LEGISLATIVE FISCAL ESTIMATE

[First Reprint]

ASSEMBLY, No. 2291

STATE OF NEW JERSEY

221st LEGISLATURE

 

DATED: SEPTEMBER 11, 2025

 

 

SUMMARY

 

Synopsis:

Provides categorical eligibility for subsidized child care services to certain child care workers.

Type of Impact:

Annual State expenditure increase.

Agencies Affected:

Department of Human Services.

 

 

Office of Legislative Services Estimate

Fiscal Impact

Annual

 

State Expenditure Increase

Indeterminate

 

 

 

 

·         The Office of Legislative Services (OLS) concludes that this bill will result in an annual indeterminate increase to State expenditures under the Child Care Subsidy Program for the provision of child care subsidies to child care workers who would be newly eligible under the bill. 

·         The Department of Human Services may also incur indeterminate, one-time expenditures in establishing a system by which the department can confirm that a qualifying child care worker is employed by a child care provider for the number of hours required to access the child care subsidy benefit. 

·         The OLS finds that several unpredictable variables would affect a cost estimate, such as the number of employees eligible for subsidies under this bill, the number of children between ages zero and five in need of child care services per each employee eligible for subsidies under the bill, and other information that determines the maximum child care payment rate paid by the State.+

 

 

 

 

 

BILL DESCRIPTION

 

      This bill provides categorical eligibility for child care subsidies to qualifying employees of licensed child care centers or registered family child care providers, regardless of the qualifying employee’s annual income.  The bill defines a “qualifying child care worker” as an educator or staff member who is employed for a minimum of 30 hours per week by a licensed child care center or a registered family child care provider, who has children ages zero through five, and is not otherwise eligible for the State’s subsidized child care assistance program.

      Under the bill, the Department of Human Services is directed to: 1) establish a process by which the department will confirm that a qualifying child care worker is employed by a child care provider for the number of hours required to access the child care subsidy benefit; 2) apply for any State plan amendments or waivers necessary to ensure continuation of federal funding for subsidized child care services; and 3) report to the Governor and Legislature in writing no later than three years after the effective date of the bill on the effectiveness of this benefit in fostering recruitment and retention of teachers and staff for licensed child care centers and registered family child care providers.

 

 

FISCAL ANALYSIS

 

EXECUTIVE BRANCH

 

      None received.

 

OFFICE OF LEGISLATIVE SERVICES

 

      The OLS concludes that this bill will result in an annual indeterminate increase to State expenditures under the Child Care Subsidy Program for the provision of child care subsidies to child care workers who would be newly eligible under the bill.  The Department of Human Services may also incur indeterminate, one-time expenditures in establishing a system by which the department can confirm that a qualifying child care worker is employed by a child care provider for the number of hours required to access the child care subsidy benefit. 

      The OLS finds that several unpredictable variables would affect a cost estimate for the provision of subsidies; for example: the number of child care workers eligible for subsidies under this bill; the number of children between zero and five in need of child care services per each child care worker eligible for subsidies under the bill; and other information that determines the maximum child care payment rate paid by the State, such as: 1) the age and special needs designation of each child receiving a subsidy under the bill; 2) the status of each child receiving a subsidy under the bill as either a part-time or full-time enrollee of child care services; 3) the facility type and Grow NJ Kids rating for each provider receiving a subsidy under the bill; and 4) the copayment amount each child care worker eligible for subsidies under this bill would be required to pay to the child care provider under the existing rules of the Child Care Subsidy Program.  Without this data, the cost impact to the State is indeterminate.

      The OLS notes that certain child care providers in the State currently offer free or reduced child care services for their employees’ children.  It is possible that the provisions of this bill may encourage such providers to discontinue these policies and shift funding of their employees’ child care expenses to the State, further increasing the expenditures incurred by the State under this bill. 

      The OLS also notes that the existing Child Care Subsidy Program expenditures are partially supported by two federal block grants: the Temporary Assistance to Needy Families (TANF) and the Child Care and Development block grants.  As block grants, both of these sources are limited in their flexibility.  For example, any federal TANF funds used to support child care subsidies would be unavailable for other TANF-related spending, such as cash assistance benefits or emergency assistance.  Moreover, both grant programs are required to help low-income families; however, this bill provides child care subsidies to families without regard to income.  Therefore, this fiscal estimate assumes that all increased costs under the bill would be paid from the State General Fund.   

      For reference, in May 2023, according to the United States Bureau of Labor Statistics, there were 19,610 childcare workers in New Jersey.  Moreover, the average annual salary for a childcare worker in the State in May 2023 was $34,280.  Under the existing income requirements for the Child Care Subsidy Program, a family of three or more with this household income would currently qualify for initial eligibility.  Additionally, the projected average annual cost for a child under the Child Care Subsidy Program in FY 2026 is $12,460.   

      The following scenario is for illustrative purposes only. To illustrate potential expenditure increases under the bill, and using the above data, if 25 percent of the current child care workforce in New Jersey were newly eligible for child care subsidies under this bill and received child care subsidies for, on average, one child between the ages of zero through five, the annual cost to the State of providing subsidies to newly eligible child care workers could be up to approximately $61 million. 

 

Section:

Human Services

Analyst:

Sarah Schmidt

Principal Research Analyst

Approved:

Thomas Koenig

Legislative Budget and Finance Officer

 

This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.

 

This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).