Strategy Spotlight

Foundational Contracts: Innovative Financing Mechanisms to Support Improved Child Care Compensation and Quality

February 2024 | Tags: Quality, Workforce, Illinois

Over the past several years, states have used federal Covid-19 relief funds and the federal Preschool
Development Grant Birth to Five (PDG B-5) to address urgent child care needs in new ways. Whether
the issue was program survival during the pandemic or quality development over a longer time span,
the key element was program staffing—and how it is funded. Foundational contracts are emerging as an
effective new funding mechanism that supports child care centers and family child care homes as they
develop stable, adequate, and well-qualified staffing drawn from the communities they serve.
The Center for Early Learning Funding Equity (CELFE) has worked with Illinois to develop three
contracting models to support child care centers and homes. CELFE has examined approaches in other
states and found a movement toward contracts as an effective strategy. This strategy spotlight reviews
lessons learned and suggests future direction.