AN ACT TO AMEND TITLE 31 OF THE DELAWARE CODE RELATING TO CHILD CARE SUBSIDIES TO INCREASE ELIGIBILITY THRESHOLDS OVER FIVE YEARS.

Legislation Document

SPONSOR:

Rep. Hilovsky & Rep. Ross Levin & Rep. Harris & Sen. Buckson

Reps. Gray, Morrison, Wilson-Anton, Burns, Snyder-Hall; Sen. Pettyjohn

HOUSE OF REPRESENTATIVES

153rd GENERAL ASSEMBLY

HOUSE BILL NO. 387

AN ACT TO AMEND TITLE 31 OF THE DELAWARE CODE RELATING TO CHILD CARE SUBSIDIES TO INCREASE ELIGIBILITY THRESHOLDS OVER FIVE YEARS.

WHEREAS, Delaware faces a childcare crisis with high costs averaging $15,607 annually for infant care and regulatory barriers limiting provider expansion, impacting workforce participation and family stability; and

WHEREAS, the current Purchase of Care (POC) program entry eligibility at 200% of the Federal Poverty Level (FPL) leaves many working families ineligible despite affordability challenges, with phase out to 300% FPL providing limited relief; and

WHEREAS, gradually and temporarily increasing POC eligibility to 275% FPL over 5 years will support moderate-income families, reduce benefits cliffs, and allow for evaluation of long-term impacts; and

WHEREAS, Delaware’s labor force participation rate of 59.4% in late 2025 remains the lowest in the Mid-Atlantic region and well below the national average of 62.9%, limiting economic productivity and growth; and

WHEREAS, expanded childcare subsidies in states like North Carolina have reduced employee turnover and absenteeism, contributing to $5.65 billion in avoided annual economic losses from childcare disruptions, while boosting labor force participation among parents; and

WHEREAS, similar expansions in Michigan have increased workforce stability, with 82% of participating families reporting sustained employment and 81% achieving career goals, leading to higher job satisfaction and reduced absenteeism; and

WHEREAS Kentucky’s childcare investments, including subsidies for workers, have improved employee retention by15-20% in participating businesses, enhancing productivity and reducing turnover costs estimates at $9,350 per parent annually nationwide; and

WHEREAS, these reforms could elevate Delaware’s 29

th

ranking in CNBC’s America’s Top States for Business 2025 by fostering small business viability through lower absenteeism and higher retention, while supporting corporate growth via a more reliable workforce; and

WHEREAS, by alleviating childcare concerns, such measures enhance job performance, reduce stress-related productivity losses, and raise the standard of living for young families, mirroring gains in states where childcare access has increased household earnings and economic output by up to 1.09% annually; and

WHEREAS, a sunset clause after 5 years ensures fiscal responsibility and opportunity for legislative review based on program outcomes.

NOW, THEREFORE:

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:

Section 1. Amend Title 31 of the Delaware Code by making deletions as shown by strike through and insertions as shown by underline as follows:

§ 3903. Eligibility for childcare subsidies

(a) A family is eligible for childcare subsidies under the Purchase of Care program if the family’s gross income does not exceed 200% of the following percentages of the Federal Poverty Level (FPL), adjusted annually:

(1) For the period beginning October 1, 2026 through June 30, 2027, 225% of the FPL;

(2) For the period beginning October 1, 2027 through June 30, 2029, 250% of the FPL;

(3) For the period beginning October 1, 2029 through June 30, 2031, 275% of the FPL.

(b) Families exceeding the entry threshold at redetermination may continue subsidies up to the following for 12 months, with copayment capped at 7% of income:

(1) For the period beginning October 1, 2026 through June 30, 2027, 325% of the FPL;

(2) For the period beginning October 1, 2027 through June 30, 2029, 350% of the FPL;

(3) For the period beginning October 1, 2029 through June 30, 2031, 375% of the FPL.

(c) The Department of Health and Social Services shall administer this section and report annually on enrollment, costs, and demographics by FPL brackets.

Section 2. Sunset Clause. The amendments made by Section 1 of this Act shall expire on June 30, 2032, unless extended by further act of the General Assembly. Upon expiration, eligibility shall revert to 200% of the FPL, subject to any subsequent legislation.

Section 3. This Act takes effect upon enactment, with eligibility changes effective October 1, 2026.

SYNOPSIS

This Act temporarily addresses Delaware's childcare crisis by gradually increasing Purchase of Care eligibility from 200% to 275% FPL over 5 years starting July 1, 2026, reducing benefit cliffs and supporting moderate-income families. It includes a sunset clause expiring June 30, 2031, to allow evaluation and ensure fiscal sustainability, with annual reporting on impacts.