State fiscal analyst warns MILEAP childcare funds will require more general fund support by 2026

The Department of Lifelong Education, Advancement and Potential (MILEAP) is “almost entirely federal and general fund,” fiscal analyst Noel Benson told the House Appropriations Subcommittee on Higher Education and Community Colleges during a presentation on the department’s fiscal 2024–25 budget. Benson said MILEAP’s total appropriations for the budget are $643,900,000, with 79% federal funding and 21% state general fund.

Benson said 91% of the department’s budget—about $584.2 million—goes to the Office of Early Childhood Education, and roughly $499 million of that is for the Child Development and Care program. “Child Development and Care is currently appropriated at $499 million; 87 percent of this—or $429.5 million—is federal Child Care and Development Fund money,” Benson said.

The nut graf: Benson told the committee the department has used federal discretionary and carryforward funds to sustain expanded eligibility adopted during the COVID-19 era. Because caseloads grew faster than expected under the 200%-of-poverty eligibility threshold, the state has been spending down permitted federal carryforward balances and will need additional state general fund to maintain current eligibility and provider reimbursement levels in fiscal 2026 unless the policy or funding changes.

What MILEAP administers: Benson outlined the department’s responsibilities, which include administering the Great Start Readiness Program (the state’s four‑year‑old preschool program, funded in the school aid budget), licensing childcare providers (transferred to MILEAP from the Department of Licensing and Regulatory Affairs), managing the Child Development and Care Scholarship, overseeing out‑of‑school time and summer learning programs, and administering postsecondary scholarship programs and attainment efforts.

Eligibility and provider reimbursement: Benson said the Child Development and Care program serves families with incomes up to 200% of the federal poverty guidelines (about $51,600 annually for a family of three under the current guideline cited by Benson) and covers children under 13 or under 18 when under court supervision or unable to care for themselves. Provider reimbursement is set by state rules and depends on provider type, age of the child, licensure status, quality rating and hours of care. Benson gave ranges discussed in the briefing: licensed‑exempt providers reimbursed between $2.55 and $4.30 per hour, licensed childcare provider two‑week reimbursements from $144 up to $864, and noted one‑time appropriations and other office allocations in the MILEAP budget.

Historical funding path and the carryforward issue: Benson summarized that prior to COVID, Child Development and Care spending ran under $200 million. The state expanded eligibility during COVID (raising the threshold to 200% of poverty) and used one‑time federal COVID dollars and other federal discretionary funds to support higher provider rates and expanded eligibility. When federal COVID funds ended, the legislature kept the 200% eligibility threshold and used federal carryforward balances to cover the increased caseloads. Benson said the state had been carrying forward about $200 million per year under federal rules but has “maxed out how much we could carry forward,” and the carryforward balance will be depleted going into fiscal 2026. He said that to maintain current program guidelines, additional general fund appropriation will be required in the fiscal 2026 budget.

Questions from members: Representative Rogers asked whether increased funding for four‑year‑old preschool had had a ripple effect on providers for infants and toddlers; Benson described provider concerns he had heard as anecdotal and said he did not have hard data on changes in the supply of infant/toddler providers but offered to follow up. Representative Roth asked which items were listed as restricted funds in the department’s funding table; Benson listed the adult foster care facilities licenses fund, child home and center licenses fund, certification fees and the Michigan Merit Award Trust Fund as examples of restricted funds. Benson also outlined that the Child Development and Care funding mix includes match requirements, maintenance‑of‑effort, and discretionary components.

What was not decided: The presentation was informational; no motions or votes were recorded on funding changes during the hearing. Benson and committee members agreed to follow up with the department for additional data on provider counts and program performance metrics.

Ending: Committee members said they would receive follow‑up materials; Benson offered to provide further breakdowns on restricted funds, provider rate tables and any available data on infant/toddler provider supply.