Childcare Landscape Study - Flipbook - Page 99
Davidson County Child Care Landscape Study Results
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Families that earn low or moderate incomes and meet specific work or education
requirements may qualify for the Child Care Certificate Program, which provides financial
assistance, or subsidized child care, to help make care more affordable.17,18 Child care
certificates are limited, however, leading to only a small proportion of eligible families
actually receiving a certificate to assist in paying for child care.
When families use certificates for child care, child care programs are reimbursed, with the
maximum reimbursement rate set by the state of Tennessee. Most of the reimbursement is
paid to providers by the state, and in some instances, families pay a portion of the
reimbursement rate in the form of a copay. As with most states, Tennessee uses the state’s
market rate survey to inform and set certificate reimbursement rates.e,19 Tennessee has the
goal of providing reimbursement rates that meet at least the 60th percentile of the market
rate, meaning the state does not meet the federal target (the 75th percentile). Fifteen states
currently meet the 75th percentile target.20
Because market-rate tuition prices are less than the true cost of providing high-quality child
care, current child care certificate reimbursement rates for high-quality centers in greater
Davidson County underpay centers by as much as $2,105 per child per month (see Table 5).
For infants and toddlers, state reimbursement rates are less than half of the estimated true
cost of care.
Table 5: Comparison of Monthly Per Child High-Quality Center-Based Care Costs and Certificate
Reimbursement Rates
Estimated Monthly Cost of
High-Quality Care
Current Monthly
Reimbursement Rate
Potential Loss
to Center
Infant
$3,457
$1,352
$2,105
Toddler
$2,729
$1,248
$1,481
Preschool
$2,214
$1,083
$1,131
Child Age
Source: 2025 Davidson County Child Care Cost Estimation Model. The Prenatal-to-3 Policy Impact Center, 2025. Tennessee
Department of Human Services, 2025.
Neither the market rate nor certificate reimbursement rates come close to covering the
estimated true cost of high-quality care. Costs such as the facility, food, supplies, and insurance
are all fixed costs, with little room to reduce expenses. This leaves staffing costs, which also
e Tennessee sets different reimbursement rates across age groups and for more highly rated programs compared to lower
rated programs. Tennessee also has different reimbursement tiers for relatively higher and lower cost of living areas.
Tennessee aims to provide reimbursement rates that are at least at the 60th percentile of the market rate, meaning that the
rate would cover the tuition charged by 60 percent of the child care programs in an area.
Prenatal-to-3 Policy Impact Center 2026
www.pn3policy.org
