Indiana is poised to infuse $200 million into a state and federally funded program to help low-income working families pay for child care, under a proposal announced Tuesday by Gov. Mike Braun. The move would mitigate a mounting crisis in the child care industry after the state slashed funding and froze enrollment in the voucher program.
The additional funding would be a stopgap until lawmakers craft a new state budget next year. It would pay for about 14,000 children from the waitlist to receive vouchers through the Child Care and Development Fund, or CCDF. About 35,000 children were on the waitlist as of February, according to a state dashboard.
"This investment allows us to reopen access after 15 months of frozen admissions, and puts us on a good, sustainable path forward," Braun said during a press conference. "It marks the start of sustained commitment to keeping care affordable and giving families long-term confidence that the support that they can count on will be there.”
Braun framed the allocation as part of a broader push to increase child care access and enable parents to work.
“Business is the main beneficiary of this, and through creative incentives, we're going to need them to weigh in because workforce is a big deal,” he said.
The administration plans to ask the State Budget Committee to divert $200 million into a separate account used to cover shortfalls at other agencies, and then use that money to reopen admissions to the voucher program. The committee, which is composed largely of lawmakers, is expected to meet Thursday.
The state will prioritize vouchers for children in foster care. WFYI reported earlier this month that some Indiana foster parents are considering giving up their licenses because they can no longer afford infant care without a voucher.
In addition to freezing vouchers, the state reduced reimbursement rates for children who are already in the program. Braun did not announce any planned changes to reimbursement rates.
Without the infusion of cash, the Indiana Family and Social Services Administration did not expect to issue new vouchers until 2027.
An about-face for Republican lawmakers?
The plan signals a new level of support for state-funded child care from Republican lawmakers. But it’s not the first time that Braun has sought to increase funding.
Indiana used more than $1 billion in temporary federal pandemic aid to invest in child care and expand vouchers under Gov. Eric Holcomb. Nearly 70,000 children were enrolled by November 2024.
When that federal money ran out, Braun proposed substantially raising state funding for the vouchers. But lawmakers balked, instead offering a far smaller, short-term budget increase designed to ensure the state would not have to take vouchers away from children currently in the program.
Who qualifies
The state will prioritize vouchers for siblings of current voucher holders; infants, toddlers and preschoolers; children of foster and kinship families; children with special needs; homeless children; children of child care workers; and children of Ivy Tech students.
Tuesday Braun appeared optimistic the legislature will be more supportive when it comes time to draft the next two-year state budget in 2027.
“It’s going to depend on a legislature that's going to be enterprising to address a lot of these issues,” he said.
As recently as November, Republican leaders were lukewarm about funding increases. Sen. Rodric Bray (R-Martinsville), who leads the Indiana Senate, said at an Indiana Chamber of Commerce legislative preview that any new state money for child care would be “very limited.”
At the same event, House Speaker Todd Huston (R-Fishers) suggested the child care crisis was spurred by the reliance on professional care givers.
“I guess I'm so old I remember when having a neighbor, family member or a friend watch your kid in a day care was OK,” Huston said. He added that the “colossal structure” of the child care system “comes with all these costs.”
But pressure on lawmakers has mounted over the past year as cuts to funding pushed child care providers to reduce the number of classrooms they operate or close altogether.
Lawmakers laid the groundwork for the $200 million infusion in child care this session with a new law that allows the state to tap into the Financial Responsibility and Opportunity Growth Fund, or FROG fund, to help pay for child care vouchers. The fund was previously restricted to state prisons, Medicaid and the Department of Child Services.
In a press release Tuesday, Huston pointed to that law and said he was glad to see the administration pursue the funding.
"Finding and affording reliable child care is a huge challenge for many working families,” Huston said in the release. “We will continue efforts aimed at reducing child care costs, encouraging more providers and supporting families."
A new focus on child care
Employers, parents and providers have made the issue “too large to ignore,” said Sam Snideman, vice president of government relations for the United Way of Central Indiana.
Snideman sees the influx of funding as part of a new recognition that the state needs to do more to make child care affordable and accessible for all families — including low-income parents who qualify for vouchers and middle class parents.
“I'm encouraged that the General Assembly made the moves that it made because they were being responsive to the real needs that were identified and articulated by the voices of so many Hoosiers,” Snideman said.
Jen Palmer, who owns a Mooresville child care center and leads the Morgan County Early Learning Coalition, said the funding is essential to help stabilize child care businesses after months of turmoil. But she was most excited to hear Braun talk about long-term investment in child care.
“Let's talk about the future. Because this isn't, this isn't sustainable,” Palmer said. “We want multiple funding streams. We want to not to have to rely on the government for funding. So let's talk about what that looks like, and let's get businesses involved.”
Contact WFYI Education Reporter Dylan Peers McCoy at dmccoy@wfyi.org.
