Indiana slashes number of children in state preschool program

Indiana will limit available seats in its state-funded preschool program to 2,500 children next school year — less than half the current enrollment. The state will also reduce reimbursement rates for preschools.

The cap is a dramatic cut for On My Way Pre-K, a voucher program that pays for 4-year-olds from low-income families to attend participating preschools.

The Indiana Family and Social Services Administration, which manages the program, announced the cap on enrollment in a memo Monday. The state will also narrow family eligibility for the program, according to the memo.

“It's going to be a huge setback for Indiana,” said Hanan Osman, executive director of the Indiana Association for the Education of Young Children. “It took us a long time to build the systems and then suddenly we're not going to be able to feed the system.”

Advocates say the cuts reverse years of growth in the program. Indiana substantially expanded programs that pay for child care for low-income families, including On My Way Pre-K, with the help of more than $1 billion in federal pandemic aid that supported child care. That money ran out, however, and Indiana lawmakers did not fill the gap. 

FSSA told WFYI in an email that the cuts were necessary because former Gov. Eric Holcomb’s administration had grown the program without a sustainable funding source. 

“This administration inherited a substantial waiting list due to a program that had expanded beyond sustainable levels,” a FSSA spokesperson, who asked not to be named, said in an email to WFYI. “To safeguard the future of childcare access in Indiana, we must make difficult but necessary decisions that will strengthen all of our programs and ensure long-term viability in today’s fiscal climate.”

On My Way Pre-K began as a pilot in 2015 and expanded statewide in 2019, allowing children to go to participating private and public preschools.

The program had about 6,200 students in October 2024, according to FSSA. Enrollment surged in recent years, with the help of federal funding. The preschool program went from serving about 3,500 to 7,900 children between 2019-20 and 2023-24, according to a state dashboard. 

Shrinking funding sources

The state has used several streams of funding to expand On My Way Pre-K. 

In addition to allocating state dollars for the program, Indiana also used federal pandemic aid and state and federal child care funding.

That includes funding from a program called the Child Care and Development Fund — or CCDF — which subsidizes child care for low-income families. It is paid for with a combination of state and federal funding. 

The state began using CCDF money to help pay for On My Way Pre-K in 2017, which allowed the preschool program to offer more generous vouchers, said Osman. 

But CCDF is also stretched thin because it expanded with the help of temporary federal funding. Nearly 18,000 children are currently on the waitlist, according to the state dashboard.

The state will stop using CCDF funding for On My Way Pre-K next year, according to the FSSA memo. 

Indiana Gov. Mike Braun had pushed to increase state child care funding to help sustain the expansion made during the pandemic. His budget proposal would’ve earmarked nearly $400 million over the two-year budget for CCDF plus $50 million each year specifically for preschool.

But Republican lawmakers offered more limited funding. 

Indiana House and Senate budget proposals called for holding preschool funding flat. CCDF received a temporary influx of state money so that families who are already participating will not lose subsidies.

Then, a bleak April revenue forecast prompted lawmakers to trim funding across the budget, including for child care and preschool. 

Without enough state funding to sustain its preschool and child care programs, Indiana is not only reducing the number of preschool scholarships but also cutting reimbursements. 

Next year, On My Way Pre-K will pay just under $150 per week per child. That’s a substantial cut for many programs. Many preschools in Marion County, for example, previously received more than $300 per week.

With the reduced state rate, some child care providers may ask low-income families who receive vouchers to pay the difference.

'Very challenging situation for families and for providers'

Advocates warn that reduced child care and preschool funding will impact families’ financial wellbeing and the state’s economy. 

Maureen Weber, president and CEO of Early Learning Indiana, said that the growth in vouchers in recent years was “buoyed” by federal stimulus funding. 

"The wind down of those funds without full replacement has led to a very challenging situation for families and for providers,” Weber said.

Many child care providers serve significant numbers of children who receive state vouchers, Weber said. “Our concern is that those providers simply may not be able to sustain their operations, which ultimately will lead to a further expansion of child care deserts.”

The consequences of the On My Way Pre-K cuts are already being seen. 

Indianapolis Public Schools previously offered free preschool to students, including some who received state preschool scholarships. The district announced this week that, as a result of cuts to state funding, it will begin charging some families using an income-based sliding scale.

Without child care, Indiana parents and caregivers may be forced to stop working or reduce their hours, increasing instability and reliance on public benefits like food stamps, said Sam Snideman, vice president of government relations for United Way of Central Indiana.

“Child care is as essential to our economic health as a state as is broadband, as is other forms of infrastructure,” Snideman said. 

Rachel Fradette contributed to this reporting.