Witnesses urge H.248 changes to help child-care openings and meet federal rules

At a House Human Services Committee hearing on H.248, two witnesses representing early-childhood organizations said the bill makes helpful technical changes, urged a provision to allow emergency financial relief for programs that are about to become licensed, and asked the committee to require the state to model the cost of meeting new federal affordability rules.

"It's working," Sarah Kenny, chief policy officer at Let's Grow Kids, told members, citing increased enrollment in Vermont's Child Care Financial Assistance Program and program openings since Act 76 took effect. Kenny said family enrollment in the program has risen about 40 percent since those changes went into effect and that public investment has helped open more than 100 new child-care programs and create roughly 600 net additional child-care spaces and about 230 new early‑childhood jobs.

Kenny and Erin Roche, Vermont director of First Children's Finance, described two related priorities: (1) giving the commissioner authority to use limited "extraordinary financial relief" for sites that are in the process of becoming licensed or registered and face immediate problems, and (2) directing the Child Development Division (CDD) to report back on the cost to comply with a new federal Child Care Development Fund rule that caps family payments for certain families at 7 percent of income.

Kenny told the committee that while Act 76 has reduced child-care costs for many families — she relayed anecdotal accounts of families moving from paying approximately half their income for care to paying less than 10 percent — gaps remain. "We still have families who are not eligible," she said, noting that eligibility depends on income and qualifying service needs and that the state has expanded service-need categories but that some families still fall outside the program.

Roche described First Children's Finance's role providing business training and technical assistance to programs and administering an infant-and-toddler capacity grant (Make Way for Kids). She said First Children's Finance has run 78 business trainings, engaged 147 child-care businesses with one-on-one assistance and conducted 63 financial or business-model analyses since opening its Vermont office. "In those two years, we have awarded just over $3,000,000 to 112 childcare projects in Vermont," Roche said, adding that last year's grants supported the opening or preservation of more than 1,000 spaces.

Both witnesses supported H.248's technical changes and recommended an added reporting requirement. Kenny asked the committee to direct CDD to report to the General Assembly by December 2025 on (a) the funding needed to ensure no family at or below 85 percent of state median income spends more than 7 percent of income on child care (the federal standard for the Child Care Development Fund) and (b) the funding needed to ensure no family receiving CCFAP spends more than 10 percent of income, as Vermont set in earlier acts. She also asked CDD to analyze shifting from a flat-tier family-share schedule to a progressive sliding scale and to evaluate IT changes needed to implement such a scale.

Members asked about workforce pay and program finances. Kenny said the state does not yet have a comprehensive, up-to-date statewide data set on program wages but that programs report anecdotal and sampled evidence of wage increases since reimbursement rates rose under Act 76. Roche said payroll makes up about three quarters of typical program operating budgets, that many centers reported significant payroll increases last year, and that most programs expect modest tuition increases in 2025 to address rising payroll costs.

On the extraordinary-relief question, both witnesses recounted cases in which new sites narrowly missed eligibility for emergency assistance after events such as flooding, and they said limited, flexible relief could save spaces that otherwise might be lost. Roche noted grant and lending timelines: First Children's Finance's grant program typically takes about three months from application to award and loans take additional time, so a narrowly targeted extraordinary-relief mechanism can fill short-term gaps.

The committee did not take formal action at the hearing. The chair said the committee would reconvene 15 minutes after the floor session to discuss whether to amend the current draft of H.248 and to hear further staff input.

What's next: witnesses offered draft language and requested the committee task CDD with the cost and IT analyses; members asked staff to consider whether an emergency-relief mechanism should be added to the bill.