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Winter can be especially challenging for Michelle Wright, owner of Michelle’s Place Child Care Center, with two locations in southwestern Illinois, across the Mississippi River from St. Louis.
Seasonal illnesses and bad weather often keep kids home. On certain days, Wright finds herself scrambling to figure out if she’ll be able to pay her teachers.
“That staff comes ready to work, maybe spent gas [money], maybe took an Uber, a bus to get here, and then six kids are out and I know the numbers are down,” she says. “I have to send that staff home.”
That’s because many states, including Illinois, use their own money and federal funds to pay out child care subsidies for low-income families based on attendance. When overall attendance for the month drops below 70%, Wright stands to lose some of the income she was expecting.
It’s a unique challenge for child care providers like Wright who operate in some of America’s poorer communities. Some 90% of the families Wright serves receive child care subsidies, so most of her income comes from the state, with payments made after the care has been provided.
Wright knows things would be easier if she had opened her centers in more affluent areas. Families that don’t qualify for subsidies and instead pay for child care on their own typically pay up front. They’re on the hook for the tuition whether their children attend or not, so providers can count on that income.
In 2024, the Biden administration finalized a rule aimed at giving providers like Wright more predictability. The rule requires states to pay child care subsidies the way most American families pay tuition – in advance and based on enrollment, not on who shows up.
A number of states have made the switch. Others, including Illinois, applied for waivers, giving them more time to comply with the rule. But now, the Trump administration has proposed getting rid of the rule all together, citing concerns about fraud.
Fraud allegations drew child care into the spotlight
Across the U.S., the families of some 1.4 million children get help paying for child care through the Child Care and Development Fund. That federal program was pulled into the spotlight after allegations of child care fraud erupted in Minnesota in late December.
The allegations, waged by a YouTuber, led first to an attempt by the Trump administration to freeze child care subsidies in five Democrat-led states. The announcement prompted an outcry and a lawsuit that has prevented a freeze, at least for now.
A couple weeks later, the Department of Health and Human Services released a video using the fraud allegations as a jumping off point to announce the Trump administration’s proposal for repealing the Biden rule.
In the video, Jim O’Neill, an HHS deputy secretary who has since left the agency, says forcing states to pay child care subsidies up front and based on enrollment created vulnerabilities.
“Those policies weakened accountability and made fraud easier, not harder,” O’Neill says.
While child care providers have been prosecuted for fraud in years past, including in Minnesota, such cases are rare. The Administration for Children and Families, the federal agency that oversees the Child Care and Development Fund, reported a payment error rate of less than 4% in 2023.
In recent years, many states have stepped up oversight, including by having state inspectors make more unannounced visits to child care centers. Child care providers are required to submit daily attendance logs to state agencies.
Still, child care advocates worry the Trump administration’s focus on fraud could get in the way of progress.
Bipartisan support for strengthening child care
Since the COVID pandemic, stabilizing child care has become a bipartisan issue, with Republican-led states among those making changes to strengthen the industry.
Last year, amid growing recognition that child care is essential to the state’s economy, Missouri’s Republican-controlled legislature approved the change to pay child care subsidies in advance and based on enrollment, not on attendance logs. Beta testing has been underway.
But late last year, the state announced it needed more time to ensure the new system works correctly and to secure long-term funding.
Casey Hanson, deputy director of the statewide policy and advocacy group Kids Win Missouri, notes that the change will bring additional costs.
“We think [it’s] the right thing to do. It’s the way providers are paid in the private market. It’s how we’re going to create a more sustainable system,” says Hanson. “But it is expensive for states, and state budgets are tough.”
Denise Wiese, executive director of Lemay Child and Family Center, a nonprofit center in St. Louis County, hopes the change will be one of many Missouri makes to ensure the viability of high-quality child care providers.
“We have to take care of the children in our communities,” she says. “They’re the ones that are going to lead this country and lead the state 30 years from now, and we just want them to start off on a strong footing.”
