INDIANAPOLIS — The Indiana Family and Social Services Administration's Office of Early Childhood and Out-of-School Learning announced Thursday that it will cut Child Care and Development Fund voucher reimbursement rates to address a $225 million funding shortfall.
The cuts range from 10 percent for infants and toddlers to 35 percent for school-age children. Officials say the reductions are necessary to maintain federal compliance and prevent disruptions to voucher access.
"We made this decision to protect the children and families that depend on CCDF vouchers. There is only one pot of money – we could either protect providers or kids, and we chose kids," said Adam Alson, director of OECOSL.
The funding crisis stems from unsustainable rate increases implemented in April 2021 using temporary COVID relief funds. The state increased voucher rates by 20 percent per child without creating a long-term funding plan.
Currently, about 55,000 Indiana children rely on CCDF vouchers, down from a peak of 68,000 in December 2024 but still well above the pre-pandemic average of 35,000 recipients.
The rate cuts break down as follows:
- Infants (0-12 months): 10 percent decrease
- Toddlers (13-36 months): 10 percent decrease
- Preschoolers (3-5 years): 15 percent decrease
- School-age children (K-12): 35 percent decrease
OECOSL surveyed 25 percent of licensed childcare providers to analyze cost data before setting the new rates. The 2025 Legislature approved $147.25 million in childcare investments to prevent deeper cuts.
"While we regret the necessity of these adjustments, they are essential to ensuring uninterrupted access to affordable care for Hoosier families," Alson said.
The rate changes take effect immediately as the state works to correct what officials call an overexpansion of childcare capacity built on temporary federal funding.
