Overview

The predominant approach to funding in most states, per-child subsidies, aims to make care more affordable for families. However, per-child rates are often not high enough to allow providers to invest in improving program quality or to compensate staff competitively. Increasing subsidy rates often lead providers to raise their private pay tuition rates, inadvertently making care less accessible for families not eligible for subsidies.

An alternative solution is the implementation of contracts paid directly to providers. These contracts can significantly bolster program revenues, facilitating critical aspects of program quality such as adequate teacher compensation and maintaining smaller class sizes. This approach enables providers to invest in high-quality programs that address the diverse needs of children without the constraint of balancing finances solely based on per-child funding.

These foundational contracts create a more sustainable model. They better support providers to maintain and improve program quality while keeping child care services affordable for all families, regardless of subsidy eligibility of the child. This shift from per-child funding allows a strategic move towards a more equitable and effective early childhood education system, where the focus is on comprehensive quality and accessibility, in addition to affordability.