Committee hears continuation of facility-revitalization grants and DEED childcare economic development funding; chairs lay bill over

The House Workforce, Labor and Economic Development Finance and Policy Committee heard testimony and laid over House File 2582, as amended, which would continue a childcare facility revitalization grant program and add funding for the Department of Employment and Economic Development(DEED) childcare economic development grants.

The chairs, Representative Dave Pinto and Representative Dave Baker, opened the hearing noting an announced budget agreement that includes a $50 million cut to the agencies within the committee's jurisdiction in the current biennium and another $50 million in the following biennium; they also said leaders had, for now, excluded the Workforce Development Fund from that cut and paused new spending from that fund pending further leader negotiations.

Testimony came from providers and intermediaries who described the program's reach and remaining need. Suzanne Pearl, Minnesota director for First Children's Finance, said the Minnesota Childcare Facility Revitalization Grant Program (implemented under contract with DCYF since 2022) sets award caps at $20,000 for centers and $15,000 for licensed family child care and is aimed at health-and-safety repairs and licensing-related facility work. She said the program averaged about a $9,000 award, received roughly 650 applications in the last round and funded 104 projects, and that nearly 3,500 grants have been made through the program overall with about 2% reported to the OIG for noncompliance after built-in program integrity checks.

Scott Marquardt of Southwest Initiative Foundation and Dariel Danan of the Economic Development Association of Minnesota described regional shortages of childcare capacity and said community-led, flexible approaches are needed. First Children's Finance data cited in committee materials show Minnesota lacked roughly 80,000 childcare slots as of June 2024; Marquardt said his Southwest region alone is short about 4,570 slots. EDAM and DEED materials provided to members show prior boosts in DEED funding: a $13 million increase in the 2024-25 biennium that is scheduled to drop to $3 million in the 2026-27 base biennium unless new appropriations are adopted.

Representative Athena Lee, chief author of HF 2582, told the committee the underlying bill would appropriate $2.5 million in fiscal years 2026 and 2027 to continue the facility revitalization grant program, while the A1 amendment adopted in committee would add funding for DEED's childcare economic development grant program to increase supply across the state. Committee members asked how funds would be targeted; testimony from Pearl and DEED staff said the DEED program requires at least 50% of its funds be spent in Greater Minnesota and that historically a majority of awards have gone to Greater Minnesota, and the facility grant program likewise directed a disproportionate share of family child care funding to Greater Minnesota.

After questions, the committee adopted the A1 amendment by voice vote and the chair laid HF 2582, as amended, over for future consideration.

Ending: Committee materials included a report and one-page summary on the facility-revitalization program; supporters urged continued funding to sustain providers and expand slots while committee chairs emphasized budget constraints and ongoing leader-level negotiations.