Senate proposal preserves general-fund childcare dollars, creates $5 million reserve and taps special fund to balance FY26

The Vermont Senate Appropriations Committee on April 17 reviewed a FY2026 budget proposal that would hold in place the current general-fund appropriation for the Child Care Financial Assistance Program (CCFAP), establish a $5 million reserve in the childcare contribution special fund and transfer $19 million from that special fund to the general fund to reconcile the committee’s budget with prior proposals.

Sen. Bruce opened the discussion by noting the committee’s intent to protect general-fund support for childcare and avoid treating that support as subject to recurring annual swaps with other funds. Emily, a committee staff budget analyst, summarized the draft language and said, “the first page is actually the creation of the $5,000,000 reserve.” She added that “if it gets used, it requires the commissioner finance management to report back on it being used.”

Why it matters: committee members framed the package as an effort to lock in the intended general-fund contribution to childcare rather than allow a recurring shift of obligations into special funds. The proposal also increases reimbursement rates for infant and toddler care compared with the House version and adds one-time investments to support licensing and provider transitions.

Key details

- Reserve and transfer: The draft would set aside $5 million in the childcare contribution special fund in FY2026 as a reserve. After reserve requirements are met, the proposal calls for a $19 million transfer from the childcare special fund into the general fund rather than reducing the general-fund appropriation to CCFAP.

- Rate change: Under the proposal the infant-and-toddler rate would be increased to 5.5 percent of current rates, compared with the House increase to 4.5 percent, according to staff summaries presented to the committee.

- One-time and base investments: The package includes one-time funding for the Office of Professional Regulation for licensing staff and IT work and about $960,000 for fee waivers for initial or transitional childcare provider licenses. Committee members also discussed adding $156,000 for career and technical center apprenticeship slots tied to early-childhood educator pipelines.

- Net general-fund impact: Committee staff walked members through comparisons of the governor, House and Senate positions. Staff said the governor’s approach reduced general-fund CCFAP spending by roughly $22 million (a governor-proposed shift plus caseload savings), the House’s package reduced general-fund spending by about $17.6 million, and the Senate draft—before accounting for the special-fund transfer—would show roughly a $3.6 million increase in general-fund spending on childcare. To reconcile that increase, the Senate proposal relies on the $19 million special-fund transfer described above.

Committee discussion and next steps

Members asked for clarification on how the $5 million reserve interacts with prior transfers and carry-forward balances; staff said the reserve largely reflects money moved into the special fund in FY2025 and that the budget language anticipates at least $5 million being available on a budgetary basis at the end of FY2026. Joanna and others asked to see spreadsheet detail showing how moving line items to one-time versus base affects the balance; staff said their draft remains subject to negotiation and further updates.

Rich and others proposed a friendly amendment to incorporate a $156,000 apprenticeship expansion at career technical centers into the construct to support the early-childhood educator pipeline; staff said the committee could add that either in this sheet or later when reviewing one-time investments.

No formal vote was recorded on the childcare draft during the session. Staff said the budget remains out of balance by roughly $7.1 million and that further adjustments, including additional revenue or cuts, will be needed as the committee works toward a final package.

Ending

Committee staff will continue to refine the spreadsheet and bring updated numbers and line-item detail back to the committee; members signaled interest in protecting the standing general-fund contribution to childcare while using limited special-fund resources and one-time dollars for transitional and licensing support.