Indiana families will see reductions in child care vouchers
Indiana is decreasing subsidies for child care
Contributed By: The 411 News
Rate reductions from 10-35% will start October 5
The monies, in the form of vouchers, low-income parents receive to help them pay for child care while they work or go to school will be reduced by 10-35 percent, announced Indiana’s Family and Social Services Administration.
FSSA notified parents and child care providers that a new rate schedule will go into effect starting October 5.
Vouchers for children, 3 years and under, will have a 10% decrease. Vouchers for preschoolers, between 3 and 5 years old, will have a 15% decrease. Vouchers for school-age children, in grades K-12, will have a 35% decrease.
The first payout date is November 6.
Adam Alson, Director of OECOSL (Office of Early Childhood and Out-of-School Learning) said the state could not sustain the levels of growth the Child Care and Development Fund (CCDF) has seen since the pandemic.
“These adjustments address a $225 million funding gap through 2026 created by the prior administration’s unsustainable use of temporary COVID relief funds and ensure continued compliance with federal requirements,” Alson said in a statement from the FSSA.
The CCDF program in each state receives matching grants from the federal government. Program funds were reduced along with the addition of new eligibility requirements in the 2025 Congressional reconciliation bill.
Alson outlined the factors leading to FSSA’s decision to reduce reimbursement rates.
In April 2021, Indiana increased CCDF rates by 20 percent per child using one-time COVID relief funds without a sustainability plan.
In 2023, the Holcomb administration issued “transitional reimbursement rates” that didn’t address the impending financial cliff. The result was an overexpansion of childcare capacity reliant on temporary funding, leading to a projected $225 million deficit by 2026.
In the 2025 Legislative Session, the Governor and General Assembly added $147.25 million to the CCDF program.
Alson said, “OECOSL received surveys from 25 percent of licensed childcare providers and analyzed their cost data to arrive at reimbursement levels that reflect current operating realities.”
The state stopped enrollment and created a waitlist for CCDF vouchers in December 2024.
“As of July, approximately 55,000 Hoosier children rely on CCDF vouchers – a decrease from the December 2024 peak of 68,000, yet still markedly above the pre-pandemic average of 35,000 recipients,” Alson said.
Story Posted:09/22/2025
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