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State officials warn $35.5 million child care shortfall for 2025–27; DHHS to adjust rates and use TANF funds
Summary
Department of Health and Human Services reported a projected $35.5 million shortfall for the 2025–27 child care budget after caseloads rose to 7,500; the department plans reimbursement changes and to use about $22.3 million in federal TANF funds to cover the gap.
Donna Aukland, chief financial officer for the Department of Health and Human Services, told the Legislative Audit and Fiscal Review Committee the department projects a roughly $35.5 million shortfall in child care funding for the 2025–27 biennium driven by caseload growth to 7,500 children versus the budgeted 6,400.
Aukland reported accounts receivable write‑offs for fiscal year 2025 of $562,000 for human service centers and $3.2 million for the State Hospital. On child care, she said the department will adjust part‑time care reimbursement to 50% of the full‑time rate, reduce state maximum rates where appropriate, and will use about $22.3 million in federal Temporary Assistance for Needy Families funds to mitigate the deficit.
Michele Gee, Director of the Economic Assistance Section, told the committee the new child care workforce benefit program serves 1,440 children—well above the program's budgeted caseload of 660—and attributed much of the budget pressure to that program's larger‑than‑anticipated uptake.
Committee members asked how the department will balance provider payments and eligibility; DHHS said internal budget adjustments and federal funds will be used while program enrollment and rates are monitored. The committee accepted the audit and budget information presented for its records.
