A change in Nebraska law now requires child care providers to reach Step 3 in the state's quality rating system to qualify for increased subsidy payments.
Most Nebraska child care owners don't realize that a provision buried in LB71 has quietly changed who qualifies for higher reimbursement rates from the state's Child Care Subsidy program. If you serve subsidized children, this matters to your bottom line.
Under LB71, which amended §43-536, the state raised the quality rating threshold required to access enhanced subsidy reimbursement rates. Previously, providers rated at Step 2 or higher in Nebraska's Quality Rating System (QRS) could qualify for the higher payment tier. That threshold has now moved to Step 3.
In plain terms: if your program was previously eligible for increased reimbursements at Step 2, you are no longer eligible at that level. You must now achieve Step 3 certification to access those higher rates.
This change directly impacts child care centers and family child care homes that currently operate at Step 2 in Nebraska's QRS and serve children whose care is paid through the state subsidy program. Providers already at Step 3 or higher are unaffected and continue to receive the enhanced reimbursement rates.
For programs operating at Step 2, the practical question is straightforward: pursuing Step 3 certification becomes necessary if you want to maintain access to the higher subsidy reimbursement rates your program may have previously qualified for.
LB71 became effective upon passage. The state's annual rate schedule—which sets the actual dollar amounts of subsidy reimbursements—is revised each October 1 under §68-1206(3). This means the new Step 3 requirement will be reflected in the reimbursement rates effective October 1 of the year the law took effect, and in every annual rate revision thereafter.
If you're currently at Step 2 and rely on subsidized child care revenue, you face a decision: invest in the additional quality improvements and documentation required to reach Step 3, or accept reimbursement at the lower rate tier. The financial impact depends on how many subsidized children your program serves and the difference between Step 2 and Step 3 reimbursement rates in your region.
This is not a penalty—the state is not removing anyone's license or funding overnight. Rather, it's a recalibration of which quality level unlocks the higher payment. Some providers may find the cost and effort of Step 3 certification justified by the increased revenue per child. Others may determine their current operations and revenue mix work within the Step 2 rate structure.
The key is understanding the change now, rather than discovering it when your annual subsidy reimbursement rate is set in October.
For detailed guidance on Nebraska's Quality Rating System steps and how to assess the financial impact on your program, contact your local child care resource and referral agency or the Nebraska Department of Health and Human Services, Division of Public Health.