Determining appropriate child care market rate subsidy payments is a complex, state-specific process. The goals and structure of state child care subsidy programs are quite different from state to state. While there is much debate on methods across the different states, there does not appear to be agreement upon a single correct way of determining rates that is applicable to all states. The Boyd Center for Business and Economic Research at the University of Tennessee has worked closely with the Tennessee Department of Human Services to determine the most appropriate Tennessee-specific structure for estimating child care market rates. The following discussion outlines the specific process by which the market rates were determined. (author abstract)