Purpose

• This bill changes how funding for Minnesota’s basic sliding fee child care program is allocated to counties. It updates the allocation rules to distribute both state and federal funds more data-driven and to respond to changes in program demand, waiting lists, and rising provider rates.

Main Provisions (What the bill does)

• Allocation basis and timing

  • Funds are allocated on a calendar year basis, starting with a guaranteed floor for each county, then distributed using a multi-step formula.
  • The guaranteed floor amount for each county is determined by a separate provision (referred to as subdivision 9 in the bill).

• Multi-step allocation after the guaranteed floor 1) Up to one-fourth of remaining funds allocated in proportion to each county’s total expenditures for the basic sliding fee program in the most recent completed fiscal year. 2) Up to one-fourth of remaining funds allocated in proportion to the number of transition-year families participating, averaged over the most recent six 12-month periods. 3) Up to one-fourth of remaining funds allocated in proportion to each county’s average waiting list over the most recent 12 months plus the reinstatement list of families whose assistance was terminated (with commissioner's approval). If a county spent less than 90% of its allocation in the most recent year, its new allocation is reduced by a calculated amount (based on the average monthly number of families that could have been served if 90% had been spent times the monthly cost per family). The reduction cannot reduce the county’s allocation to zero. Any excess funds after serving those categories are allocated according to the waiting list/reinstatement logic described. 4) Up to one-fourth of remaining funds to offset anticipated child care rate increases under section 142E.17 subdivision 1, paragraph b, estimated by county and provider category (by age). If there are more funds than needed to cover rate increases, excess goes to other allocation purposes. 5) The amount necessary to serve all families in the above categories (b and c, and d) is calculated using the basic sliding fee average cost of care per family in the county with the highest cost in the most recently completed calendar year. 6) Any remaining funds are allocated in proportion to each county’s total expenditures for the basic sliding fee program in the most recent fiscal calendar year.

• Handling increased funding within a year

  • When funding increases are implemented within a calendar year, every county must receive at least an amount equal to its original allocation for the same time period. The remainder is then recalculated to reflect the funding increase using the formulas described above.

Significant Changes to Existing Law

• Replaces or reorganizes the prior allocation method with a calendar-year-based process that prioritizes guaranteed county floors, then distributes the rest of the funds using four targeted factors: (a) county expenditures, (b) transition-year participants, (c) waiting lists and reinstatements, and (d) anticipated rate increases, plus a highest-cost-per-family basis to anchor cost considerations.
• Introduces a mechanism to reduce allocations for counties that underspent (less than 90%) in the previous period, preventing over-allocation and aligning resources with actual service levels.
• Adds explicit mid-year funding adjustment rules so counties receive at least their original allocations when funding increases occur, maintaining stability while allowing reallocation based on the new formula.
• Establishes a formal process to offset provider rate increases and to base portions of the allocation on projected costs by age and provider category.

Practical Implications

• Counties with higher waiting lists, transition-year participants, or higher recent expenditures may receive more funding under the new formula.
• Counties that underutilized their funds in the previous year may see reduced allocations to better align resources with actual use.
• The state aims to better reflect real-world costs and demand for basic sliding fee child care, including potential rate increases for providers.

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Relevant Terms - basic sliding fee - child care - allocation formula - calendar year basis - guaranteed floor - county expenditures - transition year program - transition-year families - waiting list - reinstatement list - commissioner - Minnesota Rules part 3400.0183 subpart 1 - rate increases (section 142E.17 subdivision 1, paragraph b) - age category - provider category - average cost of care per family - most recent fiscal calendar year - most recent completed calendar year - six 12-month period average - mid-year funding increase - proportional allocation - highest-cost county - basic sliding fee program expenditures