New York State’s Child Care Assistance Program helps low- and moderate- income families afford the cost of child care. For families who receive assistance, the state will pay providers the same rate as private pay families, up to a certain amount. Effective October 1, 2024, this reimbursement rate was increased by the state’s Office of Children and Family Services (OCFS). Some parts of the state experienced rate increases as high as 35% for certain age groups in particular child care settings. The average increase across the state was 9%, with a minimum increase of 5%.  

On one hand, a higher reimbursement rate suggests that providers are being paid more for their valuable service of caring and educating young children. Child care in New York already costs more than tuition at a public college– and the recent increase in market rates shows that the cost of child care continues to climb in New York.   

This reimbursement amount set by the state is called the “market rate.” Every 2-3 years, OCFS surveys providers throughout the state about the prices they charge families. The survey covers a variety of topics but is primarily focused on how much providers charge for care.  

The market rates are differentiated into groups. These groups are comprised of certain areas of the state that have statistically similar child care costs. The four market rate regions in New York are: New York City, Suburban New York City, Upstate Urban and the Upper Hudson Valley, and Upstate Rural.  For example, care in New York City is far more expensive than rural areas upstate, and the rates are designed to reflect that. Prior to 2024, there were 5 market rate groups (or ‘regions’) – in 2024, the groups were consolidated into 4 regions. Albany, Dutchess, Orange, Saratoga, and Ulster counties used to be their own market group but were added to the Upstate Urban region in 2024. 

The rates also vary by child ages and child care setting. For example, care for younger children is typically more expensive than it is for older children and child care centers are, on average, more expensive than family-based child care.  

The goal of the market rate survey process is to set a reimbursement rate competitive with private pay rates so families receiving assistance can choose the care setting that best suits their needs. Counties, using a mix of federal, state, and local funds, reimburse providers for caring for a child enrolled in the Child Care Assistance Program.  Since 2016, rates have risen considerably for all ages and care types. 

Until 2022, market rates were set at the 69th percentile of provider rates in a region. The 2022 and 2024 rates were set at the 80th percentile of surveyed provider’s rates. In other words, if OCFS surveyed 100 providers and put them on a list with spot 100 being the highest priced and spot 1 being lowest priced, the market rate would be established by looking at the prices charged by the provider in spot 80. The market rate is higher than what 80% of providers charge private pay families at the time they answered the survey.  

Providers are reimbursed by counties at the same rate they charge private pay families, up to the market rate. Under state policy, this means that if a provider charges private pay families less than the market rate, they will not receive the full market rate amount. A consequence of this is that providers need to increase the rate they charge private pay families to receive the full reimbursement amount through the Child Care Assistance Program. This creates pressure on providers to increase the cost of child care for private pay families. 

Child care is an expensive and essential service for many families with young children. The market rate survey process offers an opportunity for providers serving low- and moderate-income families to be paid more for the essential care they provide. However, it also contributes to the growing cost of care for families who make slightly more than the Child Care Assistance Program’s eligibility threshold. Paying for child care is already a stretch for too many families. The Empire State Campaign for Child Care’s vision of a universal child care system is one that would allow all families to access high quality care and ensure that child care providers earn a sustaining wage. New York should take steps to achieve that vision in the upcoming legislative session.  

To learn more about The Children’s Agenda’s child care advocacy, visit Child Care – The Children’s Agenda (thechildrensagenda.org) 

Emily Bemis is a Research & Policy Analyst at The Children’s Agenda.