Missouri allocates $78m to raise childcare subsidy rates pending governor’s approval

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Jefferson City, Missouri – Despite the delay of three childcare tax credit programs in the Missouri Senate’s last week of session, providers and experts highlight two major wins for expanding childcare in the state. First, the state budget, pending Gov. Mike Parson’s approval, allocates $78,476,232 to raise childcare subsidy rates.

“Just knowing that providers will get paid more especially with infant toddler care, where we know there are the biggest gaps between supply and demand that those providers will get paid higher, hopefully, will encourage more providers to accept subsidy and start to address some of the supply challenges,” said Casey Hanson, Deputy Director of KidsWin Missouri.

Federal guidelines suggest states pay providers at the 75th percentile of market rates. Missouri’s budget boosts rates to 100% of market rates for infants and toddlers, and 65% for preschoolers and school-aged kids. Missouri families needing childcare also benefit from new federal rules that cap co-payments for eligible low-income families at 7% of their income.

Additionally, the rule mandates specific payment practices, like paying providers based on enrollment or authorization rather than attendance.

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“It was something that the state did during COVID to help stabilize providers, and I think it will be a big help to providers going forward,” Hanson said. “They do have two years to implement that practice. But we’re hopeful with the increased rates and moving to paying on enrollment; that’s one way we can stabilize the system.”

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Hanson mentioned that a supplemental budget would likely be needed before July 2025 to keep funding the increased subsidy rates and federal changes. A 2023 survey revealed that 80% of Missouri counties are “childcare deserts,” meaning there are either no available providers or at least three children for every available spot. The Missouri Chamber of Commerce and Industry states that childcare issues cost the state’s economy about $1.35 billion a year, including around $280 million annually in lost tax revenue.

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