Indiana Cuts Child Care Provider Rates, Preserves Vouchers for 55,000 Low-Income Children

Indiana is implementing a 10-35% cut in reimbursement rates for child care providers serving low-income families through the federal Child Care Development Fund (CCDF) voucher program to address a $225 million funding gap. The state’s Family and Social Services Administration (FSSA) states the deficit was caused by unsustainable use of temporary COVID relief funds by the prior administration, and these cuts aim to maintain federal compliance and protect access for approximately 55,000 children currently on vouchers. Adam Alson, director of Indiana’s Office of Early Childhood and Out-of-School Learning, emphasized the difficult choice to prioritize children and families over providers due to limited funding. The rate cuts have sparked criticism from Senate Democrats and others who argue that the state's prior decision to expand private school vouchers for wealthier families contributed to the shortfall and that the cuts may force providers to exit the program, creating challenges for working families. The state legislature has allocated $147 million to sustain eligibility for current families but tightened requirements for new enrollees, while the program is projected to cost about $400 million by fiscal year 2027. Surveys from child care providers helped inform the adjusted rates, which reflect current operating costs and aim to prevent disruptions in voucher access.