Vermont child care funding faces carryover limits, new federal rules; agency hires contractor for supply-demand analysis

Vermont’s Department for Children and Families told the House Appropriations Committee on April 29 that the Child Development Division (CDD) relies heavily on a mix of federal grants and state special funds but faces uncertainty about whether multi‑year federal grant dollars can be carried into future fiscal years.

Janet McLaughlin, deputy commissioner for the Department for Children and Families, said federal funds are expected to total about $43,000,000 for state fiscal year 2026 and special funds about $115,000,000, including roughly $18,250,000 from the new childcare payroll tax and about $15,000,000 from an earned income tax credit (EITC) swap. "Of that grant that we get in, we have to use 70% of it for direct services," McLaughlin said, describing federal Child Care and Development Fund (CCDF) requirements for direct‑service spending.

Why this matters: CDD staff described large multi‑year grants that finance training, data systems and local program grants; those awards are designed to produce lasting systems improvements but typically must be spent on a prescribed timetable. Officials said recent guidance from federal program staff offers little assurance that remaining PDG (Preschool Development Grant) carryover funds or similar award balances will be permitted into future years, which could require the state to accelerate spending or risk losing funds.

Most important facts

- Funding mix and key figures: McLaughlin and Megan Seaton, financial director for DCF, said the governor’s FY2026 recommendation shows roughly $43 million in federal funds and $115…