UPDATED: March 20, 2024. Click here for an official announcement from Gov. John Carney and the Delaware Department of Health and Social Services.

When it comes to funding Purchase of Care, the state subsidy that helps families cover child care tuition, about 30 percent comes from federal dollars funneled through the U.S. Department of Health and Human Services, Administration for Children and Families, Office of Child Care.

As with most federal dollars, there are rules and regulations attached to how they are spent. Earlier this month, the office released its new set of rules to govern the Child Care Development Fund (CCDF).

The new rules go into effect on April 30, 2024.* Delaware and other states must submit plans later this summer for how they will retool funding and policies for Federal Fiscal Year 2025-27, which begins October 1, 2024. (These summaries outline what states must do and what they may do with federal funds, including several policies underway in Delaware.)

The new rules are designed to improve child care access, affordability, and stability. What do they require and what will they mean for Delaware families?

Required Policy Changes—and Additional Opportunities for Delaware

1. Improve family affordability by limiting co-payments. This rule requires states to establish co-payment policies that ensure families receiving CCDF subsidy pay no more than seven percent of their family income for child care regardless of family size.

Eliminate co-payments for the families in greatest need. The rule allows states increased flexibility to waive co-payments for additional families—families with income at or below 150 percent of the federal poverty line, families with a child with a disability, children who are in foster care/kinship care, families experiencing homelessness, and families with children enrolled in Head Start or Early Head Start.

Currently, Delaware’s co-pay schedule goes up to nine percent and exempts only those below 70 percent of the poverty line.

UPDATE: At the Delaware Early Childhood Council meeting March 19, the Department of Health and Social Services committed to implementing both the required and allowable policies as of June 2024. These changes impact about 75 percent (8,000 of the 12,000) children and families served by Purchase of Care; most families served are below 150 percent of the Federal Poverty Level and will have no copayment.

Additional Opportunity: Delaware could get permission from U.S. Department of Health and Human Services and use state dollars to eliminate copayments altogether. For example, families in Delaware earning up to 200 percent of the Federal Poverty Level (FPL) are eligible for food benefits (SNAP), however the state requires them to pay for child care.

2. Provide stability to child care programs, so they can plan their budgets and hire staff based on enrollment.
   • A. Grants and Contracts. This rule requires states to use some grants and contracts for slots for children in underserved geographic areas, infants and toddlers, and children with disabilities. This is similar to how state-funded pre-K (the Early Childhood Assistance Program, or ECAP) works, with an annual contract to cover a slot for a child—similar to the approach used in public K-12 education.

Additional Opportunity: This rule encourages states to consider other populations that may benefit from grants or contracts, including care for children during nontraditional hours.

• B. Prospective Payments. This rule requires states to pay child care providers serving CCDF families prior to the delivery of services or at the beginning of the delivery of services to align with private-pay practices. This helps providers cover costs for the month, including staff.
• C. Payments Based on Enrollment. This rule requires states to pay subsidy based on authorized enrollment, not attendance. This helps providers cover fixed costs including staff, whether children attend or not—and it helps stabilize their finances when children are sick or families are away. Thirty-six states already pay based on enrollment.

UPDATE: Waivers and plans to adopt these policies in the next two years will be submitted as part of Delaware’s federal plan by July 1, 2024. As of June 2024, the state committed to paying for 10 absent days per month per child. The current limit of five per month has created instability for families and providers, especially when children are sick and staff are hired to full-time commitments.

Many of the updated rules are underway in Delaware, such as consumer education, payment of subsidy above the private pay rate, presumptive eligibility, and eligibility simplification.

Do these rules address the needs of Delaware’s families? Yes—in part. What else do families and providers need?

1. Expanded eligibility. Delaware’s subsidy eligibility will be raised to 200 percent FPL if the Governor’s Recommended Budget is passed; however, all our neighboring states and most other states set their eligibility limits above 250 percent, with some much higher. After minimum wage and other increases, many families are no longer eligible but cannot afford care.

Delaware is currently serving about 30 percent fewer children on Purchase of Care than in years past—likely in part because some families now “make too much” when eligibility has not kept up with families’ realities.

2. Increased rates. The state rate per child must be raised to cover not just basic costs to operate a licensed child care facility in the state but also increased costs of staff and increased needs of children.

The state bases its rates on the “market rate,” a seriously flawed mechanism based on a broken market. The General Assembly directed DHSS to support Purchase of Care based on 100 percent of the 75^th percentile of the 2021 market rate—and we will have a new rate available in April 2024.

The study, which is conducted every three years, regularly notes a nine- to 10-percent increase in providers’ operating costs. Recent increases to minimum wage and inflation continue to drive costs higher.

UPDATE: DHSS also committed at the March meeting to “fully fund” the updated rates in the 2024 market rate study (meeting 100 percent of the 75^th percentile when new rates are released). We anticipate rates increasing up to 10 percent, likely beginning in July with the new fiscal year. No rate increase had been discussed until the announcement this week.

The General Assembly also directed DHSS to move toward a cost of care methodology—this study showed the state was paying far below the cost of basic licensed care in Delaware and far below the cost of quality. An updated study is anticipated in May.

3. Workforce benefits. The child care workforce generally makes minimum wage, with no benefits. Many of them are on public assistance, but for those who are not, some states have provided subsidized child care or health benefits to child care workers earning up to 400 percent FPL. As soon as many educators get their degrees, they leave child care for school district jobs that pay twice as much for a school year with benefits. In order to attract and retain workers, child care has to be able to offer greater compensation and benefits.

UDPATE: DHSS committed to a “one time workforce enhancement,” likely similar to bonuses awarded in previous years to early care and education employees who have served for a minimum amount of time in the field. The move provides short-term compensation support.

These new investments are being funded by existing resources; DHSS released a report in March that noted over $40 million of the $122 million Purchase of Care budget was anticipated to go unspent in FY24. The hope is that some of the FY24 funds can be spent this year, and commitments were made that the ongoing policies would continue going into FY25 and beyond.

Reactions from the Field

Child care program leaders and advocates at the DECC meeting responded to this news with enthusiasm, thanking the Carney Administration and looking forward to even more progress in the future.

At the same meeting, providers were excited to hear that the Department of Education would award quality funding (formerly tiered reimbursement connected to a STARs quality rating) at a level of at least as much as programs received in the past, based on the number POC children served, and provided annually through a streamlined process. The initial plan is for awards to be as high as $180,000 depending on the size of program and percentage of POC children served.

The strong sense from members of the Delaware Early Childhood Council and participants was that the Carney Administration was listening and investing funds in ways that will support programs and families.

What’s next and what can I do? 

1. To provide input on Delaware’s next steps, attend public CCDF feedback meetings, including Delaware Early Childhood Council meetings March 19 and May 21 (sign up for the newsletter here).
2. Reach out to your legislators to tell them to invest more in early care and education bit.ly/FY25ChildCareAsk.
3. Tell candidates for office this issue is a priority for you and ask what they will do to expand access and affordability.

* States that are not in compliance with the provisions of the final rule by April 30, 2024 may request a temporary waiver for an extension of up to two years to ensure there is enough time to execute the steps to comply with regulations.

Delaware has a strong, multifaceted strategy in place when it comes to strengthening its educator pipeline. Like other states, Delaware continues to face educator shortages—prompting  the Delaware Workforce Development Board to name teaching “a priority, in-demand occupation.” The state has in place some short-term strategies, including a nine-percent salary increase for teachers in next year’s budget, and longer-term pipeline development and retention approaches as well. Now, we’re adding another approach with teacher apprenticeships.

Delaware’s Approach

Districts now begin recruiting their own middle school students into the profession through career exploration models. In high school, almost 3,000 students are enrolled in teacher pathway courses—and their demographics more closely reflect the diversity of our student population, unlike our current breakdown of teacher demographics.

As we’ve written about previously, our state’s year-long teacher residency program has grown from just a few to over 100 residents annually in just a few years, and the General Assembly has codified it and devoted ongoing resources to support residents. Delaware schools are seeing success in their retention because these graduates become fully immersed into the full school year and culture, whereas most student teacher opportunities only last a few months. Last year, the General Assembly codified funding to support “Grow Your Own” initiatives to attract candidates within the school community through improved recruitment, retention, and diversity of educators.

Teacher apprenticeships are another component to Delaware’s Grow Your Own approach. A recently introduced bill, HB 138, will codify registered apprenticeships in teaching. The bill is led by all Senate and House Education and Labor committee chairs and members of the Delaware Workforce Development Board.

Why Apprenticeships?

Apprenticeships are a model used in many industries and have proven to be an effective earn-and-learn model for career development that provides on-the-job training and mentoring—as well as “related training and instruction,” the professional training required to support career development.

Aspiring educators will find themselves in high-quality, industry-driven pathways that pay them and provide them hands-on work experience. Increased wages as the candidate progress are a foundational agreement in the apprenticeship. Candidates will be required to meet the student teaching and coursework requirements of teacher preparation in Delaware.

In recent years, two states registered teacher apprenticeship programs with the U.S. Department of Labor (Tennessee and West Virginia), and fourteen others developed and registered their state-level apprenticeship programs, which is the approach Delaware is taking.

The Delaware Departments of Education (DDOE) and Labor (DDOL) and the National Grow Your Own Center have been part of planning this work in Delaware and informing the legislation, which was based on other states’ models.

Apprenticeship is a great pathway to certification for candidates, including paraprofessionals—and it complements the other strategies we have in place in Delaware.

What’s Next?

Rodel is a proud partner in these efforts, supporting districts and charter schools, educator preparation programs, the Delaware Department of Education, and legislators to advance these important initiatives. We look forward to supporting a pilot in the fall in Appoquinimink School District and to working with the DDOE and DDOL to explore how to leverage federal funding to support these initiatives.

We often hear that children learn to read and then they read to learn—with this transition happening at a critical point in third grade. And we know that we as a state can do more to enable children to read to learn and reach their full potential.

In recent years, the issue has gotten even more attention for a few reasons. A greater spotlight has shone on this issue as national data have been released about the loss of learning during the pandemic. The science of reading has become accepted as a body of research educators can rely on to teach children to read—and has been upheld in legislative efforts to establish state policies related to teaching reading. Early literacy has also been a high priority of Governor John Carney and the Department of Education.

State Efforts Recognized Nationally

We’ve written in the past about the energy around literacy in Delaware: The state plan was released in 2019, and the Department of Education has led tremendous efforts to strengthen grade level instruction, through high-quality instructional materials and high-quality professional learning to educators. The work has included professional learning grants to support district and charter adoption of these curricula and evidence-based options for educators to get trained in a variety of formats. These formats include traditional in-person trainings and higher education programs, including LETRS (Language Essentials for Teachers of Reading and Spelling) and other nationally recognized programs. Delaware also has been a leader on an innovative approach: microcredentials, which allow educators to demonstrate their knowledge and skills to earn recognition in literacy. This approach—called competency-based professional development—is something the Rodel Teacher Network has advocated for since 2016.

Recently, Delaware has recognized by national experts for this approach. A new report from the Center for Public Research and Leadership at Columbia University, “Staying the Course,” celebrates Delaware’s adoption of high-quality instructional materials (HQIM) and recognizes districts like Seaford, which has  transformed from one of the state’s lowest-performing districts to one of its highest on the state’s reading test, after adopting and implementing a high-quality curriculum.

Across the state, districts adopting HQIM have seen increased scores and fewer reductions since the pandemic. Some of the main benefits of this approach, according to educators featured on a recent webinar, are:

• Equity and consistency: Students benefit from tier 1 instruction across the school and district, and educators can support each other.
• Support for teachers: HQIM provide more support for teachers for intervention and removes the burden of educators to create and find materials, which can often lead to significant time demands without improved quality—another area the Rodel Teacher Network has promoted.
• Engaging content: Educators report serving as facilitators of student led conversations and discussions, and that they have found joy in classrooms through using these materials.
• More effective: Educators spoke to reductions in remediation and anticipate significant reduction in the need for intervention if all students receive this high quality instruction.

The state and districts leveraged federal funding in recent years to invest in high-dosage tutoring and focused on accelerated learning in their resources through extended school year grants for summer and after school. Colonial’s partnership with Reading Assist was featured by NBC news as a strong use of these dollars. This partnership coupled with Colonial’s new investment in early literacy HQIM stands to increase outcomes for the district’s early learners.

Implementation of Legislation Underway Bolsters Efforts

In 2021 and 2022, three bills were passed to establish policy requirements related to teacher education, curriculum and training, and screening and reporting. The requirements are now being implemented, including: working with institutes of higher education to ensure faculty who teach prospective teachers are trained on the science of reading, and releasing a list of curriculum and screeners from which districts and charters can select (anticipated in May 2023). These HQIM that focus on literacy (English Language Arts or ELA) in grades K-3 will provide the tier 1 instruction that research tells us can help  95 percent children learn to read without interventions by the end of first grade.

By 2027, all public schools in Delaware are required to be implementing HQIM, training for educators, and screenings to identify those children that do need intervention. By the end of this year, we’ll have a sense of how many districts are already on track and how many students are receiving interventions—based on reporting anticipated by December 31.

Emily Hanford’s “Sold a Story” podcast gives context on why the research on how students learn to read has not been adopted in the last few decades. Her research features Delaware among 26 states that have passed legislation since 2019 intended to support the implementation of the science of reading, and we are one of 12 states that require districts and charters to select from a list of state-approved curricula.

In Action

We know these approaches work—and we have exemplars in our state that are already underway. Reading Assist has demonstrated the benefits of explicit instruction based on the science of reading through targeted intervention—demonstrating the majority of students receiving tutoring reaching benchmarks and growing at twice the anticipated rate. Governor Carney recognized Reading Assist at a recent Rotary Club of Wilmington meeting and noted state efforts to expand their services statewide.

This week, I had the opportunity to visit Cooke Elementary with Senator Laura Sturgeon and see in action the implementation of explicit, systematic instruction based on the science of reading. Red Clay School District is piloting two curricula in anticipation of adoption in the coming years. The excitement of the educators and engagement of the students was exciting to see—and the early results are promising.

Delaware is on the right course – we are optimistic that as more educators are given the training and opportunities, we all will see the benefits.

Leading Senators on Health & Social Services and Education Committees have introduced two bills responding to advocate priorities focused on Purchase of Care, a state subsidy, which has been underfunded for decades. The bills will pay child care providers a statewide rate and stabilize support for families and providers.

Senate Bill 58 will extend policies adopted during the COVID-19 public health emergency, in which the Delaware Health and Social Services (DHSS):

1. …Did not charge “copays” for Delaware families earning up to 200 percent of the federal poverty level. Copays are the amount families are required to pay on top of the state subsidy; in some cases, Delaware had copayment requirements in place well beyond the federal recommended maximum of seven percent.

For example, a family making $44,000 pre-tax would be paying $4,000 in copays toward child care per year. (This is on top of “plus” payments that child care programs are allowed to charge families to make up the difference between the state subsidy rate and their own tuition rate.) By limiting copays for families who have the greatest need for support, the state provided stability to families and the early learning programs supporting them.

Brain development does not start at age five; all children deserve opportunities for early learning and development. In the future, we may reach the level of other developed nations that provide comprehensive care and education to all families. Short of that, Delaware may put in place a sliding scale, where the families most in need pay nothing and as a family’s income increases, they pay a portion up to seven percent of their income. This is a strategy some nonprofit providers already employ in Delaware by “scholarshipping” some (or all) students to offset the low rate the state pays.

2. …Reimbursed Purchase of Care providers for 15 absent days per child per month. Unlike pre-K-12, where schools are funded for a child for the year, child care is funded based on daily attendance reporting, which can be unpredictable. With absent days covered by the state, providers have assurance that the child’s place in the classroom can be held, ensuring continuity of care and building the bonds and strong relationships key to child development.

Delaware’s state-sponsored pre-K option, Early Childhood Assistance Program (ECAP), has avoided this challenge thanks to its unique funding structure. The program is managed through state contracts, similar to pre-K-12, where children’s slots are funded for the year. Starting in the fall, this program will serve zero-through-five year olds statewide with higher quality standards.

In the future, we hope all early learning programming can be managed through contracts, which create predictability and stability for providers and families—while establishing oversight and transparency for government. Contracts ensure funds are being used to support high-quality programs with fairly paid staffs.

DHSS included both of these items in its full FY23 budget, so these can take effect immediately upon being signed into law and avoiding a disruption in the policies being “unwound” as part of the end to the public health emergency.

Another bill, Senate Bill 59, directs DHSS to pay a statewide rate to all child care providers aligned with the rate paid to providers in New Castle County. For decades, early care programs in Kent and Sussex counties—and those who operate statewide—have been penalized as much as 40 percent for providing the same service.

How? State subsidy rates have been based on a faulty “market rate” that doesn’t actually reflect the cost of providing care to children. The market for child care is considered to be fundamentally broken nationally—and named as such by the U.S Treasury and U.S. Department of Labor in recent years.

Costs, on the other hand, are similar statewide. Teacher salaries, which make up the majority of providers’ budgets, are similar, with most providers paying minimum wage or more to keep up with other employers, and costs for supplies and food have been rising similarly.

This bill would take effect May 1; a recent DHSS report indicates that existing funds can cover this expense in the current budget year—and the state is receiving an additional annual $4 million from the federal government that can go toward evening out investment levels.

These are common sense policy changes that will stabilize child care in Delaware as we build toward our long-term aspirational system where children get the developmental experiences they all deserve—and where young families are supported and attracted to Delaware. We thank the General Assembly for their action and leadership on these issues—and look forward to working with the Joint Finance Committee to increase rates to cover the cost of child care in FY24.