Freeport child care provider warns federal rule rollback threatens stability

The U.S. Department of Health and Human Services, or HHS, closed its Biden-era child care loophole, which required states to pay providers before verifying any attendance and before care was delivered on Jan. 5, 2026.

​According to the Department of Health and Human Services, the change will roll back provisions in the 2024 Child Care and Development Fund rule that weakened oversight and increased the risk of waste, fraud, and abuse in federally-funded state child care, including programs now under investigation in Minnesota.

​Janna Rodriguez, founder & CEO of The Innovative Daycare Corp in Freeport, answered questions via email to gain insight into this issue

Q: How did the 2024 Child Care and Development Fund rule change the way you were paid for child care services?

A: The 2024 Child Care and Development Fund rule was a major and long-overdue policy win for the child care sector. For more than a decade, providers and advocates pushed for payment based on enrollment rather than daily attendance, because it reflects the reality of how child care operates.Under an enrollment-based model, providers are paid for the child’s slot, not whether a child is present for a half day or a full day. That matters because child care is a capacity-controlled system. Whether a child attends or not, that slot is still taken, staffing must still be maintained, and health and safety requirements do not change. While many states moved forward and implemented enrollment-based payment, New York State applied for a waiver from the rule, citing concerns about funding and implementation capacity. As a result, New York providers are still being paid based on attendance, not enrollment. This was deeply disappointing to the provider community, especially since other states were able to make the transition. Because enrollment-based payment has not been implemented in New York, the rule did not change how we are currently paid, but it highlighted exactly where the system continues to fail providers.

Q: Did you face any challenges for your center?   

A: As for challenges—yes, we face them every single day. The child care workforce has been chronically undercompensated and underfunded for decades. Retaining staff is one of the biggest challenges providers face. Early childhood educators are responsible for the safety, development, and well-being of young children, yet they are often paid less than workers at Target or McDonald’s.
For programs that accept child care assistance, tuition and reimbursement rates are capped. Providers cannot simply raise prices to compete with other industries. This creates a situation where we are expected to deliver high-quality, regulated care while operating with unstable revenue and noncompetitive wages.Attendance-based payment only makes this worse. When funding fluctuates based on daily attendance—especially for school-age children whose schedules change frequently—it creates constant financial ups and downs. That instability makes it harder to:

The 2024 CCDF rule showed us what stability could look like—but without implementation in New York, providers are still operating under an unstable system.

Q: Do you think the rollback of this rule will improve or complicate your day-to-day operations?

A: From my perspective, the rollback will complicate my day-to-day operations, not improve them. As a New York provider, we were already operating in a system where the 2024 CCDF rule was not fully implemented due to the state waiver, so we never experienced the full stability the rule was intended to provide. Rolling it back doesn’t fix the underlying issues—it reinforces a payment structure that leaves providers financially vulnerable. Attendance-based payment makes it harder to plan staffing, manage payroll, and cover fixed costs like rent, insurance, utilities, and food, which do not change when a child is absent. It shifts financial risk onto providers for circumstances outside of our control, such as illness or family emergencies.Instead of simplifying operations, the rollback maintains uncertainty and instability, making it more difficult to run a sustainable child care program and continue serving families who rely on subsidized care.

Q: From your perspective, did the previous rule weaken oversight or accountability in child care funding?

A: No, it did not weaken oversight or accountability. Even under the previous rule, providers were still subject to licensing requirements, attendance tracking, enrollment verification, audits, and monitoring by local districts. The rule did not remove safeguards; it simply aligned payment practices with the reality of fixed operating costs in child care. In fact, maintaining enrollment-based payments alongside attendance verification strengthens the system by supporting program stability while preserving transparency and accountability.

Q: How important is attendance verification in preventing misuse of public childcare funds? 

A: Attendance verification is important, but it should be used as an oversight and monitoring tool, not as the sole driver of payment. Tracking attendance helps ensure children are actually being served, identifies patterns, and prevents intentional misuse or fraud. However, tying payment strictly to daily attendance does not reflect how child care programs operate. Our costs—staffing, rent, insurance, food, utilities, and compliance—are fixed whether a child attends every day or misses a day due to illness or family circumstances. A balanced approach, where attendance is monitored but payments are based on enrollment, provides accountability without destabilizing providers.

Q: Do you anticipate any changes in enrollment, staffing, or services offered as a result?  

A: Yes, I do anticipate changes.When payment systems remain unstable or tied strictly to attendance, providers have to make more cautious decisions. I expect to see reduced enrollment, particularly for families with variable or nontraditional schedules, because those placements carry more financial risk for providers.Staffing is also affected. Unpredictable revenue makes it harder to plan schedules, offer consistent hours, or commit to hiring additional staff. In some cases, providers may reduce hours, delay hiring, or limit staffing growth to avoid overextending financially.

In terms of services, higher-cost offerings—such as infant care, care for children with special needs, or extended-hour care—are often the first to be scaled back. These services require more staff and resources, and without predictable payments, they become difficult to sustain. Over time, this can lead to fewer options for families and increased waitlists, even when demand remains high.

Q: Do you view this rollback as a necessary correction or a step backward for the child care system?

A: I view this rollback as a step backward for the child care system.The original rule acknowledged that child care is essential infrastructure with fixed operating costs and that providers need predictable, stable payments to remain open and serve families. Rolling it back does not correct the real problem, which was uneven implementation and lack of technical support at the state and local levels. Instead, it reinforces an outdated model that places financial risk on providers for circumstances beyond their control, such as child illness or family emergencies.For providers like me—especially in New York, where the rule was never fully implemented due to a state waiver—the rollback feels less like a correction and more like abandoning a needed reform before it was properly executed.

Q: Based on your experience, what payment system works best for providers?  

A: Based on my experience, the payment system that works best for providers is one that is enrollment-based and paid prospectively, with attendance used for monitoring and accountability rather than as a daily payment trigger. Child care programs have fixed costs—staff wages, rent or mortgage, insurance, food, utilities, and regulatory compliance—that do not change when a child is absent. An enrollment-based system recognizes this reality and allows providers to plan staffing, payroll, and services responsibly.

The most effective system includes: Predictable, upfront payments tied to enrolled children, Consistent statewide guidance and timelines, Attendance verification for oversight, not financial penalties, Adjustments only for long-term absences or withdrawals, not short-term disruptions.This approach supports stability for providers, continuity of care for families, and responsible stewardship of public funds.

Q: Do you want to add anything else regarding this matter?

A: Yes, I do want to add one more important point.Too often, children with special needs are being left out of these policy conversations, even though they are among the most impacted by instability in the child care system. Serving children with special needs requires additional staffing, training, coordination with therapists, and individualized supports—all of which increase costs and require consistent, predictable funding. When payment systems are unstable, providers are less able to offer or sustain these services, which further limits access for families who already face barriers.