Oregon early-childcare subsidy doubles to 16,000 families; agency warns of possible budget shortfall

SALEM, Ore. — Department of Early Learning and Care officials told the Joint Committee on Ways and Means subcommittee on Education on March 5 that the Employment Related Day Care (ERDC) subsidy has grown rapidly and now serves more than 16,000 families, but the program faces wait-list pressures and budget scenarios that could produce shortfalls in the next biennium.

DELC Director Alyssa Chatterjee and Early Learning Programs Director Dorothy Spence presented data and budget assumptions during an informational session on Senate Bill 5514. Chatterjee told the committee materials from the session will be posted to OLIS and that testimony may continue into the next day.

The growth and why it matters

Chatterjee and Spence said ERDC served nearly 9,000 families in December 2022 and, as of January 2025, serves more than 16,000 families covering over 26,000 children. The number of providers accepting ERDC grew from about 3,000 in 2022 to over 4,600 in January 2025. Spence said 75 percent of approved families are actively using their benefit; about 25 percent are “unconnected” — approved but not yet matched to a provider.

Spence said the agency implemented a wait list in November 2023 because program demand exceeded available funding. She told lawmakers that roughly 10,000 families are on the wait list (noting the slide in the presentation used an outdated figure) and that the wait list reflects families who need subsidized child care rather than a full-screen of all eligible households.

What the numbers show and program history

Spence reviewed past policy changes and their effects: after a 2015 change raised an ERDC exit limit to 250 percent of the federal poverty level, co-pay amounts increased and, for some families, exceeded the cost of care. She said less than 1 percent of the ERDC caseload had income above 200 percent of FPL in February 2020. At that time, Spence said the average co-pay for that population was about $975 per month; Delaware now reports much lower average co-pays after recent legislative changes.

Spence gave current figures: an average co-pay of $9.35 per month across the caseload and said 12 percent of the caseload has income above 200 percent of FPL (with a typical co-pay of about $59 for households over 200 percent of FPL). She also noted the federal and statutory co-pay cap standard at 7 percent of income.

Budget assumptions and shortfall risk

DELC presented assumptions used for caseload and budget projections: $30 million set aside for provider bargaining to reflect a 10 percent cost-per-case increase beginning January 2026, and $25 million assumed to cover federal compliance changes required in July 2026. Spence showed several growth/decline scenarios; most projected scenarios showed potential budget shortfalls under current funding assumptions. The agency said it is evaluating federal funding options and other strategies to address the gap.

Lawmakers pressed the agency on the impact of raising co-pays as a cost-saving lever. Spence and staff said raising co-pays would have limited fiscal effect relative to the size of projected shortfalls and could materially reduce families’ ability to afford care and maintain employment. The agency provided a scenario in which raising family co-pays to 7 percent would increase the monthly cost for a single parent with two children earning about $3,200 per month from $5 to $210, raising that household’s annual out-of-pocket childcare cost from about $60 to $2,580.

Barriers to connecting approved families

Spence described barriers for the roughly 25 percent of approved but unconnected families: difficulty finding a provider with the needed schedule, an open slot or a convenient location. DELC said it is partnering with 2-1-1 and Department of Human Services family coaches to perform outreach and to offer opt-in referral calls from 2-1-1. DELC also said it has improved the Find Child Care Oregon search functionality to help families find ERDC-approved providers.

Follow-up and next steps

Lawmakers asked DELC to provide more detailed slides and public materials on who the program serves (income bands, TANF share) and the agency said those responses will be posted to OLIS. The committee adjourned the informational session with testimony to continue on the following day.

Ending

No formal action or vote on SB 5514 occurred during the session; the meeting was adjourned with additional testimony and questions scheduled for the next day.