House Bill 30 (Chapter 2) of the 2022 Special Session I, Item 129, directs the Virginia Department of Education (VDOE), in collaboration with the Virginia Department of Social Services (VDSS), to prepare an annual Child Care and Development Fund (CCDF) report. The specific language of the mandate is as follows:

L. The Department of Education, in collaboration with the Department of Social Services, shall prepare an annual Child Care and Development Fund (CCDF) report that reflects all CCDF expenditures from the previous fiscal year, current grant balances and obligation and liquidation deadlines, as well as all anticipated spending for the current and two subsequent fiscal years. Identified spending should, at a minimum, be broken down by subsidies (mandated and discretionary), administrative costs, and quality efforts. The plan also shall include a certification from the Department that the maximum amount of federal funds were drawn down in the preceding fiscal year. Should the Department be unable to certify that maximum federal funds were drawn down, the Department shall identify strategies for Virginia to obtain the maximum amount of federal funds in the following fiscal year(s) as part of this plan. In addition, this plan should report, by locality, the number of subsidies (mandated and discretionary) provided, number of providers receiving CCDF dollars, the overall number of child care providers, and the waitlist for services. This information should be provided the previous fiscal year, current fiscal year, and two subsequent fiscal years. The plan shall also include an appendix with the most recently completed CCDF annual report as required by the federal Office of Child Care. The department shall submit the report by October 1 of each year to the Governor and the Chairs of the House Appropriations and Senate Finance and Appropriations Committees. In addition, the department shall post this report on its website along with any reports from previous fiscal years.

In addition, Item Q of the budget directs VDOE to provide additional data on the implementation of key policy initiatives supported by COVID relief dollars. Specifically:

Q. Notwithstanding 8VAC-20-790, the Department of Education shall increase participation in the Child Care Subsidy Program among families and providers using non-general funds by: 1) making child care assistance available to parents or guardians who are searching for work; 2) piloting the use of categorical eligibility for families with young children participating in Medicaid and WIC; 3) issuing payments to Child Care Subsidy Program vendors for authorized enrollment, subject to the attendance threshold established by the Department of Education; 4) issuing payments to providers for up to 15 days of planned closure for all vendors in the Child Care Subsidy Program for holidays, vacations, and professional development or planning time; 5) issuing payments to family day homes in the Child Care Subsidy program for up to three sick days to care for themselves or a family member; 6) increasing provider payment rates based on the cost methodology developed by the Department in its Child Care Cost Estimation Report; 7) ensuring that Child Care Subsidy Program vendor payment rates for infants and toddlers fully reflect the cost of care; 8) eliminating copayments for families at or below 100 percent of the federal poverty guidelines and reducing copayments for families above 100 percent of the federal poverty guidelines; 9) maximizing federal Child Care Development Funds to eliminate the waitlist for child care subsidy assistance; and 10) making all families eligible for assistance through the Child Care Subsidy Program for each child in the family who is under the age of 13 for as long as (i) the family's income does not exceed 85% of the state median income; (ii) the family includes at least one child who is five years of age or younger and has not started kindergarten; and (iii) the family meets all other eligibility requirements of the Child Care Subsidy Program. These expanded allowances for families and providers under the Child Care Subsidy Program are effective only in state FY 2023 and state FY 2024. In the Department of Education's October 1 annual Child Care Development Fund report, required by paragraph L. of this Item, the Department shall include detail about the impact of these expanded allowances on the number of families and children served, the number of participating child care vendors, and the Child Care Development Fund balance, as well as the Department's plan for phasing out these expanded allowances at the end of state FY 2024.

Accordingly, VDOE implemented the following policy changes as mandated by the Virginia General Assembly:

• Removed all employment requirements, allowing caretakers searching for work to remain indefinitely eligible for the program, reducing limited capacity for working parents or those participating in education/training;

o JLARC’s 2023 Self-Sufficiency report highlights concerns about this policy revision cited by local DSS department staff, and provides a suite of recommendations to reform working requirements;

• Transitioned vendor reimbursements from attendance to enrollment, increasing paid absence days, whereby the child has not attended the program, but the provider gets reimbursed, by 67%, moving from 36 to 60 days annually. While this move requires state payments for services not participated in by subsidy enrollees, this is aligned with federal regulations aimed to alleviate administrative and fiscal burden by providers who otherwise reserve seats for enrolled students but are unpaid for absences;

• Implemented paid days of planned closure for all child care providers and paid sick days for family day homes to more closely align with the private sector;

• Revised reimbursement rates to incent greater vendor participation in the CCSP based on the VDOE’s Child Care Cost Estimation Report and introduced a separate rate for twoyear-olds to align with required ratios and group sizes;

• Waived all family copayments in the CCSP for 19 months (April 2021-December 2022);

• Instituted a new copayment scale, resulting in Virginia families contributing 2% of household income, on average. The federal government considers child care affordable when a household is spending 7% or less of its income on child care. Revisions to copayment schedules that remain affordable can build capacity for additional CCSP slots;

• Expanded income eligibility for families with young children up to 85% of State Median Income ($96,969 for a family of 4);

• Used one-time federal funding eliminate wait lists based on parent choice and onboard an expanded class of eligible students at more affordable rates prior to identifying replacement funding to provide continuity of service; and

• Elimination of wait lists also resulted in 60% more school-age children (5-18 year olds) receiving child care services.

This report summarizes the required data elements as mandated in Item 129 L, and provides additional details on the impact of CCSP policy enhancements and plans for FY25-26 and beyond as required in Item 129 Q.

Note that available data suggests family demand will exceed available federal funding beginning in FY2025 and additional resources will be needed to avoid a decline in children and families served.