Across the country, states are making progress in expanding Infant and Early Child Mental Health Consultation (IECMHC). IECMHC is a prevention-based approach that pairs a mental health consultant with early childhood professionals across different early care and education settings (incl. home visiting, early intervention, child care, Pre-K, Head Start) to support their capacity to foster the healthy social-emotional development of babies and young children. There is strong evidence that IECMHC improves outcomes for children, families, and the workforce.  

Based on a recent national scan (Dec 2024–Mar 2026), at least 35 states and territories are implementing some form IECMHC. While this progress should be celebrated, system leaders need to understand that IECMHC is only one component of a comprehensive, statewide IECMH approach to addressing social-emotional and mental health outcomes for babies and young children. A comprehensive IECMH system requires collaboration and alignment across multiple programs, agencies, and funding streams to address the full continuum of IECMH promotion, preventive-intervention, and treatment services.  

Drawing on takeaways from interviews with system leaders in three states that have made significant progress in building comprehensive IECMH systems, this piece lays out what states can do to build a comprehensive IECMH system that supports the healthy social-emotional development and mental health of young children in the context of secure, nurturing relationships with parents and caregivers.  

Why Early Relational Health and IECMH Matter  

Policymakers, early childhood leaders, and families are increasingly aware of the importance of early relational health and that safe, stable, and nurturing interactions between caregivers and young children provide the foundation of healthy development. 

At the same time, states are grappling with the profound impacts of Adverse Childhood Experiences (ACEs), Trauma and Toxic Stress— all of which can disrupt the parent-child relationship and derail healthy development if left unaddressed. 

ZERO TO THREE  defines Infant and Early Childhood Mental Health (IECMH)  as “developing capacity of the child from birth to 5 years old to form close and secure adult and peer relationships; experience, manage, and express a full range of emotions; and explore the environment and learn—all in the context of family, community, and culture”.  

Given the comprehensive nature of IECMH, a continuum of supports and services are needed to promote the healthy social-emotional development and mental health of babies and young children within the context of relationships with parents and other caregivers. This includes: 

• Promotion of healthy social and emotional development and mental health for all infants and young children through materials and training that are targeted to parents, early care and education professionals, and others working with young children.  

• Preventive-intervention services for families who are experiencing levels of stress and challenges that may increase their young child’s risk of developing social-emotional or mental health problems. This includes home visitors and early intervention professionals supporting the parent-child relationship, parenting groups, and IECMH consultation for early care and education professionals. Early childhood professionals can also be supported in their work with families of young children through ongoing reflective supervision/consultation (RS/C). 

• Treatment services that address the parent-child dyadic relationship, when their interactions are determined to have a negative effect on the mental health of the young child (e.g. abuse and neglect, parental mental health, domestic violence, etc.) that are provided by clinical mental health professionals who utilize evidence-based dyadic clinical treatments. 

What a Comprehensive IECMH System Requires 

To build a coherent statewide IECMH system, states must move beyond isolated programs and services and instead build effective IECMH infrastructure systems in which governance, data, funding, professional development, and aligned policies – work together to promote high‑quality and equitable statewide IECMH services and supports.  States are at various stages of building comprehensive IECMH systems. Forty-five states have participated in ZERO TO THREE’s IECMH Financing Policy Project (FPP), which has supported cohorts of state teams each year since 2016. Building a comprehensive state IECMH system includes: 

1. Establishing IECMH Governance

A statewide IECMH system requires governance structures that enable the state to set and align programming and policy around a clear vision, provide accountability, and facilitate coordination across programs, agencies, and funding streams. Addressing statewide governance for IECMH is key for building a statewide IECMH system. State approaches to enhancing IECMH governance may include: 

• Designating a lead agency,  
• Funding a full‑time IECMH policy position, and  
• Establishing an ongoing cross‑sector IECMH advisory body. 

Alabama, Georgia, and Washington, all of which have made significant progress in building comprehensive IECMH systems, illustrate the variety of governance models that can support effective IECMH system governance. 

2. Data That Drives Decisions

States should use available data from early childhood programs, Medicaid, child welfare, and existing IECMH services, as well as population demographics, to understand needs, identify gaps, and plan for equitable access. Washington State Health Care Authority , for example, uses a range of data and qualitative focus group data from a statewide listening tour to support planning and outcomes reporting. https://www.hca.wa.gov/assets/program/iechm-statewide-tour-report-2024.pdf 

3. Sustainable Funding

States should map current funding sources utilized and examine how to maximize federal, state and philanthropic funding sources to expand IECMH services and infrastructure supports,  including: 

• Medicaid – In February 2026 the Centers for Medicare and Medicaid Services (CMS) released the State Medicaid & CHIP Toolkit for Children’s Behavioral Health Services and the Early and Periodic Screening, Diagnostic and Treatment (EPSDT) Requirements, which includes strategies to cover IECMH services and encourages states to allow behavioral health services to be provided without a formal behavioral health diagnosis. 

• State legislative appropriations – to fund IECMH system infrastructure and supports and fund services across the IECMH promotion, preventive-intervention and dyadic treatment continuum. 

• Private insurance – to cover dyadic treatment through working with their state insurance agency to examine potential coverage of IECMH services as an “Essential Health Benefit” under the Affordable Health Act (ACA). 

• Federal early childhood program funding – Some early childhood programs utilize a preventive-intervention approach to support healthy social-emotional development and strong parent-child relationships, including early intervention (Part C); home visiting; and Head Start/Early Head Start. 

• Federal grants – such as the Preschool Development Grant – Birth to Five (PDG B-5), that, similarly to a philanthropic funding, can be utilized to fund time limited infrastructure / systems projects. 

• Philanthropic funding – for short term funding of system projects including assessments of the current IECMH systems infrastructure (including funding), strategic planning, convening of key partners, as well as professional development and public awareness campaigns. 

4. A Trained and Supported Workforce  

State IECMH systems must develop higher education and professional development opportunities to support the capacity of early childhood and mental health professionals and sustain an adequate statewide workforce. States can strengthen workforce capacity by: 

• Promoting Endorsement – developing policy or guidance that either encourages or requires IECMH endorsement from the state Associations for IMH (AIMH). Endorsement creates shared statewide standards and framework for IECMH competencies and supports the capacity of early childhood and mental health professionals. The Alliance for the Advancement of Infant Mental Health Pathways for Endorsement table includes the education, work experience, training, reflective supervision, and other requirements at the different levels of endorsement. 

• Developing Training on trauma informed care / adverse childhood experiences (ACEs) – training widely across programs about the impact of early childhood trauma / adverse childhood experiences (ACEs) and how organizations can implement a trauma informed approach.  

• Promoting Diagnostic Classification (DC:0-3) training through ZERO TO THREE at the general and clinical levels to promote understanding and capacity to make mental health diagnosis for infants and young children and their families. 

• Providing Dyadic Therapy training and certification for mental health clinicians in Evidenced Based therapies and promising practices.   

5. Policies That Align Systems 

Practices that support integrated IECMH systems, such as screening, referral, professional qualification, staff training, and adoption of evidence-based practices, can be incorporated into policies and program standards across early care and education programs, Medicaid, and child welfare. 

6. Communication That Builds Public and Professional Awareness 

States should develop a communications and public awareness strategy that includes:  

• A unified campaign to promote IECMH through print media (articles, posters, developmental materials), electronic media (websites, blogs), and social media targeted to families, early childhood and mental health professionals, other professionals working with young children and their families, and the general public. 

• Communication to mental health and early childhood professionals regarding professional development and endorsement opportunities. 

• Providing information broadly on the impact of trauma, ACEs, and the importance of early relational health and social-emotional development and when, how, and where to make referrals. 

Steps States Can Use to Build a Strong IECMH System

While each state highlighted here took a different pathway to building a statewide IECMH system, commonalities in their experience suggest some key steps that states can use to build a coherent statewide IECMH system: 

1. Convene a Statewide IECMH Taskforce / Workgroup 

Bring together parents, providers, state agencies, the state AIMH, legislators, advocacy, and philanthropic organizations to analyze data, inform strategic direction and priorities, and advise on policy development. 

2. Conduct a Statewide Needs Assessment

Map current IECMH services, funding, workforce capacity, training, and communication efforts to assess the strengths and resources that the state can build upon, as well as challenges and gaps to be addressed. A statewide IECMH systems review should include: 

• Analyzing currently available quantitative data. 

• Collecting data through surveys, interviews and focus groups. 

• Reviewing documents – reports, policies, statutes. 

• Developing a report that synthesizes the data and information gathered and that identifies gaps and strengths. 

3. Engage in Strategic Planning  

Use the findings to set a shared vision, establish SMART goals, and develop actionable strategies with timelines, responsibilities, and performance indicators. 

Building Comprehensive, Sustainable IECMH Systems – A Call to Action for States 

To truly support early relational health and improve mental health outcomes for young children, states must build coordinated, adequately funded, and sustainable IECMH systems that span promotion, preventive-intervention, and treatment, with IECMHC as one important component of that system. 

Through strategic and comprehensive approaches to IECMH governance, data, funding, workforce development, policy alignment, and communication, states can create systems that support families and the workforce to promote healthy social-emotional development and mental health for every infant and young child through strong, nurturing relationships.  

CCDF State plans are coming! This is the second brief in a series focused on supporting states preparing their CCDF state plans. For more context, start with the first brief here.

What is Alternative Methodology?

One of the most important developments in early childhood finance in the last decade has one of the most confusing names: “Alternative Methodology.” Despite the enigmatic name, it’s having a big impact on child care payment rates across the country.

To understand what makes this approach an “alternative,” we have to go back to the way child care subsidies have historically been set.

The federal Child Care Development Block Grant (CCDBG), also called the Child Care Development Fund (CCDF), requires payment rates for subsidies to be benchmarked to the “market rate.” States do a Market Rate Survey every two years to learn what child care providers charge in private tuition. CCDF guidance calls for setting subsidy rates at the 75th percentile of the market rate, meaning that a family using a subsidy could access 75% of the private market. In practice, few states have historically reached this benchmark due to underfunding and the trade-off between higher rates and more children served.

The problems with this approach are well documented: child care providers often set their tuition according to what parents can afford to pay, not their true costs. The result is underpaid staff and providers operating on razor-thin margins. In other words, the Market Rate Survey measures the price of the child care service, but the price does not always cover the cost. This mismatch is even more severe in low-income areas, where families can afford even less in private tuition, leading to inequities in subsidy rates across neighborhoods.

In the 2014 reauthorization of CCDBG, Congress recognized this issue and allowed states to set their rates using an “alternative methodology, such as a cost estimation model” instead of the Market Rate Survey. Essentially, this meant setting rates based on cost rather than price.

In 2020-21, New Mexico and DC became the first in the country to use Alternative Methodology to set their child care subsidy rates. Other states, including Virginia, Colorado, and South Carolina, soon followed. Recognizing the momentum behind the idea, the federal Department of Health and Human Services (HHS) put out updated guidance on using Alternative Methodology in January 2025.

The HHS guidance requires states using Alternative Methodology to:

• Submit a request for pre-approval from HHS that includes their plan for field engagement, data collection, and cost modeling
• Collect data or use administrative data; data should be collected or updated within two years of submitting their state plan
• Validate this data with input from providers in the field
• Create a cost model or cost study using this updated data
• Translate that cost model or cost study into rates, describing how rates compare to the costs of care

Notably, the guidance does not require rates to cover the full cost of care. Many states are working toward this as a long-term goal, but are not yet able to reach it with current funding levels. (Full disclosure, I was part of a group of cost modelers who provided input on the guidance as subject matter experts back in 2023.)

States can request approval to use Alternative Methodology as part of their regular CCDF state plan cycle or at any time during the cycle. If they are approved, the Alternative Methodology approach replaces the Market Rate Survey, although some states choose to continue to collect information on private tuition to inform their understanding of the full child care market.

How is Alternative Methodology Different From a Narrow Cost Analysis?

Confusing things even further, in 2018, HHS began requiring all states to conduct a Narrow Cost Analysis as part of their CCDF state plans. Knowing that not every state would want to go through the Alternative Methodology process and develop a robust cost model, they still wanted to be sure that each state had at least a basic understanding of the cost of care.

Both the Narrow Cost Analysis and Alternative Methodology are ways of understanding the cost of providing child care and the difference between price and cost. They differ in their level of nuance and detail:

Two Possible Paths For Your State

While every state has to complete the basic federal requirements, if you’ve read this far, we can assume that you’re interested in doing more than just checking a box. We have seen states use two different paths to move their early childhood system toward deeper understanding of the cost of care and meaningful action to improve early childhood funding.

Path 1: Lean Into Your Narrow Cost Analysis

If you embrace its potential, a Narrow Cost Analysis can be a great vehicle for understanding the cost of care. It doesn’t require federal pre-approval or extensive documentation, and it can still result in a strong cost model that you can use to answer critical policy questions. The key here is to fully understand what data you have and what you need.

First, evaluate what publicly available or administrative data is available. For example, do providers already enter staffing and wage information into a workforce registry?

Next, use surveys to collect the most critical information that is not available or not reliable. To ease the burden on providers, surveys could prioritize the most important cost drivers (e.g. such as compensation, benefits, facilities, and food) and use public tools like the Provider Cost of Quality Calculator for the less significant costs. These questions can be combined with the required Market Rate Survey.

If possible, it’s also a good idea to use some focus groups to validate your assumptions with providers in the field.

The resulting cost analysis can include nuances around geographic regions, ages, settings, quality levels, and workforce compensation that go beyond the minimum requirements. As long as the Market Rate Survey remains part of the equation when setting rates, this doesn’t require pre-approval. This can be a flexible approach for states on their way to prioritizing meeting the costs of care.

The benefits of this approach include:

• Useful, robust cost information, particularly if the state has existing high-quality data and/or is willing to use surveys to collect it
• Fewer administrative hoops to jump through, with no required pre-approval
• More flexibility, including discretion about which data sources to use and how to engage the field

The major drawback is the lack of a clear signal about the state’s approach. Because the state is still conducting and using the Market Rate Survey, the field may not understand how cost estimates relate to their rates at the end of the day.

Path 2: Alternative Methodology

The Alternative Methodology approach will produce the most complete picture of actual costs and signal clearly where your state is headed. It is also a larger administrative lift: it requires federal pre-approval, documented field engagement, and detailed written methodology.

Like the Narrow Cost Analysis, Alternative Methodology can start with existing administrative data, but that data must be comprehensive and recent. Data collection should be thorough about filling in any gaps. Pursuing this approach means investing time and effort in educating providers about why it is important to share their cost data, supporting them to fill out the surveys, and listening to the field through focus groups or other qualitative engagement.

Benefits of Alternative Methodology include:

• Clear Messaging and Goals. This is a clear way for states to communicate their commitment to understanding the real costs of providing child care and working toward meeting that cost over time.
• Field Engagement. By educating and engaging the child care field about why they are pursuing this alternative route, states can build support and understanding for their approach.
• Nuanced and Updated Data: Because this approach requires detailed, recent data collection, it can support a more detailed cost model that can give states a deeper understanding of how costs differ across settings, communities, quality levels, and more. States with strong, detailed cost models can use them to evaluate many different kinds of funding policy proposals, not just subsidy rates.

The major drawback of the Alternative Methodology approach is its administrative lift. States that have done it describe at least a year of data collection, engagement, and model-building before rates are set.

There is no universally right answer.

It depends on your state’s funding situation, political climate, existing data, capacity, and appetite for the work. Helping you think through those trade-offs is what this series is designed to do.

The child care field has shifted rapidly in the last decade to understand and incorporate the cost of care into its subsidy rates and policies. Alternative Methodology, wonky as it may sound, has been a major driver of this change. States should make an informed decision about the path that is right for them.