[ST. PAUL, MN] – Starting this week, Minnesotans across the state will experience lower costs and increased access to child care thanks to a $160 million investment in the Child Care Assistance Program that Governor Walz signed into law this summer. Minnesota’s Child Care Assistance Program helps families pay for child care so parents can work or pursue employment or education leading to employment and children are cared for and prepared to enter school.

The Minnesota Department of Human Services (DHS) sets the maximum reimbursement rates paid to child care providers that serve income-qualifying families in the Child Care Assistance Program. Starting this week, utilizing the $160 million investment, DHS will increase those maximum rates. The increased reimbursement rates will expand access to affordable, quality child care; support providers; and reduce out-of-pocket costs for families.

“I am proud that our bipartisan budget includes historic investments to support our essential workers and working families,” said Governor Walz. “As we continue to take bold action to expand Minnesota’s economy, today’s increase to the Child Care Assistance Program helps ensure that our hardworking families have the resources they need, our small businesses are supported, and our youngest Minnesotans receive the care and love they deserve.”

“Since we took office, the Governor and I have been committed to supporting access to child care,” said Lieutenant Governor Peggy Flanagan. “Every Minnesota family deserves affordable and quality child care, and I’m proud that our historic investment in the Child Care Assistance Program gets us close to that goal.”

“This investment supports Minnesota’s economy in critical ways,” said Human Services Commissioner Jodi Harpstead. “Child care providers will see more of their real costs covered, while parents will have an easier time accessing reliable child care so they can work or go to school.”

All types of child care providers—including licensed family child care homes, child care centers, and informal caregivers—will benefit from the higher rates. Based on a market rate survey conducted earlier this year, weekly maximum rates will go up an average of 16% for centers and 12% for licensed family child care. While rates for care for all ages will increase, an extra boost to the infant and toddler rates aims to help families access the kind of child care that is hardest to find.

The Child Care Assistance Program serves more than 30,000 children each month, paying approximately 3,200 child care providers providing child care for approximately 15,000 low-income families. Before a modest increase last year, the program’s reimbursement rates had not changed since 2014 and were well below what families paid in the market. The current increase, funded by the federal Child Care Development Block Grant, will bring Minnesota into compliance with federal requirements requiring maximum rates to reflect the most recent market rate survey.

Rates for child care vary, depending on the child’s age, the type of provider and the provider’s location, credentials, and rating. In most cases, DHS pays the child care provider on behalf of the family. Not all families in the Child Care Assistance Program must pay the difference between the provider’s price and the state reimbursement rate.

In total, Minnesota’s COVID-19 Recovery Budget includes $597 million to strengthen Minnesota’s child care industry. In addition to the ongoing Child Care Assistance Program rate increase, the budget includes over $304 million for direct payments to child care providers to help stabilize their businesses and $22.5 million for revitalization grants for child care facilities. $6 million in the budget will be used for technical assistance to help providers reopen or start up, as well as business training to help providers retool after the pandemic. Innovation grants totaling $200,000 will test strategies to help family child care providers collectively achieve economies of scale. The Governor’s budget also includes $6 million for training, higher education, and retention grants to help individuals obtain the professional development they need to enter and stay in the child care field. The budget also includes $8 million in child care investments through the Department of Employment and Economic Development Local Community Child Care Grant Program, including $5 million for the existing program and an additional $3 million for the Minnesota Investment Foundations to use for its regional work in developing additional child care options.