The childcare and development fund remains a major federal source of financial assistance for families who need help paying for child care, with the program entering a significant period of policy changes in 2026. The federal Child Care and Development Fund (CCDF) has $12.38 billion in Fiscal Year 2026 funding, combining discretionary Child Care and Development Block Grant funding with mandatory Child Care Entitlement funding.
The latest development is a federal rule that took effect July 13, 2026. The rule gives states and territories more flexibility over several CCDF requirements, including family copayments, provider payments and the way some child care services are delivered.
These changes are important because CCDF is administered through state, territorial and Tribal agencies. Families generally experience the program through their state’s child care assistance system rather than through one national application.
What Is the Child Care and Development Fund?
The Child Care and Development Fund is the federal funding structure used to help eligible families afford child care while also supporting improvements in child care quality and the child care workforce.
CCDF combines two primary federal funding streams:
- Child Care and Development Block Grant (CCDBG): The discretionary portion that Congress funds through the annual appropriations process.
- Child Care Entitlement to States (CCES): The mandatory and matching portion of the program.
For Fiscal Year 2026, CCDBG received approximately $8.83 billion, while CCES provided about $3.55 billion, bringing total federal CCDF funding to approximately $12.38 billion.
States, territories and Tribal governments use these funds to operate child care assistance programs. The assistance can help eligible families obtain care while parents work, attend school or participate in qualifying activities.
CCDF also supports activities designed to improve child care quality. Federal program rules include requirements for investments in quality improvement and infant and toddler care.
Latest 2026 Funding Picture
The Fiscal Year 2026 funding level represents one of the most important current facts for families, providers and state agencies following the program.
| CCDF funding component | FY 2026 funding |
|---|---|
| Child Care and Development Block Grant | About $8.83 billion |
| Child Care Entitlement to States | About $3.55 billion |
| Total CCDF funding | About $12.38 billion |
The Administration for Children and Families’ Fiscal Year 2027 budget justification also lists $12.381387 billion in total CCDF budget authority for FY 2026. The same amount is proposed for FY 2027 in that budget request.
The federal allocation system distributes CCDF resources among states and territories using statutory allocation formulas. Factors include child population and economic measures used in determining state allocations.
Federal grant records also show ongoing Fiscal Year 2026 CCDF awards and supplemental actions for individual states and jurisdictions. For example, federal records show 2026 CCDF mandatory and matching awards involving states including Alabama, Arizona, California, Colorado and North Carolina.
Major CCDF Rule Change Took Effect in July 2026
The most significant recent regulatory development came from the U.S. Department of Health and Human Services’ final rule titled “Restoring Flexibility in the Child Care and Development Fund.”
HHS published the final rule May 12, 2026. It became effective July 13, 2026.
The rule rescinded four requirements that had been added through the March 2024 CCDF final rule.
The changes affect:
- Family copayments
- Provider payment timing
- Provider payment based on enrollment
- Certain grants and contracts for direct child care services
The federal government described the changes as a way to reduce administrative burden and restore flexibility to states and territories administering CCDF.
Family Copayment Rules Have Changed
One of the biggest changes involves the federal limit on family copayments.
The 2024 rule required states and territories to limit CCDF family copayments to 7% of family income. The 2026 final rule removed that federal requirement.
The change does not mean states can ignore affordability. Instead, the federal regulation returns to the previous statutory standard requiring copayments not to become a barrier to families receiving child care assistance.
States therefore have greater discretion to establish their own copayment policies within federal requirements.
For families receiving assistance, this means the amount they pay can depend more heavily on the rules established by their state or territory. A national 7% federal ceiling is no longer mandatory under the current CCDF regulation.
Provider Payment Policies Are More Flexible
The 2026 rule also changed how states can pay participating child care providers.
The previous requirement generally called for CCDF providers to receive payments prospectively, meaning payments could be made before or at the beginning of service delivery.
The new rule removes that federal mandate. States can choose to continue prospective payments or use reimbursement arrangements.
When reimbursement is used, the regulation requires providers to receive payment within 21 calendar days after the lead agency receives a completed invoice.
This gives state agencies more options while retaining a federal requirement for timely provider payments.
The change can also affect how states structure their child care subsidy systems and payment schedules.
Enrollment-Based Payment Requirement Was Rescinded
Another major change concerns whether providers must be paid based on a child’s authorized enrollment rather than actual attendance.
The 2024 rule established enrollment-based payments, subject to limited exceptions. The 2026 rule rescinded that specific federal mandate.
States now have greater flexibility in designing payment approaches while still having to comply with statutory requirements concerning provider payments and occasional absences.
The change is significant for child care providers because payment methodology can affect revenue predictability and administrative procedures.
State implementation therefore matters. A provider’s payment method can vary depending on the policies adopted by the state or territory administering the CCDF program.
Grants and Contracts for Direct Services Also Changed
The fourth major change removes a federal requirement that states and territories use certain grants or contracts to provide direct child care services for specified populations and areas.
The 2026 rule gives lead agencies more discretion over how they structure those services.
HHS stated that states and territories retain flexibility to continue policies that were previously required. The federal government is no longer requiring all of those practices under the rescinded provisions.
This means the regulatory change does not automatically eliminate state programs or payment practices. Instead, states can determine which approaches best fit their CCDF systems.
States Are Already Implementing the 2026 Changes
The federal changes are moving into state-level implementation.
Missouri, for example, received an August 17, 2026 notification from the Office of Child Care addressing its compliance status following the new CCDF rule.
The notice confirmed that the federal 7% copayment requirement was rescinded effective July 13. It also addressed changes involving grants and contracts, prospective provider payments and enrollment-based payment policies.
Missouri’s notice illustrates an important point for families and providers: the federal rule establishes a framework, but state agencies still determine many operational details.
Other states are similarly responsible for reviewing their CCDF plans, waivers and payment systems in light of the new federal requirements.
Federal CCDF Funding Restrictions Also Became a Major 2026 Issue
Another important development earlier in 2026 involved federal restrictions on CCDF funding for five states.
In January, HHS announced that it had frozen access to certain child care and family assistance funds for California, Colorado, Illinois, Minnesota and New York, citing concerns about fraud and misuse. The action included CCDF funds.
The affected states challenged the federal funding restrictions in court.
A federal district court subsequently issued a preliminary injunction preventing the administration from implementing the funding restrictions against the plaintiff states and directing that restrictions outside permitted statutory authority be removed.
The litigation became an important part of the 2026 CCDF landscape because states depend on federal funding to operate their child care assistance programs.
The funding dispute is separate from the July 2026 regulatory changes governing how CCDF programs operate.
Congress Also Considered Reversing the 2026 CCDF Rule
The new CCDF rule also faced congressional opposition.
Senators introduced S.J. Res. 199, a Congressional Review Act resolution seeking to disapprove the HHS rule.
The Senate rejected the resolution on July 30, 2026, by a 47–52 vote. The vote left the HHS final rule in effect.
As a result, the July 13 regulatory changes remain the governing federal framework for the affected CCDF provisions as of September 9, 2026.
What the Current CCDF Changes Mean for Families
For families using child care assistance, the most important takeaway is that federal rules now give states more flexibility.
Families should not assume that every state will apply the same copayment or provider payment policies.
The current federal framework means:
- The mandatory federal 7% copayment cap has been removed.
- States still must ensure that copayments do not create a barrier to receiving assistance.
- States can choose whether to make prospective provider payments.
- Reimbursement payments must generally be made within 21 calendar days after a completed invoice.
- States have more flexibility regarding enrollment-based payment policies.
- States have greater discretion regarding certain grants and contracts for direct services.
These changes can make state-level CCDF policies more important than before.
What the Changes Mean for Child Care Providers
Child care providers participating in CCDF programs should pay close attention to their state agency’s implementation decisions.
The federal rule does not establish one mandatory payment model for every state. Instead, it gives lead agencies greater flexibility.
That flexibility can influence:
- Provider payment schedules
- Enrollment and attendance procedures
- Billing requirements
- Copayment structures
- Contracts and grants
- Administrative requirements
Providers should therefore rely on current guidance from the CCDF lead agency in their state rather than assuming that the federal rule automatically changes their individual payment arrangement.
Why the Child Care and Development Fund Remains Important in 2026
The scale of federal CCDF funding makes the program a central part of the U.S. child care assistance system.
With approximately $12.38 billion in FY 2026 funding, CCDF continues to provide substantial federal resources for child care subsidies and quality-related activities.
At the same time, the 2026 regulatory changes shift more responsibility toward states and territories.
That combination of federal funding and state flexibility means families may see different policies depending on where they live.
The program’s basic purpose remains consistent: helping eligible families access child care while supporting quality and the child care system. The current federal changes primarily affect how states administer that assistance.
Childcare and Development Fund Latest Update
As of September 9, 2026, the most significant confirmed developments are the $12.38 billion FY 2026 CCDF funding level, the July 13 effective date of the new flexibility rule, continued state implementation of the revised requirements, and the Senate’s July rejection of an effort to overturn the rule.
The 2026 rule remains in effect. States and territories retain greater discretion over copayments, provider payment timing, enrollment-based payments and certain direct-service arrangements.
For families receiving assistance, the practical impact will depend heavily on the policies adopted by their state or territory.
The latest CCDF changes are still shaping child care assistance across the U.S.—share your experience or stay informed as states continue implementing the 2026 rules.