New CCDF Final Rule: Restoring Flexibility in the Child Care and Development Fund (CCDF)
On May 12, 2026, the Administration for Children and Families (ACF), Office of Child Care (OCC) published a final rule that will reduce costs and burden for States, Territories, and Tribes administering the CCDF program. This final rule supports the Trump Administration’s and HHS Secretary Robert F. Kennedy Jr.’s commitment to deregulation and eliminating unnecessary regulatory burdens. The final rule is available here.
The final rule rescinds the following four requirements added in the March 2024 CCDF final rule (89 FR 15366) that are costly, burdensome, and overly prescriptive:
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Federally mandated cap on family co-payments to no more than 7 percent of family income: Repeals the requirement for States, Territories, and Tribes to cap family co-payments at 7 percent of family income. With this change, CCDF policy reverts to the previous requirement that matches the statutory language that co-payments cannot be a barrier to families receiving child care assistance. Under this final rule, Lead Agencies may continue to set family co-payments to align with community needs.
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Requirement to use some grants or contracts to provide direct child care services: Repeals the requirement for States and Territories to use some grants or contracts to provide direct services for infants and toddlers, children with disabilities, and children in underserved geographic areas. By repealing this requirement, HHS is ensuring that parents can use federal funding through vouchers or certificates to access the providers of their choice that will meet their unique needs.
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Requirement to pay child care providers prospectively: Repeals the requirement for States and Territories to pay child care providers in advance of or at the beginning of the delivery of service (i.e., prospectively) and restores the option to pay providers on a reimbursement basis. This change increases Lead Agency flexibility to develop payment policies that they believe best support program integrity and combat potential fraud in their CCDF programs.
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Requirement to pay child care providers based on child’s enrollment rather than attendance: Repeals the requirement for States and Territories to pay child care providers based on a child’s enrollment rather than attendance. The change provides greater flexibility and multiple allowable options to meet the statutory requirement to delink provider payments from a child’s occasional absences. States and Territories will also have increased flexibility to support program integrity and combat potential fraud in their CCDF programs.
The final rule continues to allow States, Territories, and Tribes the option to implement rescinded policies based on their own assessment of what works best for children, families, and child care providers in their communities and what policies best support their ability to prevent fraud within the CCDF program.
This final rule takes effect on July 13, 2026. Forthcoming guidance will outline the process ACF will follow to address existing non-compliances and transitional and legislative waivers related to the rescinded requirements.
Additional resources will be available here.
Please contact OCC at OCCPolicyInfo@acf.hhs.gov with any additional questions.
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