DCF proposes childcare fund swap and $3.5 million caseload adjustment in FY26 budget

Department for Children and Families staff told the Senate Appropriations Committee on March 14 that the FY26 request includes a $3.5 million reduction tied to Child Care Financial Assistance (CCFAP) caseload savings and a proposed revenue swap that would use special funds from the childcare payroll tax to reduce reliance on general fund dollars.

Megan Smeaton told the committee the CCFAP caseload projection is based on known populations and enrollment outreach, and that the department and JFO reached consensus on the $3.5 million reduction as savings beyond what the agency expects to utilize next year. She described the childcare budget as composed of payroll‑tax special funds, an income‑tax‑credit (ITC) swap, federal funds, and some general fund; the department plans to apply higher special‑fund revenues to offset general fund in FY26.

Smeaton said the adopted consensus revenue forecast for the childcare payroll tax was approximately $19 million above the initial appropriation, creating an opportunity to swap special funds for general funds and redeploy general fund to other agency needs. She reiterated the department’s understanding that statutory or BAA language could constrain how funds are used and noted that legislative language under discussion expresses an intention that childcare funds be reserved for program needs.

Committee members asked staff about the long‑term plan for payroll‑tax coverage and whether the department expects the payroll tax to fully cover program costs; staff replied the payroll tax was not intended to cover all expenses and that the mix of special fund, federal funds and general fund would continue to support the program.