The Idaho Department of Health and Welfare is suspending new enrollment in a largely federally funded program that helps families pay for child care costs because of an expected budget shortfall.
The state health department is also delaying an increase in benefits for families in the Idaho Child Care Program because it expects the program to incur a budget deficit as more families become eligible, child care estimates rise and families pay less.
Alex Adams, the new director of the Idaho Department of Health and Human Services and the governor's former budget director, informed legislative budget writers of the issue in a letter dated Aug. 14, and the health department released the letter to reporters on Tuesday. Adams wrote that the health department “must act now to get back on track.”
The health department projects the program, which has a budget of $52.7 million, will have a deficit of $15.5 million for the current fiscal year, which began in July and runs through June 2025.
Enrollment in the program will be suspended starting Thursday, the health department said in a blog post.
“Our goal is to minimize the impact to current (program) participants and avoid impacting future new participants who are foster care families and other at-risk populations, within the scope of the approved budget,” Adams wrote in a letter to lawmakers.
The Health Department's response also included:
It would lower the program's eligibility income limit to 130 percent of the federal poverty limit from 175 percent, which the department increased in recent years, after enrollment in the program reopened, and it would adjust provider reimbursement rates and recover administrative costs of contracts related to the grant program.
In a letter to the co-chairs of the Idaho Legislature's powerful budget committee, the Joint Finance and Appropriations Committee (JFAC), Adams said about 7,800 children are currently enrolled in the program, which relies primarily on federal funding through Child Welfare and Development Block Grants.
The health department typically changes the program's benefit rates in October after completing a local market rate analysis, which is required every three years for federal funding, Adams said. But the changes won't happen until July 2025 after a new state health department analysis this month showed costs have risen by about 25%, Adams said.
“This year's local market price survey revealed what many already knew: child care costs are rising rapidly,” the health department's blog read. “Increases in funding have not kept pace with program costs.”
Adams outlines additional cuts for Idaho Legislature to consider
The shortage projections given to lawmakers were a “worst case” scenario, according to a blog post from the Department of Health, and health officials hope the shortfall will become smaller as they review the projections.
“If this occurs, we intend to minimize the impact on families by changing the eligibility criteria as little as possible,” the post read.
“From our position, we believe that covering more children at a lower rate is preferable to covering fewer children at a higher rate. But ultimately, I think that's a policy decision that Congress will have to address,” Adams told reporters.
Adams wrote that the changes would bring the program's budget into balance with the state budget, “minimize the impact on existing participants, protect enrollment among at-risk individuals, and return eligibility and enrollment to historical levels, while still resulting in increased reimbursement rates for providers of all ages.”
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“We know these decisions are never easy, especially given the importance of access to affordable child care to both the workforce and early childhood development,” Adams wrote. “Indeed, the Department has formed a new Early Childhood Development Division to explore opportunities to advance these very issues. We are ready, willing, and able to work with Congress to explore both regulatory reform and budgetary solutions to child care issues.”
Adams said there is about $50 million in unused federal funds from the grant program and urged lawmakers to consider “the possibility of using these 'lost' funds to expand child care capacity in all markets across the state, or other investments that would benefit child care without creating an unsustainable cliff.”
What's next for Idaho lawmakers on child care programs?
The Idaho Legislature wrapped up its business for the year in April, but when lawmakers return in January, there will be calls for a “thorough investigation of the agency's actions and decisions that put us in this situation in the first place,” Sen. Scott Grow (R-Eagle), co-chair of the JFAC, told the Idaho Capital Sun.
Rep. Wendy Homan (R-Idaho Falls), co-chair of the Budget Committee, added in a joint phone interview with Grow on Tuesday that immediate action is needed to bring spending into line with the budget.
“This has been a historical pattern for this agency,” Homan said, referring to an investigation into the health department's handling of child welfare grant funding. “So it's great news for Idahoans that we have leadership that says, 'In fact, we need to follow the law.'
The program was not expected to run a deficit in fiscal year 2024, Adams told reporters.
The Idaho Department of Health requires families who participate in the program to cover the costs of child care through income-based copayments.
Adams said enrollment in the program has mostly increased over the past decade, with a few drops in the first few years after the pandemic. But enrollment spiked last fiscal year, which ended in July, and continues to grow so far in the current fiscal year 2025. Adams projected about 8,100 people will be enrolled in the program by July 2025, and about 9,000 by July 2026.
Letter to ICCP Members of Parliament
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