Proposed rule changes would impact Ohio child care system ratings and funding

The Ohio Department of Children and Youth and Ohio Department of Job & Family Services are looking to adopt two new rule changes that impact Ohio’s publicly funded child care and the rating system used for it.

The first rule change is meant to meet mandates from the federal level that seek to address closures of child care facilities resulting from the COVID-19 pandemic by increasing base reimbursement rates for state-rated programs and will take effect mid-year.

The second rule change is a proposal by the state to restructure the Step Up to Quality (SUTQ) rating system for child care facilities which could potentially reduce opportunities for facilities to receive additional incentives for higher ratings. This proposal is set to take place, or perhaps be amended, following a recent public comment period.

Currently, Publicly Funded Child Care (PFCC) providers receive additional state funding based on their star rating. One-star rated programs get an additional 5% on top of a base rate paid to all programs, those with a two-star rating get another 18%, three-starred programs get 21% extra, four-starred programs get 29% and five-star programs get 35% more money, according to the Ohio Department of Job & Family Services.

That five-star tiered system will be replaced by bronze, silver, and gold ratings, according to a memo from the ODCY and ODJFS directors explaining the changes. In addition, “specific ratio and group size requirements” would need to be met to achieve a gold rating. Facilities not only need to meet the requirements of one tier to receive the rating, but all the other tiers below it to obtain their rating.

DCY director Kara B. Wente and ODJFS director Matt Damschroder said the ratings changes were proposed as part of a joint study committee on both PFCC and the SUTQ ratings, “initiated by members of the Ohio General Assembly.”

“An essential task of the committee was to review the existing SUTQ standards to identify areas of improvement and make changes to enhance child outcomes and remove unnecessary administrative barriers for child care and early learning programs,” the memo from Wente and Damschroder stated.

Critics of the new changes to the tiering system, who say the state needs to account for straining economic situations of child care providers, argued that the state is creating an environment where the ODCY has to do more with less.

“Rather than increasing funding to make this change, Ohio lawmakers are leaving the Department of Children and Youth to shift around the same too-small pool of money instead of directing state revenue to fill the gap,” wrote Kathryn Poe, Ali Smith, and Michael Shields, researchers for the think-tank Policy Matters Ohio.

Poe, Smith, and Shields also pushed back against arguments made by the state agencies that the changes to the child care system and ratings tiers would result in less administrative lift.

“The proposed collapse to a three-tier system also flattens opportunities to earn higher enhancement rates,” the researchers wrote in public comments against the rule changes. “That’s why, even apart from the direct loss of revenue from enhancements, taking away quality rating indicators that providers have worked hard to earn will result not only in a loss of morale among providers, but also tangible losses in pay and lost investment in earning a specific SUTQ tier.”

Other public comments on the proposed rules praised the increase in base payments on the federal level, but spelled out specific negative impacts the state rule changes would have on local child care facilities. Many wrote that the changes would create a chasm between doing their work and keeping up with government regulations.

“My main concern with the changes is that lowering ratio requirements for Gold (rating) puts many programs in a position to have to choose between high quality programming and financial stability,” one unspecified commenter stated.

“When we discovered that the new standards would ultimately result in a reduced payment, it was like a final kick in the face and left us child care providers feeling like no one cares for the industry at all,” another unnamed comment stated.

The change that will increase base rates for PFCC providers is set to take effect mid-2024, according to the ODCY/ODJFS memo. The state plans to make changes to the SUTQ rating system effective July 7, but “could change through the feedback/legislative process before they are finalized,” according to an ODCY spokesperson.