Children, Youth and Families department outlines budget priorities, CCAP compliance and IT upgrades

The Minnesota Department of Children, Youth and Families (DCYF) presented the governor's budget recommendation to the House Children and Families Committee on March 26, outlining investments in program integrity, child-care program compliance and IT modernization and noting operating cost pressures.

The presentation said the proposal “does not include cuts to critical social safety net programs,” while showing net general-fund savings in the near term. Ashley Reisenauer, chief financial officer for DCYF, told the committee: “The governor's recommendation for DCYF includes cancellations or reductions in state federal fiscal year '25 that offset biennium. As a result, the net impact to the general fund for '25 fiscal years 25 through '27 is a savings of $16,500,000 and the budget proposal also results in a savings of 7,700,000.0 in the 28-29 biennium.”

Why it matters: the package would affect how Minnesota administers child-care assistance, how the department enforces eligibility and how providers receive payments. Committee members asked for more detail on specific cost drivers and how proposed changes would affect providers and families.

Key proposals and details

- Program integrity and CCAP compliance: Reisenauer said the governor's budget invests in program integrity with $5.4 million in FY26 and $2.8 million in FY28–29, including funding for a statewide electronic attendance record system for the Child Care Assistance Program (CCAP) and two full-time equivalents in DCYF's compliance office. She said parts of the CCAP proposal are needed for federal compliance and are “positive for families,” citing: a cap on family copayments at 7% of income (down from 14%); a restructured tier system to reduce administrative burden; and 12-month redeterminations keyed to the date of the last determination.

- Training and public tools: the budget would require legally non‑licensed providers to complete annual health and safety training and proposes $200,000 one-time to add pre‑licensure inspection reports to the Licensing Information Lookup system (LIL).

- SSIS modernization and IT costs: the governor recommends dedicating $10 million of existing DCYF IT funding to modernize the Statewide Supervised Intake System (SSIS). Reisenauer flagged ongoing IT and maintenance costs as a pressure, estimating a $2.4 million IT cost increase in FY26, half expected to be covered by federal reimbursement.

- Operating adjustment and transition funds: an operating adjustment would increase DCYF’s base to help offset expected growth in employee compensation, insurance and IT services; the department expects to use budget strategies such as delaying noncritical spending or holding vacancies to absorb remaining costs. The presentation also proposes reallocating unspent transition-account funds from the agency’s 2023 appropriation and canceling $2.5 million to the general fund.

- Savings proposals: DCYF described two savings items: funds no longer used because the Mille Lacs Band of Ojibwe declined to join the American Indian Child Welfare Initiative at this time, and a reduction of $1.5 million per year to restorative-practices grants, leaving a $1 million base per year.

- Provider hub and attendance records: committee members asked how the electronic attendance-record system relates to the existing provider hub. Reisenauer and Diane Halsey, assistant commissioner for early childhood, said the plan is to make attendance-record functionality part of the provider hub so providers can use that portal or upload data from third‑party systems.

Committee action and follow-up

The committee laid over House File 2436 for possible inclusion in a later omnibus bill. Members asked DCYF for more precise line‑item detail on major operating pressures — notably printing and mailing (Reisenauer said mass mailing costs could increase by about $1 million next year), specialized IT hardware and staffing, and employee compensation assumptions (roughly 2% next year and 4% in later years). The department said it assumes about 35% average federal reimbursement for administrative costs when estimating net state costs.

Reisenauer said the package attempts to preserve prior investments that strengthen families and avoid unnecessary foster placements, while acknowledging the need for additional efficiencies to meet projected costs going forward.

Ending

Committee chairs and members said they will seek additional detail from DCYF as they consider the department's proposals during budget deliberations and possible omnibus-package negotiations.