Legislature again fails to address root causes of the state’s worsening child care crisis
UPDATE (Jan. 5, 2026): Ohio legislators made some of the positive changes described below because they were required by the federal government, which provides most of the funding for child care in Ohio. But now, federal policymakers are considering a new rule that would undo the requirements, deepening the child care crisis. Highlighted policies are under immediate threat. See our press release for context.
Ohio legislators had the opportunity to use the state budget process to address the ongoing child care crisis. They failed to do so. Provider base payment rates (previously called reimbursement rates) for publicly funded child care (PFCC) remain at the 50th percentile; family income eligibility for PFCC remains at 145% of the federal poverty level (FPL); and the sector remains in a state of disarray.
The meager funding they did provide went to band-aid programs that do not affect the underlying causes of the crisis: low wages for providers and a family eligibility threshold among the worst in the nation.
Child care funding is made up of federal funds – Temporary Assistance for Needy Families (TANF) and the Child Care Development Block Grant (CCDBG) – and state funds, also called General Revenue Funds. Every state that receives federal funds must agree to spend General Revenue Funds on the program(s) as well. A recent report found that Ohio was one of six states that allocated no General Revenue Funds beyond what was federally required.[1] Lawmakers funded new lower-cost programs, but no additional state funding was granted to the most pressing and critical needs in the sector when adjusting for inflation.
In fact, when adjusting for inflation between the last state budget and the current one, state lawmakers did not just underinvest in the sector; they actually cut $5.6 million in state funding[2] — despite the ongoing crisis[3] and clear need for state action. Federal funding increased over the same period by more than $400 million compared to what was spent during fiscal years 2024 and 2025, when adjusting for inflation.[4] State legislators allocated nearly half the additional federal funding to the governor’s Child Care Choice Voucher program, an ineffective program that will not make child care affordable for those who need it most, rather than strengthening PFCC.[5] Federal funding depends on the whims of a capricious Congress; it is too precarious to provide a real solution to Ohio’s child care crisis. There’s no way around it: fixing our state’s child care crisis will require significantly more state investment.
Good: Child care advocates won some improvements
Leaders in the child care sector — especially early childhood educators from the Care Economy Organizing (CEO) Project — successfully pressured lawmakers to include some positive changes in the budget.
CEO Project leaders submitted dozens of testimonies speaking to the real-life impacts of state polices on their small businesses and held individual meetings with legislators in their districts. This advocacy, combined with the work of other child-focused organizations, mitigated the harm done by legislators and is one reason they took steps in the right direction.
Federal mandates also played a role, requiring the state to improve provider payment structures and family co-pays. The legislature also included modest funding for new programs intended to increase the number of early childhood educators in the state and make child care more affordable — though these programs are limited in scope and reach.
Providers will be paid the full Base Rate, regardless of their customary rate[6]
Before the state budget, PFCC providers received payment for their services at either the Base Rate established by DCY (the 50th percentile of the market rate), or their customary rate, whichever is lower. As a result, the 50% of PFCC providers in the state serving the lowest income communities — and therefore charging lower rates — were being shortchanged, not receiving the full value of the Base Rate. This language was fixed in HB 96[7] to make sure that all PFCC providers receive the full Base Rate, regardless of what the families they serve can afford. While the change has not yet been implemented, once in place it will raise the bottom line for half the child care providers in Ohio.
Providers will be paid based on enrollment, not attendance[8]
Providers will soon be paid for their care of income-qualified children based on the enrollment of children in their programs, not on children’s attendance.[9] This payment change is required by the Administration for Children and Families for continued federal funding. Previously, if a child was absent from child care, the provider would only receive a set amount based on whether the child was enrolled on a full-time or part-time basis, and only up to twenty days. This inclusion will have a great impact on providers by allowing them financial stability, regardless of a child’s attendance. It is slated to go into effect no later than July 5, 2026* July 9, 2028. (*The federal government extended the deadline for states to make this positive change. Ohio’s legislature did so almost immediately.)
Family co-pays capped at 7% of household income[10]
Another federally mandated change from the Administration of Children and Families is to cap co-pays for PFCC-eligible families at 7% of their household income, the federally determined rate of affordability.[11] While this was not a change made to policy in the state budget, it had to be accounted for financially.
Currently, families are eligible for PFCC if they have a household income below 145% of the federal poverty level and are able to continue receiving support from PFCC until their household income reaches 300% FPL.[12] Family copayment is on a sliding scale, with copayments for families making between 146% and 200% FPL ranging from 7% to 8.75% and increasing substantially once families’ income surpasses 200% FPL: A family of four with a household income of $92,052 (295% FPL) has a co-pay of $1,944 per month — that’s 25.3% of their monthly income.[13] As of 2024, nearly 10,000 Ohio kids are in households in PFCC’s “phase out” range between 200% and 300% of FPL. [14]DCY has until August 1, 2026 to cap the copays of all PFCC families at 7% of their household income.[15]
Homeless families eligible for PFCC for 12 months (up from 90 days)[16]
Another win extended the eligibility for families experiencing homelessness from 90 days to 12 months, providing crucial support for parents in finding and maintaining gainful employment.[17] This change is also due to a federal requirement for funding.[18] This expansion will benefit the nearly 400 children enrolled in the program.[19]
Bad: The legislature chose weak, ineffective policies over real fixes
More money for Child Care Choice Vouchers, with less to ensure quality care[20]
The Governor’s Child Care Choice Voucher Program (CCCVP) was allocated $200 million over the biennium to continue providing vouchers to families making between 146% and 200% FPL. The funding for this program comes out of the same funding stream as PFCC. This investment would be more wisely spent funding Free Child Care for Child Care Workers, or simply increasing the eligibility threshold for PFCC, which provides higher rates for providers and incentivizes high-quality care.
Incentivizing and promoting high quality child care matters because it supports children’s brain development, emotional well-being, and school readiness during the most critical years of growth. It also allows parents to work and strengthens the economy, while helping close equity gaps for kids in low-income and marginalized communities.[21] Ohio legislators disincentivized quality care by prohibiting vouchers from including enhanced payments for providers that participate in Step-Up-To-Quality (SUTQ), the state’s child care quality assurance program. These enhancements are a standard part of PFCC because they serve an important purpose: quality early learning is linked to improved school readiness.[22] In effect, this means that early childhood educators who put in time, energy, and money to achieve Bronze, Silver, or Gold SUTQ ratings will not see additional payment for their higher quality care from voucher participants. The Child Care Choice Voucher will be increased from the previous biennium to meet PFCC Base Rates by November 2026, providers will not be given SUTQ [23] to their payment and children will not be ensured high-quality care.
Child Care Cred ignores a proven, superior alternative[24]
In the state budget, lawmakers created the Child Care Cred program, splitting the cost of child care between employees, employers, and the state for parents and guardians lucky enough to be employed at a participating company. Unlike tri-share programs[25] in other states that split the cost equally, Ohio’s iteration imposes 40% of the cost on employers, 40% on employees, and only 20% on the state. The legislature allocated $10 million in FY 26 for Ohio’s less-effective program, which is only open to employees at participating employers making less than 400% FPL: $106,600 for a family of three.[26] Some states, like Michigan, have seen lackluster participation with even stronger “tri-share” programs that split the cost of child care equally between the state, employer, and employee.[27]
A more effective alternative would be to create a program similar to Kentucky’s free child care for child care workers.[28] Ohio currently has two companion bills in the House and Senate, HB 484 and SB 177, that would create upwards of 10,000 new child care slots in the state[29] and have a deeper impact on the child care sector.
Creation of Child care Provider Recruitment[30]
Ohio lawmakers created the Child Care Recruitment and Mentorship Grant program in the budget allocating it $2.85 million over the biennium. The intention of the program is to recruit new providers to the sector, in an attempt to address the near 33% reduction in the child care workforce in the state since 2019.[31] What this program fails to recognize, however, is that short-term mentorship and recruitment cannot make up for the severely low wages dissuading new workers and providers from entering the sector. In 2024, the median annual wage for child care workers was just $13.57.[32] Lawmakers must address the low wages in the sector if they really want to see more people working in child care.
Ugly: The legislature left in place the root causes of the crisis, and added some that will make it worse
The legislature failed to pass policies that would make a substantive difference in the child care sector, like raising family eligibility for PFCC or base payment rates for providers. Instead, they pushed forward provisions that devalue early childhood education.
PFCC eligibility still at 145%[33]
Rather than helping more Ohio families afford the skyrocketing cost of child care, the legislature chose to keep PFCC eligibility at 145% FPL ($38,643 for a family of three[34]). As of March 2025, Ohio’s eligibility threshold puts us third from the bottom compared to other states. For Ohio to be middle of the pack nationally, PFCC eligibility would need to be 225% FPL ($59,963 for a family of three).
Provider payments remain at 50th percentile[35]
Until recently, Ohio paid providers at the 25th percentile.[36] It was only after a federal mandate that, in July 2024, the state increased payment rates to what is still the lowest in the nation: the 50th percentile.[37] While five states use alternative methods to calculate payments rates for providers — like a cost model — 45 states, including Ohio, use a market rate survey instead.[38] Remaining at the federally mandated 50th percentile keeps Ohio tied for last among those 45 states.[39] The Office of Child Care recommends the 75th percentile to promote “equal access” for families, and more than half the nation’s states have implemented this payment threshold.[40]
Shift to county for presumptive eligibility[41]
The state budget repealed the requirement for county Jobs and Family Services departments to provide PFCC to families while their applications are still being considered.[42] Repealing this requirement allows for county discretion, which may result in presumptive eligibility being rescinded in some Ohio counties. This will harm families who rely on affordable child care to work. Eligibility determinations can take months, forcing families to choose between taking a job — and spending hundreds, if not thousands, on child care until their determination comes through — or turning down a job because they can’t afford to pay for child care in the meantime.
11th hour provisions[43]
Legislators dodged accountability for three of their most harmful provisions by adding them to the state budget at the last minute, with no opportunity for public input. One provision reduces the payment rates for Type A family child care homes to match the Type B family child care home rates — a significant decrease from previous rates aligning Type A homes with child care centers. The second provision raises the hour thresholds designating the status of a child as hourly, part-time, or full-time. These two provisions went into effect November 2, 2025, and end June 30, 2027, and will revert to current policy after that date.[44] The third, a permanent change, was made to staff-to-child ratios in family child care homes during Conference Committee as well.
Collapsed PFCC payment categories:[45] Legislators reduced payment rates for the 242 Type A providers[46] offering PFCC to the payment rates for Type B providers.[47] Type A providers are paid at a higher rate for a reason: They have additional costs associated with staff and zoning, and are also able to care for more children. Especially in rural areas, where there simply isn’t the population density to justify a child care center, Type A homes provide a crucial avenue for high-quality, comprehensive child care that services the unique needs of a geographic region. Reducing payment rates disincentivizes Type A providers from continuing to invest in their business at the same level. The table below compares what Type A providers would be paid without this harmful provision to what they can expect to make with the provision in place.[48]
Table 1
Across all SUTQ ratings in this example, Cluster 1 Type A providers will see a 10.7% reduction in their payments, Cluster 2 a 15.5% reduction, and Cluster 3 a 28.0% reduction. This will harm all Type A providers, but disproportionately those in rural areas where child care is already sparce. According to the Center for American Progress, in 2018 nearly 60% of rural Ohioans lived in a child care desert.[49]
Changes to payment thresholds for hourly, part-time, and full-time care:[50] The state budget also increases how many hours of care per week a child must receive to be considered for specific payment thresholds. The changes are as follows:
- Hourly: Fewer than 7 hours increases to fewer than 10
- Part-time: 7-25 hours increases to 10-33
- Full-time: 25+ hours increases to 33+
Providers receiving payment for children authorized for between seven and ten hours of care and 25 and 33 hours of care will see reductions in payments and may ultimately lead to children being turned away because businesses simply can’t afford to have a slot taken up by a child with lower level-of-service needs.
As an example: The Johnson family lives in Columbiana County and sends their 5-year-old daughter to a bronze-rated Type B home for after-school care eight hours a week.[51] Before this change, the Johnson family’s child care provider would have received $121 per week, the part-time rate.[52] After this change, the Johnson family’s child care provider receives just $74.80 per week — 38% less than before the legislature’s last-minute changes.
For another example, say the Brown family lives in Franklin County and sends their 2-year-old son to a gold-rated Center for 30 hours per week while they work. His grandma cares for him two days a week for free. Before this change, the Brown family’s child care center would have received $365.19 per week, the full-time rate, for their son. After this change, the Brown family’s center receives the part-time rate of $250 per week, a 32% reduction.
Increase in staff-to-child ratios:[53] The state legislature increased staff-to-child ratios in Type A and B home-based facilities. Type B family child care homes may now care for seven children at the same time, up from the previous limit of six. Type A family child care homes may now care for eight to 14 children at the same time — depending on the age of the children and number of staff — up from the previous limit between seven and 12. Keeping ratios low is important because it prioritizes children’s safety and allows more tailored approach to each child’s unique needs.[54]
The crisis continues
Despite growing attention to Ohio’s child care crisis, data-driven policy solutions, and dozens of people testifying about the need for additional state investment, legislators fell short. They made some changes to PFCC in the state budget, but few will make a substantive difference.
Addressing the child care crisis requires significant investment—above the bare minimum mandated by the federal government. Because of the legislature’s inaction, the crisis will likely continue to deepen between now and the next state budget. As providers struggle to make ends meet over the next two years, legislators ought to consider solutions that have proven, measurable impacts like free child care for child care workers. Prioritizing the needs of our early childhood educator workforce by investing ample state funds is crucial, or we will see more doors close and prices for parents continue to increase.
[1] “An Uneven Start: 2025 State Funding for Child Care & Early Learning,” Child Care Aware of America. Accessed November 4, 2025. Page 10.
[2] GRF Funds: Child Care State/Maintenance of Effort (MOE)(ALI 830400), Child Care Licensing (ALI 830409), Early Care and Education (ALI 830500); and two new line items: Child Care Cred Program (ALI 830414) and Child Care Cred Program (ALI 830418)
Federal Funds: TANF Block Grant (ALI 830605), Child Care (ALI 830604)
LBO Analysis of Enacted Budget, Department of Children and Youth. Jacquelyn Schroeder. Ohio Legislative Service Commission. July 2025.
[3] “Ohio’s child care crisis,” A. Smith, K. Poe, H. Smith. Policy Matters Ohio. April 15, 2025.
[4] In inflation-adjusted dollars for FY24-25, $647.4m was spent from TANF (830605, 600689) and $812.7m from the Child Care Development Block Grant (830604). Actuals for FY24-25 from Legislative Service Commission Appropriation Spreadsheet. Actual spending for TANF in Fiscal Year 2024 was spent out of Jobs and Family Services’ ALI 600689 and is not displayed in above source. Expenditure data for TANF from FY 24 was received from the Legislative Service Commission.
[5] “The bill specifies that the program must utilize PFCC rates, in providing vouchers under the program, no later than November 1, 2026. H.B. 96 requires a portion of federal line item 830604, Child Care, and $50.0 million in each fiscal year in federal line item 830605, TANF Block Grant, to be used for the program. In total, about $100.0 million in each fiscal year is allocated for the program.” LBO Analysis of Enacted Budget, Department of Children and Youth. Jacquelyn Schroeder. Ohio Legislative Service Commission. July 2025. Page 2.
[6] Funded by ALIs 830400, 830500, 830604, and 830605. LBO Analysis of Enacted Budget, Department of Children and Youth. Jacquelyn Schroeder. Ohio Legislative Service Commission. July 2025. Page 19.
[7] Section 5104.32 | Provider contracts. Ohio Revised Code. Effective September 30, 2025.
[8] Funded by ALIs 830400, 830500, 830604, and 830605. LBO Analysis of Enacted Budget, Department of Children and Youth. Jacquelyn Schroeder. Ohio Legislative Service Commission. July 2025. Page 19.
[9] Section 5104.32 | Provider contracts. Ohio Revised Code. Effective September 30, 2025.
[10] Funded by ALIs 830400, 830500, 830604, and 830605. LBO Analysis of Enacted Budget, Department of Children and Youth. Jacquelyn Schroeder. Ohio Legislative Service Commission. July 2025. Page 19.
[11] “New Rule to Improve Child Care Access, Affordability, and Stability in CCDF,” Office of Child Care. February 29, 2024.
[12] Rule 5180:6-1-02 | Application and qualification process for receipt of publicly funded child care benefits. Ohio Administrative Code. Effective November 2, 2025.
[13] Publicly Funded Child Care Family Weekly Copayment Desk Aid. Ohio Department of Children and Youth. Effective October 1, 2024.
[14] According to data from a public records request to the Ohio Department of Children and Youth on PFCC utilization by FPL for calendar year 2024. Received March 13, 2025
[15] Appendix 1: Lead Agency Implementation Plan for State/Territory Ohio FFY 2025-2027. Administration of Children and Families. Approved November 9, 2024. Page 3.
[16] Funded by ALIs 830400, 830500, 830604, and 830605. LBO Analysis of Enacted Budget, Department of Children and Youth. Jacquelyn Schroeder. Ohio Legislative Service Commission. July 2025. Page 19.
[17] Department of Children and Youth Comparison Document. Legislative Budget Office, Office of Research and Drafting. Updated October 2, 2025. Page 19.
[18] Appendix 1: Lead Agency Implementation Plan for State/Territory Ohio FFY 2025-2027. Administration of Children and Families. Approved November 9, 2024. Page 2.
See also: Department of Children and Youth Comparison Document. Legislative Budget Office, Office of Research and Drafting. Updated October 2, 2025. Page 20.
[19] An average of 387 children benefited from ORC 5104.41 each month during state fiscal year 2025, according to a data request from the Department of Children and Youth.
[20] Funded by ALIs 830604 and 830605. LBO Analysis of Enacted Budget, Department of Children and Youth. Jacquelyn Schroeder. Ohio Legislative Service Commission. July 2025. Page 2.
[21] For more information on the importance of high quality child care, see the November 8, 2023, report from the Administration for Children & Families titled Children’s Learning and Development Benefits from High-Quality Early Care and Education: A Summary of the Evidence. https://acf.gov/opre/report/childrens-learning-and-development-benefits-high-quality-early-care-and-education?utm_source=chatgpt.com
[22] “Early Learning & Child Care,” Groundwork Ohio. February 2025.
[23] H.B. 96, Section 423.90(b)(1). The Ohio Legislature 136th General Assembly. Effective June 30, 2025.
See also: Procedure Letter 36. Ohio Department of Children and Youth. October 29, 2025.
[24] Funded by ALI 830414. LBO Analysis of Enacted Budget, Department of Children and Youth. Jacquelyn Schroeder. Ohio Legislative Service Commission. July 2025. Page 17.
[25] “Free Child care for Child care Workers is a better solution to Ohio’s child care crisis,” Ali Smith. Policy Matters Ohio. February 20, 2025.
[26] “2025 Poverty Guidelines: 48 Contiguous States (all states except Alaska and Hawaii),” U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation.
[27] “MI Tri-Share Pilot Evaluation,” Prepared by Public Sector Consultants for the Michigan’s Women Commission. October 20, 2022.
[28] See “Free Child care for Child care Workers is a better solution to Ohio’s child care crisis,” Ali Smith. Policy Matters Ohio. February 20, 2025.
[29] Determined using data from a public records request to the Department of Children and Youth.
[30] Funded by ALI 830418. LBO Analysis of Enacted Budget, Department of Children and Youth. Jacquelyn Schroeder. Ohio Legislative Service Commission. July 2025. Page 18.
[31] Bureau of Labor Statistics Occupational Employment and Wage Statistics. May 2024 and May 2019. Accessed October 17, 2025.
[32] Ibid.
[33] Funded by ALIs 830400, 830500, 830604, and 830605. LBO Analysis of Enacted Budget, Department of Children and Youth. Jacquelyn Schroeder. Ohio Legislative Service Commission. July 2025. Page 19.
[34] “2025 Poverty Guidelines: 48 Contiguous States (all states except Alaska and Hawaii),” U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation.
[35] Funded by ALIs 830400, 830500, 830604, and 830605. LBO Analysis of Enacted Budget, Department of Children and Youth. Jacquelyn Schroeder. Ohio Legislative Service Commission. July 2025. Page 19.
[36] Think about it like this: If there are 100 child care programs in a county and each child care program is put in order with the cheapest program at the top and the most expensive program at the bottom of the list, then the 25th program on the list is the 25th percentile and the 75th program on the list is the 75th percentile.
[37] For more information on provider payment rates, see Ohio’s child care crisis.
[38] “Decision point: state child care assistance policies 2024,” Karen Schulman. National Women’s Law Center. May 20, 2025.
[39] “How Ohio’s Publicly Funded Child Care measures up,” Heather Smith. Policy Matters Ohio. March 10, 2025.
[40] “Child Care and Development Fund Payment Rates,” Office of Child Care. April 10, 2023.
[41] Funded by ALIs 830400, 830500, 830604, and 830605. LBO Analysis of Enacted Budget, Department of Children and Youth. Jacquelyn Schroeder. Ohio Legislative Service Commission. July 2025. Page 19.
[42] Department of Children and Youth Comparison Document. Legislative Budget Office, Office of Research and Drafting. Updated October 2, 2025. Page 18.
[43] Funded by ALIs 830400, 830500, 830604, and 830605. LBO Analysis of Enacted Budget, Department of Children and Youth. Jacquelyn Schroeder. Ohio Legislative Service Commission. July 2025. Page 19.
[44] LBO Analysis of Enacted Budget, Department of Children and Youth. Jacquelyn Schroeder. Ohio Legislative Service Commission. July 2025. Page 2.
[45] LBO Analysis of Enacted Budget, Department of Children and Youth. Jacquelyn Schroeder. Ohio Legislative Service Commission. July 2025. Page 2.
[46] Child care Search. Department of Children and Youth. Downloaded October 8, 2025.
[47] Rule Change: “Payment rates and procedures for providers of publicly funded child care services,” Ron Puff. The Register of Ohio. Filed October 20, 2025.
Greenbook Analysis: LBO Analysis of Enacted Budget, Department of Children and Youth. Jacquelyn Schroeder. Ohio Legislative Service Commission. July 2025. Page 2.
[48] Weekly Payment Rates for Providers of Publicly Funded Child Care. Department of Children and Youth. 5180:6-1-10 Appendix A. Enacted October 20, 2025.
[49] “39% of people in Ohio live in a child care desert.” Center for American Progress. 2018. Accessed Oct. 28, 2025.
[50] LBO Analysis of Enacted Budget, Department of Children and Youth. Jacquelyn Schroeder. Ohio Legislative Service Commission. July 2025. Page 2.
[51] Weekly Payment Rates for Providers of Publicly Funded Child Care. Department of Children and Youth. 5180:6-1-10 Appendix A. Enacted October 20, 2025.
[52] Using the newly determined rates from the 2024 Market Rate Survey Effective November 2, 2025.
[53] LBO Analysis of Enacted Budget, Department of Children and Youth. Jacquelyn Schroeder. Ohio Legislative Service Commission. July 2025. Page 2.
[54] “Supervision: Ratios and Group Sizes,” Office of Child Care. Accessed October 28, 2025.