Resource for practitioners: Sharing lessons learned for implementation of prospective payments
Federal
February 2025- August 2025
Why This Matters for Families
The Child Care and Development Fund (CCDF) is a federal program that plays a crucial role in supporting low-income families by improving access to child care, enabling parents to work, attend school, or pursue employment opportunities, while also enhancing the quality of care for young children. Despite serving 1.8 million children annually, six times as many eligible families remain unserved — largely due to chronic underfunding and the burdensome, complex process of accessing benefits for families and providers. This means millions of families are missing out on work and earnings, and children are missing out on critical opportunities to learn and grow.
Barriers to both family participation and provider engagement limit the effectiveness of the CCDF program. Families struggle to find affordable, trustworthy, and convenient care, often navigating confusing systems and inflexible schedules. Providers, particularly those accepting government subsidies, face delayed payments, excessive paperwork, and reimbursement policies that don’t reflect the private market.
Improvements to the provider experience could improve the performance of the entire child care ecosystem. Many early education providers operate with razor-thin margins, and delayed payments for those participating in the CCDF program further limit their cash flow, making it difficult to cover payroll and operating expenses. Aligning CCDF payment practices with private payment norms stabilizes revenue, making subsidy program participation more viable for providers and thereby increasing care options for families.
Implementation Challenge
In 2024, the federal government updated CCDF regulations to increase affordability, access, and provider stability. A key provision requires that all states transition to paying providers prospectively (in advance) and based on enrollment rather than attendance — aligning with how private-paying families typically pay (88% do so in advance).
States have until August 1, 2026, to implement these changes, allowing for transitional planning and the issuance of waivers. Yet implementation remains uneven, and state approaches vary widely. Some states (Maryland, Utah, Hawaii, Kansas, Wisconsin, North Dakota, South Carolina, and Texas) already pay prospectively; others cite technical and budgetary hurdles that they must overcome to comply with the new regulations.
Provider payment reform is not only an administrative fix—it’s a systemic intervention that aligns public sector practices with those of the private market. Successful implementation is key to supporting the “iron triangle” of sustainable child care: full enrollment, full fee collection, and revenue that covers the cost of care. A stronger field means more care options for families that align with their preferences, fewer wait lists for spots in desired programs and locations, and more programs that offer high-quality services to children and families.
Our Approach
During the first quarter of 2025, we conducted a systematic review of the 2025-2027 approved CCDF State Plans, Appendices, waivers, and other publicly available documentation to gain a deeper understanding of provider payment practices. The purpose of this review was to learn more about: 1) the policies and practices in states that are already in compliance with the payment requirements, and 2) how states that do not currently pay providers in advance are approaching the implementation of new practices.
To contextualize our learning from the State Plan and documentation analysis, we consulted with experts to gain insight into the real-world challenges and opportunities from the perspectives of families, providers, and administrators. We also engaged with a state that recently implemented prospective and enrollment-based payments to learn from and document their experience.
OBJECTIVES
Understand how states are approaching the implementation of new regulatory requirements regarding CCDF payment practices
Understand what fixes are necessary (statutory, regulatory, budgetary, or technical) to enable this implementation, and get a sense of the timelines required
Understand how states propose working with stakeholders, such as vendors, to design processes that work well for both providers and families.
WHAT WE DID
Systematic scan of approved 2025-2027 CCDF state plans and waivers
Desk research on current payment delivery practices, including states that already pay providers prospectively
Conversations with experts across the ECE landscape to understand real-world challenges and opportunities from multiple perspectives.
Conducted a state-by-state comparison of implementation decisions made in states that already pay providers on a prospective basis. We published a resource that details current (as of September 12, 2025) state-by-state policies and practices regarding enrollment, payment, verification, reconciliation, and changes/edge cases.
What We Learned
Many states are now turning their focus to implementation and seeking information on what has been done in other states - across our analysis, we found:
Most states have not implemented prospective payments and have received waivers to allow additional time for implementation. Six states were paying providers prospectively at the time of plan submission (Hawaii, Kansas, Maryland, North Dakota, Utah, and Wisconsin), two have implemented since (South Carolina and Texas), and 42 states do not yet meet the new requirements.
Of the 31 timelines that had sufficient detail to be analyzed by our team, the minimum implementation time was 5 months, the maximum was 25 months, and the average was 13 months. Many places planned to begin focusing on implementation in the summer of 2025.
Many states already pay based on enrollment. Upon submission of the 2025-2027 State Plan, 24 states were paying based on enrollment, 20 were not, and seven said it was “impracticable.” We have not observed prospective payments implemented without payment based on enrollment. However, at least one state (Maryland) that pays prospectively administers “enrollment”-based payments, which in practice resemble attendance-based payments and can be burdensome for families and providers.
Our research prepared us to answer key implementation questions about states that have already implemented prospective and enrollment-based payments, including:
How is eligibility defined?
Who does the state pay (and how, if applicable)? (Parents via EBT? Providers?)
What tools or systems does the provider need to interface with?
How does the provider-child relationship get established technically?
How does the state handle under/over payments (reconciliation process)?
How long does it take?
How does the state handle program integrity and take steps to mitigate fraud?
Who is involved in the program integrity check processes (family, provider, state)?
What is known about IT landscapes and support?
To expand access to high-quality child care for low-income families, the child care subsidy program must operate more like the private market in which it exists. Paying providers prospectively and based on enrollment is a crucial step; it supports providers, expands care options for families, and strengthens the child care system as a whole. Sustained commitment from states — through thoughtful implementation, provider engagement, and technical investment — will determine the long-term success of these reforms.
Throughout 2025 and into 2026, we will continue to transfer lessons about implementing prospective and enrollment-based practices from states that have already implemented them to new places. Our team has already connected with Missouri, and helped to review their draft procedures and offered suggested language revisions and considerations. We aim to engage with a broad group of states representing diverse political and operational environments as they implement these changes. We welcome outreach from states in early, middle, or late stage implementation work on prospective payments to understand what is working (or not) for state administrators, for providers, for families, and what is the impact on the number of available spots and participating children.
