Side-by-Side Analysis: Comparison of the 2025 Child Care Modernization Act to Current Law

The following is a summary of key revisions the Child Care Modernization Act of 2025 would introduce to the Child Care and Development Block Grant Act of 2014. Among other changes, this legislation would: 

• Create new child care supply and facilities grants. These grants would aim to ensure facilities are designed and equipped to keep children healthy, safe, and support their development, as well as to expand the supply and capacity of child care providers so that working parents have multiple quality child care options to suit their family’s needs. Facilities and supply funding would be time limited (FY2027-2030) and authorized as a separate program outside of the regular CCDBG program. States could reserve up to 10% of their allotment for state-level activities and award subgrants to qualified child care providers with the remaining funds, with priority given to those serving or who would serve priority populations of children:  
  • “Start Up Supply and Expansion Subgrants” would support startup and expansion costs, help meet regulatory standards, or establish or expand family child care networks. 
  • “Facilities Subgrants” would support the renovation or construction of a building or facility used for providing direct child care services.   
• Require states to develop and use a valid and reliable cost estimation model to ensure payment rates are sufficient to meet the cost of providing child care services. States would have five years to implement their model (revising it every two year) to reflect: the costs of service delivery (including fixed costs, operating expenses, and staff salaries and benefits necessary to recruit, train, and retain a qualified workforce); variations in the costs of service delivery by submarket, provider type, and children served, including by geographic area; ages of children; whether the children have particular needs (such as children with disabilities and children served by child protective services); whether the providers offer nontraditional hours; and quality of the child care. In addition to current stakeholders, states would be required to consult with eligible child care providers in developing the model. 
  
  Payment rates would need to remain sufficient to cover the cost of providing child care, and states would provide a cost of living increase to maintain the level of services provided during the year prior. The bill prohibits HHS from requiring adoption of a particular cost estimation model or element of a particular cost estimation model. 
  • Currently, states may use a survey of their child care market rate or an alternative methodology (including a cost estimation model) to determine provider payment rates. The law allows states to differentiate payment rates based on factors nearly identical to those identified above. Payment rates must be sufficient to ensure equal access for eligible children to child care services that are comparable to child care services in the State or substate area that are provided to children whose parents are not eligible to receive public child care assistance. 
• Require states to undertake a review of state and local health and safety requirements to determine redundancies and oversights that may exist. This includes requirements for CCDBG inspections and the CACFP.  
• Add a definition of “mixed delivery system” that ensures child care services promote parental choice, are offered by varied service providers (including faith-based and community-based child care providers) and in multiple settings (including family child care homes, centers, Head Start, and public and private schools), and can be supported with a combination of public and private funds. 
  • The term mixed delivery system is not included in the current law.  
• Authorize funding of “such sums as may be necessary” for fiscal years 2026 through 2030.   
  • CCDBG is currently appropriated at $8.75 billion for FY2025.  
• Amend the purpose of the law to add implementation of a mixed delivery system, ensure child care services cover the full workday and work year, increase focus on early learning and development, and assist states in supporting the child care workforce. 
• Amend the definition of “eligible child care provider” to allow licensed, regulated, or registered care providers (or their staff members) who are otherwise eligible for CCDBG assistance to include care for their own children as long as other eligible children are also being cared for by the provider. 
  • The definition currently includes grandchildren, great-grandchildren, siblings living in a separate residence, and nieces and nephews, but does not include the provider’s own child.  
• Clarify the parent activities that qualify a family for CCDBG by adding a definition for “eligible activity” that includes: full-time or part-time employment; self-employment; job search activities; job training; secondary, postsecondary, or adult education; health treatment that prevents the parent from participating in other eligible activities; activities to prevent child abuse or neglect, family violence prevention or intervention activities, or participation in a family or medical leave program.  
  • Current law instead incorporates eligible activities into the definition of eligible child, stating that a child must reside with a parent or parents who are working or attending a job training or educational program.  
• Require states to describe how they will meet the needs of certain groups of children in state plans. This includes: children in underserved areas, including areas that have significant concentrations of poverty or unemployment and that do not have a sufficient supply of eligible providers; children experiencing homelessness, in foster care, in kinship care, and who are receiving, or need to receive, child protective services; and children in rural areas.  
  • Current law requires states to describe how they will develop or implement strategies to serve children in underserved areas, infants and toddlers, children with disabilities, and children who receive care during nontraditional hours. This change adds the aforementioned subgroups of children.  
• Require state plans to describe how they will “support child care business technical assistance,” including: 
  • provision of strategies to support management coaching and the use of core best business practices; 
  • development and use of shared services initiatives including initiatives involving provider networks; and 
  • coordination of activities with programs of the Small Business Administration, programs of the Department of Agriculture, and other Federal, State, and local programs supporting child care businesses. 
    • State plans are currently required to describe how a state will develop and implement strategies to strengthen providers’ business practices. 
• Specify that activities to assist child care providers in their efforts to recruit, train, and retain qualified staff must be included in the state’s quality improvement funds (a minimum of 9% of funding).  
  • Current law outlines numerous quality improvement activities that states can choose from, including those related to training and professional development of the child care workforce; improving upon the development or implementation of the early learning and developmental guidelines; developing, implementing, or enhancing a tiered quality rating system; improving the supply and quality of child care programs and services for infants and toddlers; and more.  
• Add a reporting requirement on information related to the percentage of income that families spend on child care. This would include information on children who are eligible for but are not receiving assistance, all children residing in the state, and the child care options available to families at an affordable rate. It would also require states to include a feasibility study on how they could lower the percentage of family income spent on copayments and increase access to child care so that all eligible children receive care. States would also include an analysis on the progress they have made over 10 years regarding child and family eligibility and enrollment, expansion of parental choice and equal access, payment rates and payment practices, workforce recruitment and retention, and more.  
  • This information would be in addition to what states are required to report on under the current law, which includes family and child demographics, type of care utilized and for what length of time, cost of care, payment methods, child fatalities, and more.  
• Direct the Department of Agriculture to remove regulatory burdens that restrict the presence of home-based child care providers in rural areas. Specify that licensed, regulated, or registered child care providers are exempt from a Department of Agriculture prohibition on funds being used to purchase or construct buildings that are “largely or in part specifically designed to accommodate a business or income-producing enterprise.” 

Please see the PDF version below for side-by-side tables.

Download2025 CCDBG Modernization Act Summary (502.92 kB)