Child Care Modernization Act of 2025

Key Points

• The bill reauthorizes and updates the main federal child care program (CCDBG) through fiscal year 2030, expanding the definition of who qualifies for help. Parents engaged in job searches, self-employment, education, mental health treatment, substance use treatment, or taking family leave can now qualify for child care assistance.
• A brand-new grant program is created to expand the supply of child care by funding startup costs, facility construction, renovation, and repair. States would distribute subgrants to qualified child care providers, with priority given to those serving children in underserved areas, rural communities, foster care, and homelessness.
• By 2031, states must switch to a cost estimation model for setting payment rates that reflects the true cost of running child care, including staff salaries and benefits, instead of relying only on market rate surveys. This is meant to help providers pay workers enough to recruit and retain qualified staff.
• States can apply for waivers to raise the income ceiling for families eligible for child care subsidies above the current 85% of state median income, but only after demonstrating they are already serving the lowest-income families. This could open assistance to more middle-income families.
• The bill emphasizes parental choice through a 'mixed delivery system' that includes family child care homes, centers, Head Start, faith-based programs, and schools. It also directs the Department of Agriculture to remove loan restrictions that have made it harder for home-based child care providers to get financing.