Fact Sheet: Build Back Better Act - Child Care and UPK

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Subsection (d): Establishment of Birth Through Five Child Care and Early Learning Entitlement Program.

• Authorizes the Secretary to administer the program
• Requires that every family that applies receives assistance by October 1, 2024

Subsection (e): Lead Agency.

• Requires the Governor of a state wishing to receive funds to designate a lead agency to administer the funds

Subsection (f): Applications and State Plans.

• States may submit applications that includes either (i) a transitional state plan, or (ii) a full state plan
  • Transitional plans must be implemented during a 3-year period
  • Full plans must be implemented during a 3-year period
• The following are requirements for transitional plans:
  • Not more than 3 years following enactment of this Act, the Secretary must award funds to approved states, so long as the state assures it will submit a full plan
  • States must describe how funds will expand access to direct child care services and increase the supply and quality of providers
• The following are requirements for full plans:
  • PAYMENT RATES. The plan must certify that payment rates, within 3 years after the state receives funds, (i) sufficiently meet the cost of child care and set rates in accordance with a cost estimation model or cost study and (ii) correspond to differences in quality based on the state’s tiered system for measuring quality of eligible child care providers
  • COST ESTIMATION I. The plan must demonstrate that the state has developed and uses, after consultation with entities and stakeholders, a reliable cost estimation model or cost study for the payment rates to reflect rates for providers at each of the tiers; cost variations also need to consider geographic area, type of provider, age of child, and additional costs associated with providing inclusive care
  • COST ESTIMATION II. The plan must certify that the state’s payment rates (i) are based on the most recent estimates from the cost estimation model so providers receive sufficient payment to meet requirements of their tier; (ii) provide sufficient payments to providers not at the top tier to enable increases in quality to meet tier requirements; (iii) provide adequate wages to staff (at minimum, a living wage and equivalence to elementary educators with similar experience and credentials); and (iv) are adjusted on an annual basis for cost of living
  • PAYMENT PRACTICES. The plan must provide assurance that the state will implement payment practices that support the fixed costs of providing child care services
  • TIERED SYSTEM – MEASURING QUALITY. The plan must certify that the state will implement, within 3 years after receiving funds, a tiered system for measuring quality. The system must:
    • Include a set of standards, where the highest tier is, at a minimum, equal to Head Start performance standards and considers child development in different types of settings (e.g., centers vs. family child care providers) as quality indicators
    • Include a different set of standards for care provided during nontraditional hours
    • Provide resources and support for providers at lower tiers
  • ACHIEVING HIGH QUALITY. The plan must certify the state will implement, within 3 years after receiving funds, policies and financing practices that allow families to choose the highest quality tier within 3 years after enactment of this Act
  • COMPENSATION. The plan must certify that the state, within 3 years after receiving funds, has or will have a wage ladder for staff that at a minimum meets the living wage and equivalency to elementary educators’ wage requirement
  • SLIDING FEE SCALE FOR COPAYMENTS. The sliding fee scale must be used to determine copayment for families (family income based on State Median Income):
    • Income 75% or less - $0 copay
    • Income between 75 and 100% - more than 0 but not more than 2% of income copay
    • Income between 100 and 125% - more than 2 but not more than 4% of income copay
    • Income between 125 and 150% - more than 4 but not more than 7% of income copay
    • Income between 150 and 250% - 7% of income copay
  • PROHIBITION ON CHARGING MORE THAN COPAYMENT. Child care providers receiving federal funds cannot charge more than the total of financial assistance provided under this section and any applicable copayments
  • ELIGIBILITY. The plan must certify that each child that receives assistance will receive assistance for not less than 12 months, unless the child ages out
  • POLICIES TO SUPPORT ACCESS TO CHILD CARE FOR UNDERSERVED POPULATIONS. The state must assure priority for increasing access to quality and supply for underserved populations (low-income, underserved areas, infants and toddlers with disabilities, dual language learners, care during nontraditional hours)
  • LICENSING. The state must develop, within 2.5 years after receiving funds, licensing standards for providers

Subsection (g): Payments.

• For transition payments for FY 2022 – 2024, the Secretary is required to:
  • Make allotments to application approved states using the formula under section 658O(b) under the Child Care and Development Black Grant Act of 1990
  • Secretary can reallot funds from states, tribes and territories without an approved application by the date required by the Secretary to states, tribes and territories with approved applications
• For transition payments for FY 2025 – 2027, the Secretary is required to:
  • Pay approved states 95.440% of expenditures in each quarter for direct child care services
  • Pay approved states an amount equal to the product of 1.06045 and the FMAP of expenditures in the quarter for quality-improvement and building supply activities
  • Pay approved states 53.022% of expenditures in the quarter for administration costs
  • Make advanced estimated payments of expenditures submitted by the state and adjust payments, as necessary, based on any overpayment or underpayment for previous quarters