Committee reviews accounting fix to protect childcare fund receipts at fiscal close

Members of the Appropriations Committee questioned administration staff about a timing mismatch that can leave childcare special-fund receipts unaccounted for at fiscal close.

The presenter explained that payroll withholdings taken in the fourth quarter (April–June) are not reconciled and posted to the childcare fund until a reconciliation process in the subsequent November. Without a temporary estimate-and-reserve mechanism, those amounts could be swept into general-purpose reserves at closeout, undermining the childcare fund’s intended balance. To address that timing mismatch, the BAA proposes a new, annual construct (Section 53) to estimate the fourth-quarter contribution and temporarily reserve it in the general fund until final returns are processed, at which point the money would be transferred to the childcare special fund.

The presenter said the Joint Fiscal Office and the Tax Department will help produce a reasonable estimate. Members raised risks of over- or under-estimating the amount and noted that if estimates are too high they could temporarily reduce stabilization or pension balances; if too low, the state could have to draw on other sources. Staff said the mechanism is intended as a mechanical accounting fix to ensure childcare-dedicated payroll-tax revenue is preserved for its statutory purpose.