The recent decision by HHS to roll back 2024 Child Care Development Fund Final Rule changes represents yet another step backward for the early care and education system. In a country where child care providers are operating with near-zero margins (United States Treasury, 2021) and literally going hungry at unprecedented rates (RAPID Survey Project, Stanford Center on Early Childhood, 2025), the shift to pay-by-enrollment offered a lifeline of financial stability. 

There is a significant body of evidence that  up-front payments improve stability for providers by increasing predictability and keeping revenue streams consistent throughout the year. The pandemic made clear that attendance-based payments can leave child care providers in the lurch when the unexpected happens. Reverting to this outdated system would leave providers more vulnerable and slow progress because attendance-based payments fluctuate wildly, making it difficult for providers to “make informed decisions around budgeting, staffing, and enrollment.” (New America Policy Brief, 2021). 

There is no evidence that pay-by-enrollment increases the potential for fraud. In fact, providers are still required to verify that children meet the definition of “enrolled” on a month-to-month basis, a status that requires certain attendance thresholds to be met. The Department’s assertion that the 2024 rule “favor[s] guaranteed contract slots with providers over parent-directed vouchers” also lacks grounding in reality. The  payment model does not  have any impact on parent choice; the system just needs to be made accessible enough—and the reimbursement rates feasible enough—for all types of providers to want to participate. 

Child care supply shortages exist in every state today, a well-known weak link in the infrastructure that undergirds our workforce and our economies. We urge the department to reconsider rolling back this rule that promised to help more providers stay open while encouraging others to enter the field without sacrificing their financial stability. We believe this proposed change is a knee-jerk reaction to an overstated and largely debunked “problem.” Mitigating fraud should be a priority for every state, but this rollback is not the solution. 

Instead, we urge the Department to encourage states to modernize their infrastructure in support of stronger monitoring controls that can help identify and act on anomalous payment activities. Many state lead agencies are facing staffing limitations and relying on legacy software, increasing the risk of fraud across the system. Additional administrative investment can reduce bottenecks in the system and root out bad actors without adversely impacting the rest of the child care "workforce behind the workforce," the overwhelming majority of whom are doing things the right way and caring for our children in good faith. 

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