Vermont Senate Backs Sweeping Childcare, Paid Family Leave Proposal

Preschoolers at Turtle Island Children’s Center in Montpelier Credit: File: Jeb Wallace-Brodeur

The Vermont Senate on Thursday gave preliminary approval to S.56, a sweeping childcare and paid family leave bill that would pump tens of millions of dollars into the state’s broken childcare system — increasing access and affordability, with benefits for both families and providers.

But the proposed law would come with a hefty price tag of more than $240 million over its first two years, requiring an influx of money from the state’s general fund, the elimination of a child tax credit, and a payroll tax on Vermont workers and employers.

On the floor before the vote, Sen. Philip Baruth (D/P-Chittenden-Central) hailed the legislation as “historic.”

“I’m absolutely delighted to have this bill go forward,” he said.

S.56 would significantly expand eligibility for subsidies under Vermont’s Child Care Financial Assistance Program (CCFAP), the state’s primary mechanism for helping low- and middle-income families afford childcare. Working families with an annual gross income of up to 185 percent of the federal poverty line — or $55,500 for a family of four — would be eligible for fully covered tuition, while families making up to 600 percent of the poverty line — or $180,000 for a family of four — would be eligible for a partial subsidy.
Currently, families making up to 150 percent of the poverty line receive a full subsidy and families earning up to 350 percent of the poverty line qualify for a partial subsidy.

“Almost no family with little kids that need childcare makes over $180,000 for a family of four,” said Sen. Ruth Hardy (D-Addison), one of the bill’s reporters. “So it really … helps to subsidize [childcare] in an equitable way.” The bill would also increase the state’s reimbursement rates to childcare centers and home-based programs through the CCFAP program. Starting on January 1, 2024, the Department for Children and Families would be required to reimburse childcare providers at a rate 38.5 percent higher than in fiscal year 2023, to better account for the true cost of childcare.

As part of the legislation, DCF would be required to submit a report to the legislature by November that examines instituting a professional pay scale for childcare workers. Early childhood educators have advocated for years for better pay, in line with their public-school peers. According to a 2021 report funded by the state, the median annual income for early childhood teachers in Vermont is less than $40,000; for assistant teachers, it’s around $22,000.
Additionally, a prekindergarten education study committee would make recommendations by December on how to improve and expand accessible, affordable, high-quality preschool education. When first introduced, the Senate bill called for public schools to provide free, full-day preschool for all 4-year-olds in the state, but that section was scrapped during committee deliberations.

Rolled into the legislation is a provision for twelve weeks of paid parental leave following the birth or adoption of one or more child. The benefit — which would be capped at $600 per week — could be used by one parent or shared between two parents and would be available to those who are employed or self-employed. To administer the program, the state would need to hire 15 new positions in the state’s Department of Taxes, the bill says. Hardy said the parental leave program would allow parents to stay home with their young infants, freeing up spots in the childcare system.

The full proposal would cost more than $240 million combined during fiscal years 2024 and 2025, according to an estimate from the Legislative Joint Fiscal Office. The CCFAP rate and eligibility expansion would cost around $165 million; the parental leave benefit would cost nearly $20 million; and $25 million would go to “readiness” grants that childcare centers could use for workforce recruitment and retention or improvement of their facilities. To pay for the programs, the state could use $49 million from the general fund, plus a payroll tax of 0.42 percent — 75 percent paid for by the employer and 25 percent by the employee. The bill would also repeal Vermont’s child tax credit to free up another $31.8 million. The tax credit, which was created just last year, gives $1,000 for each child under age 6 to families that make $125,000 or less. Families earning between $125,000 and $175,000 per year receive a partial payment.
Sen. Jane Kitchel (D-Caledonia), chair of the Senate Committee on Appropriations, acknowledged the large price tag attached to the bill.

“I think it’s reflective of the commitment that we have made for childcare to be a priority for this session,” Kitchel said. “To address the shortcomings of our childcare system is not cheap. We might as well be honest about that. “

Only one critic spoke against the legislation on the Senate floor. Sen. Randy Brock (R-Franklin) acknowledged that it was “a great bill” but said it was not fiscally responsible and that the funding mechanism was not carefully considered. “Beware of solving poverty by increasing taxes on the poor,” Brock said. “It’s a circular argument.”

The bill advanced by a 24-6 vote and will be read a third time in the Senate on Friday before heading to the House for further deliberation.

There will be a lot to discuss. Last week, the House passed its own plan for paid family leave. Under that bill, people would be eligible for 12 weeks of paid leave at 90 percent of their salary, after the birth of a child or due to illness. That proposal would cost around $117 million annually.

Let’s Grow Kids, an early childhood education advocacy group that has pushed for substantive investment in Vermont’s childcare system, expressed optimism after Thursday’s vote.

“S.56 does what child care advocates have been calling on lawmakers to do for years: create a long-term, sustainable revenue source that can fund an accessible and affordable child care system,” the group’s CEO, Aly Richards, said in a statement. “This is a moment to celebrate and we must also remember we have a lot of important work ahead to ensure this legislation continues to be as strong as possible.”