Facing a projected $225 million budget gap, Indiana’s Family and Social Services Administration (FSSA) is reducing reimbursement rates for providers in the Child Care and Development Fund (CCDF).

The cuts range from 10% for infant and toddler care to 35% for school-age children. State officials say the move is meant to stabilize the program after temporary COVID-19 relief dollars allowed enrollment to expand without a long-term funding plan.

According to FSSA, the choice came down to lowering provider payments or removing children from the program. The agency says keeping all 55,000 currently enrolled children in care was the priority, even though enrollment is down from a high of 68,000 in late 2024. Officials noted that the new rates were based on surveys of licensed providers and are intended to align with current costs.

Child care providers and Democratic lawmakers have criticized the decision, warning that reduced reimbursements could push centers to close, particularly in low-income communities where most families rely on vouchers. Rep. Carey Hamilton (D-Indianapolis) argued the cuts leave working parents with “impossible choices” between keeping their jobs and affording care, while the state has expanded private school vouchers for wealthier families.