Northwest Arkansas child care center owner Shahid Sheikh presents proposed changes to the state’s child care reimbursement rate structure in the auditorium at the Department of Education’s Little Rock headquarters on Oct. 28, 2025. Sheikh was among several providers on an emergency working group the state Early Childhood Commission formed to address financial strain on the industry. (Tess Vrbin/Arkansas Advocate)
A panel of child care experts on Tuesday recommended several steps the Arkansas Department of Education can implement by Saturday with the goal of preventing child care layoffs and closures throughout the state.
The emergency working group, formed last week by the state Early Childhood Commission, proposed readjusting both child care providers’ reimbursement rates and low-income families’ copayments and eligibility under the School Readiness Assistance Program.
The Department of Education can implement all the recommendations by Nov. 1 and prevent a wave of layoffs and closures that would leave thousands of Arkansans without child care, working group members Shahid Sheikh and Dawn Colyer said. The $28 million plan should sustain the program for eight weeks and forgo the need to ask the state Legislature for financial help, they said.
“We’ve come to a consensus that there’s a certain level of loss that each of us is willing to take so that we don’t have to shut down,” Sheikh said.
Colyer runs a child care center in Sheridan, and Sheikh runs four Northwest Arkansas centers.
The education department and Early Childhood Commission will discuss the recommendations and choose their next steps by the end of the week, said Ashelyn Abney, interim director of the department’s Office of Early Childhood.
Without imminent changes to the funding formula, 250 child care facilities in 50 of Arkansas’ 75 counties would see a total of 400 layoffs by next month, according to a survey presented to the commission Oct. 15. The federally funded program serves about 16,000 children and has a waitlist of 1,100, according to the education department.
Initial plan had been delayed
The department ruffled providers’ feathers in September when it announced changes to the financial aid program’s reimbursement and copayment structures, with the goal of reducing the child care waitlist and making the program more financially sustainable.
The agency delayed cuts to providers’ reimbursement rates until Nov. 1 but moved forward with participant copayments on Oct. 1 as planned. Those increased copayments have already forced some Arkansas child care centers to close because parents could not afford to pay more, Sheikh told the Early Childhood Commission earlier this month.
The federal Child Care and Development Fund supports the School Readiness Assistance Program but is mostly inaccessible due to the ongoing federal government shutdown, said Chris Barnes, a State Leadership Development Coach in the department’s Division of Elementary and Secondary Education.
Barnes said last week that the state had about $16.3 million in CCDF funds on hand. On Tuesday, he said that number is about $24.2 million, with $20.8 million funding direct services to families and $3.8 million in quality investment funds.
The working group used the $24.2 million as a basis for their proposal and said the education department should take another $4 million in CCDF funds from contract expenses. The agency would still meet the minimum federal requirements for using the funds even with the proposed contract spending reductions, Sheikh said.
Families who are working or enrolled in school with income at or below the state poverty level will not pay a copayment for children before kindergarten, and families above the poverty level will pay a copay scaled to income and the age of the child, according to the education department.
For families with multiple children, the working group proposed capping copayments at 7% of their household income and charging families the same percentage of their base rate for each child’s age group.
Provider reimbursement rates are higher for child care centers that have achieved higher quality ratings on a scale of one to six. The group suggested making reimbursement rates the same for the third and fourth levels and for the fifth and sixth levels. This would circumvent the problem of squeezing providers financially by lowering their base rates, and it would ensure continued quality care at each level, Colyer said in an interview.
Northwest Arkansas reimbursement rates would be higher than those in the rest of the state because of the region’s higher cost of living and because private child care providers in the region charge families more than in other areas, Colyer said.
We’ve come to a consensus that there’s a certain level of loss that each of us is willing to take so that we don’t have to shut down.
– Shahid Sheikh, owner of four Northwest Arkansas child care centers
The working group’s third recommendation was for the education department to remove the 72-month limit on low-income families’ access to the School Readiness Assistance Program.
“What sense does that make if you’ve got a family [whose] child’s been with you for four years, and Mom’s pregnant, she’s 12 months away from losing her benefits, and she’s got a baby coming?” Colyer said during the work session. “That doesn’t make sense to us at all, to do that to families.”
Besides Sheikh and Colyer, several other child care providers from throughout the state served on the working group, as did Lorraine McKelvey, a child development expert and researcher at the University of Arkansas for Medical Sciences.
Rep. Denise Garner, D-Fayetteville, and Sen. Jane English, R-North Little Rock, are members of the Early Childhood Commission and also served on the working group.
Sheikh said he hopes the group continues to be allowed to consult the commission on issues facing the child care industry once the current issues are resolved. The federal government shutdown began Oct. 1 with no end currently in sight.
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