SB 522-FN-A - AS INTRODUCED
2024 SESSION
24-2856
02/10
SENATE BILL 522-FN-A
SPONSORS: Sen. Lang, Dist 2; Sen. Gannon, Dist 23; Sen. Pearl, Dist 17; Sen. Avard, Dist 12; Sen. Innis, Dist 7; Sen. Ward, Dist 8; Sen. Carson, Dist 14; Rep. Coker, Belk. 2; Rep. Moffett, Merr. 4
COMMITTEE: Education
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ANALYSIS
This bill requires rulemaking by the department of health and human services on child care early education and establishes an early childhood education account program to provide funds for an education freedom accounts scholarship organization to administer grants to eligible New Hampshire pre-kindergarten children for qualifying expenses.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
24-2856
02/10
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Twenty Four
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Short Title. This act shall be known as the "Early Childhood Education Act."
2 Statement of Findings. The general court hereby finds that:
I. The availability of quality, affordable, safe, and reliable child care is critical to allow parents to remain in the workforce, build a strong and future-focused economy, and provide a supportive environment for healthy child development that prepares children for success in school and in life.
II. Over the past 2 years, the inherent fragility of New Hampshire's child care system has become undeniable and there is an urgent need to improve access to childcare for working families and solidify the child care sector through system-based policy change and investment.
III. Investment and improvement in the child care system has been identified as an essential priority from diverse stakeholders including, businesses, state leaders, providers, early care and education professionals, higher education, faith leaders, and families across New Hampshire.
IV. The child care industry is vital to New Hampshire’s economic success. Yet many New Hampshire businesses are struggling to recruit and retain their workforce and have identified childcare as an important component to solving the burgeoning workforce crisis in New Hampshire. As such, the New Hampshire Business and Industry Association has identified “policies that strengthen the early childhood system including increasing access to quality, affordable childcare to allow caregivers to return to the labor force” as a 2023 public policy priority.
V. In May 2021, the director of the New Hampshire economic and labor market information bureau reported that “increasing the labor force participation rate of women ages 25-54 by just 1.3 percent (10,000) through increased access to child care would add over $1 billion to New Hampshire’s gross domestic product by 2031 and over $1.5 billion in personal income.”
VI. Parents need and deserve equitable access and true choice in the care of their children. Reliable, quality care not only supports parents who choose to enter and want to stay in the workforce, but it also provides critical prevention, health, and development support for children.
VII. Investing in the early years of children's development has demonstrated a substantial return on investment for the economy, families, and children. Access to high quality child care has been shown to support a child’s healthy development and is proven to mitigate the impacts of trauma. Countless studies have shown that access to affordable, quality child care mitigates the impact of adverse childhood experiences, reducing the potential of negative long term impacts.
VIII. Policy change and investment need to be directed at the state’s child care scholarship program for low income working families, the child care workforce, and state infrastructure.
IX. New Hampshire’s child care scholarship program plays a significant role in ensuring all New Hampshire families have choice and access to quality, safe, and reliable child care, regardless of income, geographic location, or field of work. However, federal sources indicate that less than 15 percent of income eligible families have access to child care subsidies.
X. New Hampshire’s child care scholarship program contains policies which no longer match the economic reality of families who live and work in our state. These outdated policies have created barriers to access for families. Revision to eligibility and reimbursement policies would support families qualifying for child care scholarships, incentivize child care programs to open their doors to these families, and provide stability to New Hampshire families.
XI. New Hampshire’s child care workforce is in desperate need of support as outlined in the state’s child care strengthening plan. A lack of available childcare employees has led to longer wait times for child care slots and higher costs for families. For every teacher employed in a child care classroom in New Hampshire, an average of 8 children and their working parents are served. When a teacher leaves and a new recruit cannot be found, a child care program will likely have to tell 8 children and their working parents that they can no longer serve them.
XII. According to the February 2021 study, Constraints on New Hampshire’s Workforce Recovery by the department of health and human services, 54,000 children under 6 years old needed child care but there were only 33,000 licensed slots. This contributes to young people delaying starting families, reduces the number of young people in the workforce, and results in employees having to resign or turn down job offers across all industries.
XIII. New Hampshire needs to support state infrastructure to increase the capacity of the state to effectively implement and manage child care scholarship, workforce support grants, and to ensure that parents have true choice in accessing high quality, affordable child care.
3 New Subparagraphs; New Hampshire Employment Program and Family Assistance Program; Rulemaking. Amend RSA 167:83, II by inserting after subparagraph (q) the following new subparagraphs:
(r) Modification of eligibility for the child care scholarship program as follows:
(1) Adjust income eligibility to 85 percent state median income as federally permitted by the Office of Child Care;
(2) Remove parent cost-share for any eligible family at or below 100 percent of the Federal poverty level and assign a $5 per week cost-share for families greater than 100 percent and at or below 138 percent;
(3) Adjust steps in eligibility to broaden income categories; and
(4) Remove the child care scholarship work requirement.
(s) Modification of reimbursement for the child care scholarship program as follows:
(1) Transfer annual childcare scholarship amount to entity designated by department of education to administer the Early Childhood Education Account (ECEA);
(2) Set reimbursement rates across all programs to match the 75th percentile of market rate survey and/or allow for rates to be set through an alternative “true cost of care” mechanism to be defined by the department of health and human services;
(3) Implement adjustments federally permitted by the office of child care to the market rate survey which more equitably account for geographic differences, inflation, off-hours care, and other costs of child care which are not currently captured in the market rate survey; and upon implementation, the department of health and human services shall develop and engage in training of all staff on program eligibility and reimbursement changes to the child care scholarship program.
4 New Section; Education Freedom Accounts; Early Childhood Education Account Program. Amend RSA 194-F by inserting after section 12 the following new section:
194-F:13 Early Childhood Education Account Program.
I. There is hereby established a childcare fund to finance grants for eligible New Hampshire children. "Eligible child" means a resident of this state who is between 2.5 and 5 years old and whose annual household income at the time the child applies for the program is less than or equal to 350 percent of the federal poverty guidelines as updated annually in the Federal Register by the United States Department of Health and Human Services under 42 U.S.C. section 9902 (2). No income threshold need be met in subsequent years, provided the child otherwise qualifies.
II. The fund shall be non-lapsing and continually appropriated to the department of education for the purposes of the early childhood education account (ECEA) program under this section. The fund shall consist of transfers from the education trust and appropriations of general funds to implement the program. The state treasurer shall invest the moneys deposited in the fund as provided by law. Interest earned on moneys deposited in the fund shall be deposited into the fund.
III. The department of education shall designate a scholarship organization to administer grants to eligible New Hampshire children. The scholarship organization shall have the duties, obligations, and authority as in RSA 194-F:4 and RSA 194-F:6.
IV. The amount of annual grants to children shall be equal to the cost of an opportunity for an adequate education determined pursuant to RSA 198:40-a.
V. Parents of an ECEA child shall agree to use the children care grant funds deposited in their child's ECEA only for the following qualifying expenses to educate the early childhood education child:
(a) Tuition and fees at a licensed childcare provider, family childcare provider, or private school with independence under RSA 194-F:7.
(b) Tuition and fees for non-public online learning programs.
(c) Services contracted for and provided by a district public school, chartered public school, public academy, or independent school, including, but not limited to, childcare, individual classes and curricular activities and programs.
(d) Textbooks, curriculum, or other instructional materials, including, but not limited to, any supplemental materials or associated online instruction required by either a curriculum or a provider.
(e) Computer hardware or other technological services and devices, that are primarily used to help meet the ECEA child's educational needs.
(f) Educational software and applications.
(g) Tuition and fees for summer education programs and specialized education programs.
(h) Educational services and therapies, including, but not limited to, occupational, behavioral, physical, speech-language, and audiology therapies.
(i) Any other educational expense approved by the scholarship organization.
VI. ECEA funds shall not be refunded, rebated, or shared with a parent or pre-kindergarten EFA student in any manner. Any refund or rebate for goods or services purchased with ECEA funds shall be credited directly to the student's ECEA.
VII. Parents may make payments for the costs of childcare and educational goods and services not covered by the funds in their child's ECEA. However, personal deposits into an ECEA shall not be permitted.
VIII. Funds deposited in a ECEA shall not constitute taxable income to the parent or the ECEA child.
IX. An ECEA shall remain in force, and any unused funds shall roll over from quarter-to-quarter and from year-to-year until the parent withdraws the ECEA child from the program, or an ECEA converts to and EFA pursuant to RSA 194-F upon entering kindergarten, unless the EFA is closed because of a substantial misuse of funds. Any unused funds shall revert to the education trust fund established in RSA 198:39 and be available to fund other EFAs.
X. Nothing in this chapter shall require that an ECEA child must be enrolled, full or part-time, with either a licensed childcare provider, family childcare provider, or private school.
XI. If any provision of this chapter, or the application thereof to any person or circumstances, is held invalid, such invalidity shall not affect other provisions or applications of this chapter which can be given effect without the invalid provision or application, and to this end the provisions of this chapter are declared to be severable.
XII. For the fiscal year ending June 30, 2025, and every fiscal year thereafter, the amount necessary to fund the grants under this section is hereby appropriated to the department from the education trust fund established in RSA 198:39. If the balance in the education trust fund is less than zero, the governor is authorized to draw a warrant for sufficient funds to eliminate such deficit out of any money in the treasury not otherwise appropriated. The commissioner of the department of administrative services shall inform the fiscal committee and the governor and council of such balance. This reporting shall not in any way prohibit or delay the distribution of grants under this section.
5 Effective Date. This act shall take effect July 1, 2024.
24-2856
Revised 1/9/24
SB 522-FN-A- FISCAL NOTE
AS INTRODUCED
FISCAL IMPACT: [ X ] State [ ] County [ ] Local [ ] None
Estimated State Impact - Increase / (Decrease) | ||||
| FY 2024 | FY 2025 | FY 2026 | FY 2027 |
Revenue | $0 | See Methodology Below - Potential $28.4M Per Year Federal Fund Loss | ||
Revenue Fund(s) | Federal Funds | |||
Expenditures | $0 | Early Childhood Education Account Program -Indeterminable Increase (Open Education Trust Fund Appropriation)
Department of Health and Human Services Costs - General Funds - $4,949,488 in FY 2026 and $5,196,920 in FY 2027
Federal Funds (Child Care Development Fund) - $9,607,752 in FY 2026 and $10,088,140 in FY 2027 | ||
Funding Source(s) | Education Trust Fund, General Fund, Federal Funds (Child Care Development Fund) | |||
Appropriations | $0 | Early Childhood Education Account Program - Open Appropriation | ||
Funding Source(s) | Education Trust Fund | |||
• Does this bill provide sufficient funding to cover estimated expenditures? [X] No • Does this bill authorize new positions to implement this bill? [X] N/A | ||||
The Department of Education was contacted on 11/30/23 for a fiscal note worksheet, with follow-up contact made on 12/19/23. If information is received, a revised fiscal note will be forward to the House Clerk’s Office.
METHODOLOGY:
This bill establishes an early childhood education account program to be administered by the Department of Education and requires rulemaking by the Department of Health and Human Services on childcare early education.
Department of Education Impact
This bill creates an early childhood education account program, which would provide grants to eligible individuals to be used for qualifying early childhood education related expenses. The Department of Education has not provided any estimates as to the potential fiscal impact of this bill. It should be noted that this bill includes an “open appropriation” from the state education trust fund to cover any amounts necessary to fund program grants.
Department of Health and Human Services
This bill requires the Department of Health and Human Services to adopt rules relative to modifying eligibility for the childcare scholarship program to:
- Adjust income eligibility to 85% of the state median income.
- Remove parent cost-share for any eligible family at or below 100 percent of the federal poverty level and assign a $5 per week cost-share for families greater than 100 percent and at or below 138 percent of the federal poverty level.
- Adjust steps in eligibility to broaden income categories.
- Remove the childcare scholarship work requirement.
This bill further requires the Department to adopt rules relative to the modification of reimbursement for the childcare scholarship program to:
- Transfer annual childcare scholarship amount to the entity designated by the Department of Education to administer the Early Childhood Education Account (ECEA).
- Set reimbursement rates across all programs to match the 75th percentile of the market rate survey and allow for rates to be set through an alternative “true cost of care” mechanism to be defined by the Department.
- Implement adjustments federally permitted by the office of childcare to the market rate survey which more equitably account for geographic differences, inflation, off-hours care, and other costs of childcare which are not currently captured in the market rate survey and upon implementation develop and engage in training off all staff on program eligibility and reimbursement changes.
The Department states the requirements that the Department adjust income eligibility to 85% of the state median income, adjust steps in eligibility to broaden income categories, remove parent cost share for families at or below 100% of the federal poverty level, and set the cost share at $5 per week for families with income greater than 100% of the federal poverty level and at or below 138% of the federal poverty level were already adopted, for the biennium ending June 30, 2025, in HB2 (2023 session). Therefore, the Department does not expect the requirements being adopted into Revised Statutes Annotated to have an impact on state revenue or expenditures in FY 2025, however, does anticipate the following costs in FY 2026 and FY 2027 (the source of these expenditures are 66% child care development fund (CCDF) federal funds and 34% state general funds):
FY 2026 FY 2027
Keeping the Income Eligibility at 85% of the State Median Income $9,030,000 $9,481,500
Maintaining Broadened Steps $1,012,200 $1,062,810 Maintaining the Reduced Parent Cost Share $1,470,000 $1,543,500
Total $11,512,200 $12,087,810
The Department states the bill’s requirements that it adopt rules relative to removing the childcare scholarship program’s work requirement is unclear. There is no work requirement for the childcare scholarship program. To be eligible for childcare scholarship, each parent must be participating in a qualifying activity: employment, job search, participating in post-secondary training or educational programs that are preparatory to employment, participating in basic education activities, participating in NH employment program (NHEP) activities approved on the individual’s employment plan, or participating in mental health or substance misuse treatment programs (for NHEP or Family Assistance Program recipients). If the Department were to remove the requirement that parents participate in a qualifying activity, the Department would lose federal CCDF dollars because CCDF requires that parents be participating in a qualifying activity to receive childcare. Additionally, the childcare scholarship uses parents’ participation in qualifying activities to determine a child’s service level: part-time, half-time, or full-time. Without a qualifying activity requirement, the Department would have no way of determining the appropriate service level necessary for a child. The requirement that reimbursement rates be set at 75 percent of the market rate survey and that the Department implement adjustments to account for difference in the true cost of care were already adopted, for the biennium ending June 30, 2025, in HB2 (2023 session). Therefore, the Department does not expect the requirements being adopted into Revised Statutes Annotated to impact state revenue or expenditures in FY 2025, however, expects maintaining the reimbursement rate at 75 percent of the market rate survey and making the adjustments for the true cost of care to cost $3,045,000 in FY 2026 and $3,197,250 in FY 2027. The source of these expenditures are 66% CCDF federal funds and 34% state general funds.
The bill’s requirement that the Department transfer “annual child childcare scholarship amount to entity designated by the Department of Education to administer the Early Childhood Education Account (ECEA) is unclear. The term “annual childcare scholarship” amount is not defined by the proposed legislation or already used in the childcare scholarship program. The Department assumes that “annual childcare scholarship amount” refers to 52 times the weekly rate that the Department would pay for an eligible child to be enrolled in a childcare facility. Based on this assumption the proposed legislation would direct the Department to transfer to the ECEA the weekly rate normally paid for childcare scholarship in an annual lump sum. However, even with these assumptions the requirement is unclear because the weekly rate varies based on the type of facility a child is enrolled at and the child’s service level. Additionally, transferring CCDF funds to the ECEA administrator would violate CCDF rules that require the designated lead agency to determine eligibility for childcare scholarship.
The Department states, the federal funding from the Childcare Development Fund was $28,400,000 for FY 2023. The Department expects the repeal of qualifying activities or the transfer of childcare scholarship funds to the ECEA administrator would result in the loss of CCDF funds in future state fiscal years.
AGENCIES CONTACTED:
Department of Education and Department of Health and Human Services