Restoring Flexibility in the Child Care and Development Fund (CCDF): What Tribal Programs Should Know

A new federal rule finalized by the U.S. Department of Health and Human Services (HHS) \rescinds several child care policy requirements that were added in the March 2024 CCDF final rule. The new regulation, titled Restoring Flexibility in the Child Care and Development Fund (CCDF), is intended to reduce administrative burden and return greater flexibility to States, Territories, and Tribal Lead Agencies administering CCDF programs.

The final rule becomes effective July 13, 2026.

What Changed?

The final rule rescinds four major requirements that were added in 2024:

• The federally mandated 7% cap on family co-payments

• The requirement to provide some direct services through grants or contracts

• The requirement to pay child care providers prospectively

• The requirement to pay providers based on children’s enrollment rather than attendance
  

According to HHS, these changes are intended to reduce costs and administrative burden while restoring flexibility for Lead Agencies to determine what policies work best in their own communities.

What Does This Mean for Tribal CCDF Programs?

According to HHS, the final rule does not directly affect Tribal CCDF sovereignty or Tribal authority.

Many Tribal Lead Agencies were already exempt from several of the requirements addressed in the final rule — particularly those related to grants/contracts and provider payment practices.

However, the final rule does impact Tribal programs in one key area:

Family Co-Payments

The rule removes the requirement that Tribal Lead Agencies choosing to implement family co-payments must cap those co-payments at 7% of family income.

Under the new rule, Tribal Lead Agencies now have maximum flexibility in establishing co-payment policies that align with their community needs and local priorities.

This does not require Tribes to increase co-payments. Rather, it allows Tribal programs to determine their own approach if they choose to implement cost-sharing policies.

Continued Flexibility for Tribal Programs

The final rule also reinforces that Tribal Lead Agencies may still choose to implement many of the policies rescinded at the federal level if they believe those approaches best support families and providers in their communities.

For example, Tribal programs may still:

• Cap co-payments at lower affordability levels

• Use grants or contracts for direct child care services

• Pay providers prospectively

• Pay providers based on enrollment rather than attendance

The difference is that these policies are no longer federally required.

Why HHS Says These Changes Were Made

HHS stated that many States and Territories reported the 2024 requirements were more costly and difficult to implement than originally anticipated.

The Department also cited concerns related to:

• Administrative burden

• Costly systems changes

• Program integrity and fraud prevention

• The need for greater local flexibility in administering CCDF programs
  

At the same time, many commenters opposed the rescissions, raising concerns about child care affordability, provider stability, and family access to care.

Final Thoughts

For Tribal CCDF programs, the new rule largely preserves and reinforces Tribal flexibility rather than imposing new mandates. Tribal Lead Agencies continue to have the authority to design policies that best support their children, families, providers, and communities.

NICCA will continue monitoring federal CCDF developments and sharing updates and resources relevant to Tribal child care programs.

Source: Restoring Flexibility in the Child Care and Development Fund (CCDF), U.S. Department of Health and Human Services, Final Rule, published May 12, 2026.