Did You Know New Jersey is seeking to implement a permanent enrollment-based child care subsidy program starting in January 2025?

Posted on May 29, 2024


By Shadaya Bennett
Senior Legislative Analyst

For more information on this topic, contact Shadaya at sbennett@acnj.org.

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What is the Subsidy Program? 

The New Jersey Child Care Assistance Program, administered by the State Department of Human Services (DHS), Division of Family Development, provides financial assistance to low-income, working families to help cover the expenses of child care. The program operates based on specific eligibility criteria to alleviate the burden of child care costs.

Subsidy based on enrollment versus attendance

The child care subsidy program underwent a shift amid the challenges of the COVID-19 pandemic. Traditionally, the program operated on an attendance-based payment model, meaning providers received subsidies based on children's daily attendance. However, due to fluctuating attendance during the pandemic, the program transitioned to an enrollment-based model. This change not only offered more stability in funding to child care providers but also streamlined payment processes for families. Initially considered a temporary measure, this shift garnered support from policymakers, parents, providers, and advocates, like ACNJ, who recognized its value and advocated for long-term implementation.

The State Legislature aimed to extend the enrollment-based subsidy provision, but faced obstacles such as concerns about the overall expense and diminishing federal funding that helped pay for the reformed program. Despite efforts to extend the provision until June 2024, in January, legislation stalled at the governor's desk. After the legislation received a pocket veto, the governor proposed extending enrollment-based subsidy payments until December 2024 in his State Fiscal Year 2025 Budget. 

Federal regulations and N.J.’s decision to make changes to the program permanent 

In response to nationwide program reforms, the U.S. Administration for Children and Families introduced new regulations governing child care subsidies, with a focus on enhancing accessibility and affordability for families while simplifying program participation for providers. Among these regulations is the mandate for states to transition to permanent enrollment-based subsidy payments. Most recently, New Jersey’s Department of Human Services requested a change to the Department’s budget plan to continue enrollment-based payments which would be permanent as of January 2025 pending the State Legislature’s approval. 

What’s next

The proposed extension of subsidy based on enrollment in the Fiscal Year 2025 Budget, legislative initiatives for permanent enrollment-based payment, and the Department of Human Services' desired shift to permanent enrollment-based payments demonstrate New Jersey's commitment to finding solutions that support families through the subsidy program. However, sustaining New Jersey's child care subsidy requires funding commitments from both the state and federal levels. 

DHS’s recent request for additional funding in the State Fiscal Year 2025 Budget would be used to enable the state to serve all eligible families through the reformed program. There is also a push for federal funding to support the program. Furthermore, ensuring the program's viability requires not only securing adequate funding, but also expanding eligibility criteria to serve more families. A comprehensive approach including sufficient state and federal funding and an expansion of eligibility guidelines is imperative for the program's sustainability and efficacy.