Texas poised to add $100 million to child care scholarship program

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Texas lawmakers are providing an extra $100 million in child care scholarships and giving regional workforce development boards more freedom to allocate money to key providers.

Nearly 95,000 Texas children are on a waitlist for child care scholarships. Meanwhile, brick and mortar facilities are closing and the cost of child care in Texas is making it difficult for working parents to make ends meet.

“Because of this funding, thousands more parents will be able to go to work while their children thrive in high-quality child care,” said David Feigen, the director of early learning policy for the child care advocacy group Texans Care for Children. ”This is a huge step, and we are grateful and energized to help get these funds to the families who are counting on them.”

Feigen’s group is one of several that have put pressure on Texas lawmakers this session to address critical issues affecting child care centers.

Texas’ decision to use previously unallocated federal dollars to address these issues is a massive step forward, experts say. The funding was added to Senate Bill 1, the budget bill, after the Senate finance committee removed it from the House’s supplemental appropriations bill. Rep. Armando Walle confirmed the move Tuesday in a statement to the Texas Tribune.

“I am proud to announce that, through diligent negotiations and collaboration with stakeholders across the board, we secured $100 million in the state budget for child care scholarships,” Walle said. “Access to quality child care is essential for both economic stability and our children’s future. By exploring every budgetary option and building consensus, we achieved a result that will make a real difference in the lives of Texas families.”

Marilyn Hartsook, the interim director for the Deep East Texas Workforce Development Office, is cautiously optimistic about what the money means for the region. She expects the region’s budget for the child care program will grow by about $14 million.

The workforce region currently receives about $17.8 million for direct care, which translates to $23.73 per child per day. Hartsook’s team aims to reach 2,945 children per day under the current budget. That number would increase substantially with new funding, but it is only one part of the solution to child care.

It is also important to recognize that no one-size solution fits all – regions don’t just need additional funding, but some flexibility in how they work with providers, said Kim Kofron, the senior director of early childhood education for ChildrenAtRisk, a child advocacy group.

House Bill 2294, which was sent to the governor, allows for more flexibility in how local workforce boards spend money. The bill gives the boards the discretion to allocate more funding to providers struggling financially, especially in high-need areas.

“We need scholarships,” Kofron said. “We have 95,000 kids on the waitlist. But we also have to make sure that we have the buildings. We also have to make sure we have the teachers. And we have to make sure that it's affordable. This bill allows us to hopefully address all three of those things in various ways.”

It costs a lot to keep a childcare facility running, and most operate at around a 1% profit margin, Feigen said.

In 2024, the cost was too much for many facilities, and they closed. Texas lost 75,000 child care seats and more areas found themselves to be child care deserts, according to Kofron.

“These child care providers are trying to run a business, but they can't charge a lot because parents can't afford it,” said Mandi Kimball, vice president & chief government affairs officer for ChildrenAtRisk. “Even though they’re quality, they're not getting reimbursed for their quality, and that is impacting the sustainability of child care. Which is why we're seeing these deserts.”

Sen. Judith Zaffirini, a Laredo Democrat who sponsored the bill in the Senate, said the bill will help high-quality child care centers that serve families in low-income areas catch up.

Providers often must keep their rates low to remain affordable and current law prevents the workforce development boards from reimbursing them above those rates, even if they earn high ratings in the Texas Rising Star program.

“That’s not fair, and it threatens the sustainability of high-quality care in the communities that need it most,” Zaffirini said.

This bill allows the commission to reimburse those providers at a higher rate.

The senator believes that this bill will create more options for quality child care, which would increase enrollment and have broader implications on Texas’ workforce.

Disclosure: Texans Care for Children has been a financial supporter of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.

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