The District of Columbia (DC) has made significant public investment in child care educator compensation since 2022, first through direct wage supplements in FY 2022 and 2023, and then through a new revenue stream model in October 2023 (FY 2024). Created by the early childhood educator (ECE) compensation program, this new payment structure provides funding to licensed child care providers, helping them offer competitive wages, improve recruitment and retention of qualified staff, and support early childhood educators in advancing their careers.

This report summarizes directors’ perspectives on the new revenue stream model to identify successes, challenges, and unintended consequences of implementation.

Why This Matters

Early childhood educators play a crucial role in supporting children and families, yet low wages have long contributed to instability in the child care sector. DC’s investment in educator compensation offers valuable lessons for policymakers seeking to strengthen early childhood systems nationwide.

What We Found

Directors’ narratives highlight the ECE compensation program’s potential to strengthen staff recruitment, retention, and quality of care by raising educator pay, while also revealing areas where administrative processes, communication, and payment structures could be improved.

• Motivations: Directors viewed the program as essential to retaining and recruiting staff. Many viewed their participation as critical to stabilizing their workforce, improving morale, and signaling respect for early educators’ expertise.
• Implementation successes: The new revenue stream model increased flexibility and administrative clarity. Directors appreciated being able to allocate funds to meet operational needs, including paying above the minimum salary scale and covering noneducator roles, without needing to increase tuition. Directors also found the administrative process generally manageable and preferred this model to the previous direct payment approach.
• Implementation challenges: Directors in smaller centers, in particular, reported burdens related to data and payment systems, waiver applications, and the timing of payments. Some also noted confusion about role classifications and the eligibility of educators.
• Unintended consequences: Some directors noted that the new revenue stream model led to pay compression between educators and those in leadership positions, which affected morale and raised concerns about fairness. Others shared that standardized salary scales reduced their flexibility to manage compensation and center operations. A few reported that maintaining compliance with salary requirements could increase tuition costs for families, and that available funding or payment formulas did not always fully cover their center’s needs.

How We Did It

Urban Institute is undertaking a multiyear analysis of DC’s ECE compensation program in licensed child care facilities. Urban researchers analyzed survey data and conducted interviews with child care center directors to understand their motivations for participation; their experiences with the new revenue stream model; and their perceptions of the model’s impacts on staff, program operations, and families.