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MSDE warns of childcare scholarship freeze as enrollment surges; advocates urge maintaining reimbursement and credential funding
Summary
Department of Legislative Services told the panel that childcare scholarship enrollment surged from 15,296 in January 2021 to 42,478 in December 2024, creating fiscal pressure that prompted MSDE to plan an enrollment freeze starting May 1, 2025; MSDE and advocates urged retaining reimbursement values and restoring mandated childcare credential
The Division of Early Childhood and the Maryland State Department of Education told the Education and Economic Development Subcommittee that rapid growth in the childcare scholarship program has created a fiscal shortfall that requires short‑term cost containment, while advocates asked the committee to preserve program value and workforce credentialing investments.
DLS analysis and key numbers. Natalie Andrade of the Department of Legislative Services summarized fiscal 2026 proposals for the Division of Early Childhood and told the committee that childcare scholarship enrollment rose from 15,296 children in January 2021 to 42,478 in December 2024 — a 178 percent increase. DLS reported that total childcare scholarship payments rose substantially and that the fiscal 2026 allowance includes $495,000,000 for childcare scholarships. DLS said MSDE closed fiscal 2024 with a program deficit and anticipated continued shortfalls as enrollment growth outpaced federal and one‑time ARPA funds.
MSDE cost containment and freeze plan. Andrade said MSDE notified the General Assembly on Jan. 31, 2025, of a plan to implement an enrollment freeze for the childcare scholarship program beginning May 1, 2025 and continuing through September 2025; the department projected it could maintain approximately 40,000 children on the program by admitting new enrollees only as children left the program. DLS and MSDE also discussed a proposed change to provider reimbursement rates: DLS framed an approach using the 60th percentile of the 2024 market rate survey. MSDE officials later told the committee the department expects to reimburse at about the 68th percentile beginning Sept. 1, 2025 and said families’ copay shares would not change immediately as a result of the rate change.
Workforce credentialing oversight. DLS noted the fiscal 2026 allowance omitted funding for the Maryland childcare credential program that Chapter 165 of 2024 required to be funded in FY26; MSDE acknowledged the omission and said it planned to request funding in a supplemental budget. Childcare advocates pressed the committee to restore the credential program funding immediately: several witnesses said credentialing supports the early childhood workforce and is necessary to retain and recruit providers.
Advocates’ testimony. Representatives from Maryland Family Network, the Maryland State Child Care Association and SEIU Local 500 asked the committee to avoid enrollment caps and to maintain reimbursement levels at or near recent market percentiles. Laura Wheildreier of Maryland Family Network said the program then served about 14 percent of eligible children and urged the committee not to reduce the reimbursement floor from the 70th percentile to the 60th percentile. Chris Push (Maryland State Child Care Association) and Ellie Culmers (SEIU Local 500) said the childcare credential program must be funded in FY 2026 as required by last session’s legislation to support workforce compensation and training.
Pre‑K expansion and sliding scale. DLS also reviewed implementation of Blueprint for Maryland’s Future early‑childhood expansions and noted challenges in meeting mixed‑delivery targets for private providers; it recommended modifications to statutory phasing and per‑pupil increases to constrain long‑term costs. MSDE told the subcommittee it will implement a phased pre‑K sliding scale and that private providers are better positioned to collect family share payments than public schools, which would need systems and processes if they elect to collect fees.
What comes next: MSDE requested that the General Assembly and the committee consider enrollment management and provider reimbursement changes and said it supports quarterly reporting on childcare scholarship enrollment, expenditures and wait lists. Advocates urged the legislature to preserve or restore credential funding and to prioritize sustaining reimbursement levels and enrollment access as fiscal decisions are made.
