Subcommittee advances SB 1535 A to make ERDC TANF priority optional; lawmakers ask how much the pause would close the budget gap

The joint Ways and Means Subcommittee on Education on Feb. 24 moved Senate Bill 1535 A to the full Ways and Means Committee with a "do pass" recommendation. LFO summarized that the bill would make the Employment-Related Day Care (ERDC) program’s priority qualification for Temporary Assistance for Needy Families (TANF) families optional, allowing the Department of Early Learning and Care to pause the TANF bypass to manage caseload growth and budget pressures.

LFO explained the agency’s current ERDC caseload is roughly 12,000 and said about 10,000 is a level the agency can sustain under current funding assumptions. LFO said anticipated net unobligated federal revenues for the agency are about $127,700,000; roughly $50,000,000 of that would need to be carried into the next biennium to align with federal-to-state fiscal timing, leaving about $78,000,000 available to partially close the gap. LFO estimated the caseload funding gap at roughly $80,000,000 but cautioned the final number would depend on caseload attrition and policy choices such as use of the TANF bypass.

The bill also directs the Department to convene a childcare liability insurance work group and report findings to the Legislature by Nov. 1, 2027. Committee members asked questions about how long a TANF bypass pause would need to last to eliminate the deficit without additional funding, how unspent federal funds are counted (anticipated grant awards versus banked cash), and how changes could affect providers and program matching between vouchers, grants and openings.

Senator Weber and others emphasized concern for childcare providers’ stability and asked staff and the department to evaluate provider impacts as policy work proceeds. After member questions, the subcommittee moved SB 1535 A to the full committee with a due-pass recommendation by voice consent.