HOUSE BILL REPORT
SHB 2689
As Amended by the Senate
Title: An act relating to the working connections child care program.
Brief Description: Concerning the working connections child care program.
Sponsors: House Committee on Appropriations (originally sponsored by Representatives Gregerson, Ormsby and Macri; by request of Office of Financial Management).
Brief History:
Committee Activity:
Appropriations: 2/26/26, 3/2/26 [DPS].
Floor Activity:
Passed House: 3/4/26, 53-44.
Senate Amended.
Passed Senate: 3/11/26, 33-16.
Brief Summary of Substitute Bill
  • Modifies existing income eligibility provisions for the Working Connections Child Care program so that income eligibility is maintained at 60 percent of the State Median Income (SMI), instead of increasing to 75 percent of the SMI beginning July 1, 2029, and 85 percent of the SMI (subject to funding) beginning July 1, 2031.
  • Requires that child care subsidy rates must achieve the seventy-fifth percentile of market beginning July 1, 2027.
  • Requires that the Department of Children, Youth, and Families (DCYF) adopt rules that allow child care providers to claim:  (a) a full month of payment for a child who has 10 or fewer absences in a month; or (b) a half month of payment for a child who has attended at least one day in a month but has 11 or more absences.
  • Prohibits the DCYF from allowing child care providers to receive a child care subsidy rate that is different than the rate for the subsidy region in which the provider is located.
  • Repeals the requirement that the DCYF pay child care providers prospectively based on when child care is expected to begin.
HOUSE COMMITTEE ON APPROPRIATIONS
Majority Report: The substitute bill be substituted therefor and the substitute bill do pass.Signed by 18 members:Representatives Ormsby, Chair; Gregerson, Vice Chair; Macri, Vice Chair; Berg, Bergquist, Callan, Cortes, Doglio, Fitzgibbon, Leavitt, Lekanoff, Peterson, Pollet, Ryu, Springer, Stonier, Street and Thai.
Minority Report: Do not pass.Signed by 9 members:Representatives Couture, Ranking Minority Member; Connors, Assistant Ranking Minority Member; Burnett, Corry, Dye, Keaton, Marshall, Rude and Valdez.
Minority Report: Without recommendation.Signed by 2 members:Representatives Penner, Assistant Ranking Minority Member; Manjarrez.
Staff: Jordan Clarke (786-7123).
Background:

Working Connections Child Care. 

Working Connections Child Care (WCCC) is a federally and state-funded program administered by the Department of Children, Youth, and Families (DCYF) that provides subsidies for child care while a parent is working or participating in approved work-related activities.  Eligible families must make a copayment to the child care provider based on the family's countable income, which is established in state law.

 

The WCCC program is available to families who meet certain eligibility requirements and have a household income at or below 60 percent of the State Median Income (SMI), adjusted for family size.  Beginning July 1, 2029, a family is eligible for the WCCC program when the household's income is at or below 75 percent of the SMI, adjusted for family size.  Beginning July 1, 2031, and subject to the availability of funding provided, a family is eligible for the WCCC program when the household's income is above 75 percent of the SMI and is at or below 85 percent of the SMI, adjusted for family size.

 

Market Rate Survey. 

The federal Child Care and Development Fund (CCDF) Block Grant provides funding to support WCCC.  As a condition of receiving this federal funding, CCDF rules require states to conduct a statistically valid and reliable survey of the market rates for child care services, or an alternative methodology, such as a cost estimation model that has been approved by the Administration for Children and Families (ACF) within the United States Department of Health and Human Services at least every three years.  State lead agencies must ensure that the market rate survey (MRS) or an alternative methodology reflects variations by geographic location, category of provider, and age of child.

 

Child Care Subsidy Rates and Payments. 

Child care subsidy base rates are currently set at the eighty-fifth percentile of the market as established by the 2024 MRS for licensed family homes, and at the eighty-fifth percentile of market as established by the 2021 MRS for child care centers.  Beginning July 1, 2026, child care subsidy base rates must achieve the eighty-fifth percentile of the market as established by the most recent MRS published before May 20, 2025, for licensed or certified child care providers.

 

The DCYF rule sets out the base rates for family home providers and child care centers, which includes different regions and age ranges for infants, toddlers, preschool, and school-age child care.  Currently, rates are differentiated into seven different regions.  There are also four counties that receive different regional rates only for child care centers:  Clark, Benton, Walla Walla, and Whitman Counties.

 

When a child who has been approved for subsidy attends at least one day in the calendar month, the provider may claim payment for absent days that month.  Payments are made retroactively following provider billing and verification of at least one day of attendance in the month of service.

 

In 2024 the ACF updated CCDF regulations to require that states pay child care providers prospectively and based on enrollment in order to maintain access to federal CCDF funding. On January 5, 2025, the ACF announced it was rescinding these rule changes.
Summary of Substitute Bill:

Working Connections Child Care Program Eligibility.

Eligibility for the WCCC program is modified so that income eligibility is maintained at 60 percent of the SMI, instead of increasing to 75 percent of the SMI beginning July 1, 2029, and 85 percent of the SMI (subject to funding) beginning July 1, 2031.

 

Working Connections Child Care Subsidy Rates.

Child care subsidy base rates are set at the seventy-fifth percentile of market, beginning July 1, 2027, for licensed or certified child care providers.  The market rate survey must achieve a provider response rate of at least 65 percent for each child care subsidy rate region in order for it to be considered valid for the purpose of informing future rate increases.

 

The DCYF is prohibited from allowing child care providers to receive a child care subsidy rate that is different than the rate for the subsidy region in which the provider is located.

 

Working Connections Child Care Subsidy Payments.

The DCYF must adopt rules that allow child care providers to claim:

  1. a full month of payment for a child who has 10 or fewer absences in a month; or
  2. a half month of payment for a child who has attended at least one day in a month but has 11 or more absences.

 

The requirement that the DCYF pay child care providers prospectively based on when child care is expected to begin is repealed.
EFFECT OF SENATE AMENDMENT(S):

The Senate amendment:

  • changes the Working Connections Child Care (WCCC) monthly provider reimbursement policy to authorize payment for:  (a) up to 11 days; (b) up to 15 days; or (c) up to the full number of authorized days (depending on the number of days the child attended in the calendar month), rather than requiring:  (a) a full month of payment for a child who has 10 or fewer absences in a month; or (b) a half month of payment for a child who has attended at least one day in a month but has 11 or more absences; and
  • modifies language regarding the provider response rate for the market rate survey to require that, beginning with the 2028 market rate survey, a child care subsidy rate region must achieve a provider response rate of at least 40 percent and also be greater than the response rate for that region in the prior market rate survey for the results to be valid for the purpose of informing future rate increases, and specifies that a minimum of 65 percent participation must be achieved for a valid survey once a region achieves 65 percent, rather than requiring that the market rate survey achieve a provider response rate of at least 65 percent for each child care subsidy rate region in order for it to be considered valid for the purpose of informing future rate increases.
Appropriation: None.
Fiscal Note: Available.
Effective Date: The bill contains an emergency clause and takes effect immediately, except for section 4, which takes effect July 1, 2027.
Staff Summary of Public Testimony:

(In support) None.

 

(Opposed) None.

 

(Other) Thank you for removing the Governor's proposed WCCC cap, which would have created chaos in the child care industry.  Advocates are grateful that this cap has been removed.  Waitlists are already terrible and the cap would have made this worse, and advocates are thankful for the changes included in the proposed substitute.

 

Increasing the supply of child care providers helps families and keeps children safe and supported.  This bill has heavy losses with the attendance policies and the future eligibility changes being removed.  Paying based on attendance would be very difficult.  The state does not require districts to be paid retroactively, but this bill would remove the requirement for the state to pay prospectively.  There is strong concern that these policies will cause budget issues for child care providers, including for Early Childhood Education and Assistance Program and Head Start providers.

 

The Legislature should work to pass new revenue to protect child care investments instead of reducing those investments.  The Legislature should protect child care access and child care providers, who are amazing and help families build their lives.
Persons Testifying:

Lori Pittman, Puget Sound Educational Service District; Maggie Humphreys, MomsRising; and Bronti Lemke, Parent, MomsRising.
Persons Signed In To Testify But Not Testifying: None.