; that requires public comment before a final decision is reached. (The comment period runs until February 4.)
In the case that HHS does move forward with these changes, families and child care providers alike will face increased challenges. HHS declined to provide a comment to the Prospect on their decision to target 2024 CCDF provisions.
As of 2024, U.S. families spend anywhere between $6,552 and $15,600 per year on full-day care for one child.
HHS seeks to reinstate attendance-based billing, so that providers are required to prove client attendance rate to receive funding, rather than reporting how many children are enrolled. Challenges can arise through this approach, says Casey Peeks, the senior director of early childhood policy at the Center for American Progress: “We don’t want to be in a situation where it’s more advantageous for a provider to just work with private paying families and not accept subsidy payment. That squeezes the options that these low-income families have.”
Attendance-based payments are particularly tricky and throw funding structures off-balance, Peeks adds. “If there’s a child who doesn’t attend one day, your [a provider’s] operating costs don’t go down.”
Similarly, the administration has proposed getting rid of the requirement that states pay child care providers up front.
In its announcement of the proposed change, HHS said that the up-front payment requirement makes it easier for child care centers to defraud the government by receiving money before services are rendered. But that goes against the standard used by the private sector, said Karen Schulman, the director of state child care policy at the National Women’s Law Center.
“Usually [when] a parent comes in, they don’t say, ‘I’ll pay you after, at the end of the month.’ No, the provider receives the payment at the beginning of the month,” she said.
Requiring payments up front ensures that child care centers will reliably be paid and, in turn, will pay their staff on time. “This [rule] was insurance for the provider,” Schulman said.
Encouraging states to funnel their funding into parent-directed vouchers instead of contracting with or providing grants to providers is another key fixture of HHS’s rule changes. School choice has been a main priority of the Trump administration, with the One Big Beautiful Bill Act (OBBBA) creating a tax credit program that supports religious and private K-12 schools. HHS’s announcement shows that these voucher policies are being extended into the child care sector.
Voucher programs allow parents to use allocated public dollars to locate and decide on a child care provider who participates in the subsidy program. A major critique of this approach is that it often excludes infants and toddlers, children with disabilities, and those who live in underserved areas. The 2024 rule required states to provide grants and contracts to providers to increase the amount and quality of child care for these groups.
“Everybody has trouble finding child care supply but those specific demographics suffer even greatly from the child care supply issues in this country,” says Peeks. “Grants and contracts are actually a tool to help build supply and stabilize the supply that we have, because the funding goes directly to providers.”
HHS also proposed removing the requirement that limits family child care contributions to 7 percent of the family’s income. That requirement has meant that states and the federal government are responsible for any other costs incurred, reducing the financial burden on families.
If HHS does remove the 7 percent cap, some states will likely keep that requirement regardless. But others may force families to spend more of their income on child care costs.
AS THE CHILD CARE SECTOR BEGAN REACTING to these sweeping changes to the CCDF, HHS made another announcement: Access to federal child care and family assistance funds were frozen for five states. Effective immediately on January 6, California, Colorado, Illinois, New York, and Minnesota were cut off from using funds from the CCDF, Temporary Assistance for Needy Families, and the Social Services Block Grant. Citing “serious concerns about widespread fraud and misuse of taxpayer dollars in state-administered programs,” HHS cut off access to roughly $10 billion in funds for the affected states.
In order for the freeze to be lifted, HHS requested that each impacted state turn over immense amounts of data related to the administration of child care funding, like the names and Social Security numbers of anyone who received benefits from some of the programs. These directions were similar to the “Defend the Spend” system, which states must already comply with to receive funding for programs like Head Start.
The five states promptly filed suit against the Trump administration, calling the freeze illegal and unconstitutional. On January 9, a federal judge ruled that child care funds could not be blocked, lifting the freeze, but did not rule on the legality of the freeze. Instead, states were given 14 days to make arguments in court.
The latest rule reversals come after a uniquely difficult year for child care workers and the families who rely on them. In late 2024, the last of emergency COVID child care funding expired. Then, when the Trump administration took office in early 2025, child care providers were hit by funding freezes and the firing of federal employees who were supposed to answer questions and ensure the effective use of funds.
Though some of the most harmful funding freezes and executive orders were blocked in the courts, advocates say their impacts are still felt.
“These programs are operating on the margins, and they can’t afford to miss a day or week of payments,” said Schulman. “They could close. If they close, parents lose their child care. They can’t work without child care.”
In July, the president signed OBBBA, dealing a blow to social safety net programs like SNAP and Medicaid. This could force some states to spend less on child care to maintain their SNAP and Medicaid programs.
The administration’s crackdown on immigrant communities also poses a threat to the child care industry, where 20 percent of workers are immigrants. If care workers are deported, or stay home from work out of fear of arrest or harassment by Immigration and Customs Enforcement, children and families will be left behind.
Even when child care funding is flowing, inflation means that money doesn’t go as far. Congress’s March 2025 continuing resolution kept the CCDBG spending levels the same as they were for fiscal year 2024. The Center for Law and Social Policy crunched the numbers, however, factoring in the rate of inflation, and found that 24,000 children could lose their access to child care. If levels aren’t increased in the next round of funding, that number could double.
DESPITE TRUMP ADMINISTRATION CUTBACKS, some states and cities are stepping up to support families. On January 8, newly inaugurated Mayor Zohran Mamdani and Gov. Kathy Hochul announced a major expansion of child care in their respective New York jurisdictions. The plan they laid out would expand child care options for around 100,000 young children statewide, and puts New York City on track to become the first American city with free universal child care. It’s a major early win for Mamdani, who made child care affordability a central issue of his campaign.
The new policies, on which Hochul proposed spending $4.5 billion in the coming fiscal year, would help the state expand child care to all four-year-olds by fall 2028. The money will also make New York City’s “3-K” program (for children ages three to kindergarten) universal, and will allow the city to begin to offer free child care for two-year-olds. This fall, 2,000 two-year-olds will start in the program, which will expand each year. The state legislature still needs to approve Hochul’s funding request, but the odds are good.
Vermont has also greatly expanded its child care funding in recent years. New Mexico has become the first state to offer universal child care.
“States’ actions are important. They’re not sufficient, because we need to reach all families,” Schulman said. “But [when] that investment and commitment is made, it does have results.”