Increasing Childcare capacity, and how to fund it, is gearing up to be one of the major debates lawmakers will likely consider during this upcoming budget session.
Lawmakers on an interim study committee on fiscal policy discussed many topics Wednesday, when childcare funding and supply drew some heated debate.
Republican lawmakers including Sen. Chris Garten (R-Charlestown) believe Indiana’s statutory childcare regulations are too burdensome. He pointed to teacher-to-child classroom ratios and teacher training, as requirements that contribute to the state's inability to increase childcare supply.
“We can't have a regulatory burden that sets the threshold so high that it chokes off demand, and we wonder why the costs are up,” Garten said.
In recent months, state leaders have been working through various code deregulation proposals in the childcare space that deal with staffing, meals, sleep and childcare worker credentialing.
However, some of those moves have been met with opposition from childcare providers and workers. Concerns include that reducing required education or training requirements could diminish their profession, or lead to unsafe conditions for children.
Democrats on the study committee, including Rep. Ed DeLaney (D-Indianapolis), argued that the state should instead focus on providing a dedicated, stable funding stream for the state’s childcare subsidy waivers, or CCDF vouchers.
“We can't cheap our way out of the child care problem,” DeLaney said. “There isn't enough savings by getting rid of all regulations to deal with $350, $400 a week for one kid.”
Adam Alson, director of the Office of Early Childhood and Out-of-School Learning which oversees administration of the CCDF vouchers, said he agrees that cutting red tape for childcare providers is needed.
“Indiana statutory code regarding childcare, Indiana code 12-17.2, is a confusing mess that at times is difficult for even OECOSL and my office to interpret and execute, let alone childcare businesses. This must be simpler.”
Alson suggested other policy recommendations to the committee to ensure the state has a fiscally sustainable path forward for childcare funding. He said Indiana’s current financial health is a good indicator that promising changes can be made in this regard.
“We, as a state, are at the point of having a realistic conversation about the appropriate level, and to what, to fund childcare,” Alson said. “This is an opportunity that few states ever have.”
He also said the funding the state provides for CCDF and On My Way Pre-K vouchers can not be the only source of funding for families in need of childcare.
Discussion around the state’s employer childcare expenditure tax credit program, which provides certain businesses tax credit for investing in childcare for employees, showed that the credit remained largely unused as of the 2024 tax year.
Those from the Legislative Services Agency who presented the data to lawmakers Wednesday said it's likely that the credit has gone unused because of the law’s original narrow eligibility and the cost of providing childcare is too high for the credit to cover any meaningful aid. Lawmakers expanded which businesses can qualify for this credit in the 2026 legislative session.
Gov. Mike Braun also told reporters this week that he believes the legislature has momentum to do more on childcare policy and funding.
“I'm optimistic that we get together on a common agenda, and we can do things for the state that we've never been able to consider before because of the place we're in financially,” Braun said.
Alson said that as of Sept. 30, around 17,700 children were on the waitlist for CCDF vouchers.
This is down significantly from August, when the waitlist was around 29,000 children.
Indiana childcare workers have faced a tough year as CCDF vouchers were paused for any new families in late 2024, causing many providers to lose business and even close down.
State lawmakers approved a one-time infusion of $200 million into the program in April, allowing thousands of families to get off the CCDF waitlist and get help paying for childcare. Alson told lawmakers on Wednesday that he, along with Braun, plan to keep that same funding amount in their budget proposal for the upcoming session.
Alson also said the state should capitalize on existing moves to reform the childcare sector by creating conditions for employers, philanthropy, and local governments to invest alongside the state.
“No matter how much we want to think of childcare as a state-level issue, the issue is inherently local, and every community in Indiana has a different set of assets and opportunities that can be brought to bear to this issue.”
Contact Government Reporter Caroline Beck at cbeck@wfyi.org
