Does the law allow States to use grants and contracts to build supply of high-quality child care?

Yes, the law continues to allow States to use grants and contracts, as well as vouchers, as an allowable strategy for addressing the needs of underserved populations and communities.  States can award grants and contracts to providers in order to provide financial incentives to offer care for special populations, require higher quality standards, and guarantee certain numbers of slots to be available for low-income children eligible for CCDF financial assistance.  Grants and contracts can provide financial stability for child care providers by paying in regular installments, paying based on maintenance of enrollment, or paying prospectively rather than on a reimbursement basis.  Without stable funding, it can be difficult for providers to pay for the higher costs associated with providing high quality child care, particularly those in low-income or rural communities.   ACF encourages States to explore how grants and contracts can be used as part of a strategy to increase the supply of high quality care and anticipates providing further guidance on the use of grants and contracts.

(Reference: Section 658E(c)(2)(A))