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*hb1321*
HOUSE BILL 1321
F5 6lr1930
By: Delegate Palakovich Carr Delegates Palako vich Carr, McCaskill,
Mireku–North, Addison, Ebersole, Feldmark, Pasteur, Patterson, Roberson,
Vogel, Wilkins, Wims, and Young
Introduced and read first time: February 12, 2026
Assigned to: Ways and Means and Appropriations
Committee Report: Favorable with amendments
House action: Adopted
Read second time: February 26, 2026
CHAPTER ______
AN ACT concerning 1
Child Care Scholarship Program – Enrollment Application Process and Copays 2
– Alterations 3
FOR the purpose of prohibiting an enrollment freeze in the Child Care Scholarship 4
Program from applying to certain individuals; requiring the State Department of 5
Education to establish a waitlist for the Program under certain conditions; requiring 6
the Department to give priority for enrollment in the Program to certain individuals 7
on the waitlist; requiring the Department to identify, inform, and assist requiring 8
the State Department of Education to identify, inform, and assist Child Care 9
Scholarship Program applicants who qualify for enrollment in publicly funded 10
prekindergarten, Head Start, and Early Head Star t subject to certain conditions; 11
repealing a process for presumptive eligibility in the Program; limiting copays for 12
certain individuals under the Program subject to certain conditions; requiring copays 13
for certain individuals under the Program subject to certain conditions; and 14
generally relating to the Child Care Scholarship Program. 15
BY repealing and reenacting, with amendments, 16
Article – Education 17
Section 9.5–111 and 9.5–113 18
Annotated Code of Maryland 19
(2022 Replacement Volume and 2025 Supplement) 20
BY repealing and reenacting, with amendments, 21
2 HOUSE BILL 1321
Article – Education 1
Section 9.5–111(d)(4) 2
Annotated Code of Maryland 3
(2022 Replacement Volume and 2025 Supplement) 4
(As enacted by Section 1 of this Act) 5
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 6
That the Laws of Maryland read as follows: 7
Article – Education 8
9.5–111. 9
(a) (1) In this section the following words have the meanings indicated. 10
(2) “Analysis” means the market rate survey or an alternative method 11
allowable under federal law. 12
(3) “Program” means the Child Care Scholarship Program. 13
(b) (1) Beginning in 2017, and every 2 years thereafter, the Department shall 14
conduct an analysis in order to formulate appropriate reimbursement rates for the 15
Program. 16
(2) The Department, before conducting the analysis, shall consult with: 17
(i) The Office of Child Care Advisory Council; 18
(ii) Child care resource and referral agencies; 19
(iii) Child care worker organizations; and 20
(iv) Any other appropriate entities. 21
(c) On or before September 1, 2017, and by September 1 every 2 years thereafter, 22
the Department shall report to the Joint Committee on Children, Youth, and Families, the 23
Senate Budget and Taxation Committee, and the House Appropriations Committee, in 24
accordance with § 2–1257 of the State Government Article, on: 25
(1) The methodology of the analysis required under subsection (b) of this 26
section; 27
(2) Cost estimates for raising the Program’s reimbursement rates to the 28
45th, 55th, 65th, and 75th percentile of chil d care providers in each of the State’s market 29
regions; 30
HOUSE BILL 1321 3
(3) The minimum base payment rate that is required for child care 1
providers to meet health, safety, quality, and staffing requirements in accordance with 2
federal law and the factors used to determine that rate; 3
(4) The rate adjustment that the Department will implement based on the 4
analysis; 5
(5) Any adjustments to Program eligibility or family copay amount that 6
will be implemented; and 7
(6) Any potential impacts on families and providers due to any adjustments 8
made to the Program. 9
(d) (1) The Governor shall include in the annual State budget an appropriation 10
from all fund sources for the Program that is not less than the total appropriation for the 11
Program in fiscal year 2018 or fiscal year 2019, whichever is greater. 12
(2) Except as provided in paragraph (3) of this subsection, the Department 13
may not make the following alterations to the Program in effect as of January 1, 2023: 14
(i) Reduce the reimbursement rates; 15
(ii) Reduce the income eligibility requirements; or 16
(iii) [Implement] SUBJECT TO SUBSECTION (E) OF THIS SECTION, 17
IMPLEMENT a freeze in Program enrollment. 18
(3) (i) The Department may alter the Program in effect as of January 19
1, 2023, by reducing the reimbursement rate s, reducing the income eligibility 20
requirements, or implementing a freeze in Program enrollment, if: 21
1. The Department submits a notification to the Senate 22
Budget and Taxation Committee, the Senate Committee on Education, Energy, and the 23
Environment, the House Appropriations Committee, and the House Ways and Means 24
Committee, in accordance with § 2–1257 of the State Government Article, on the intended 25
Program alterations, including the reason for, and expected duration of, the proposed 26
actions; and 27
2. The Program alterations identified in the notification are 28
not implemented until the completion of the regular legislative session immediately 29
following the submission of the notification. 30
(ii) If the Board of Public Works approves budget reduction s for the 31
Program under § 7 –213 of the State Finance and Procurement Article for a certain fiscal 32
year, the Department may reduce the reimbursement rates, reduce the income eligibility 33
requirements, or implement a freeze in Program enrollment at any time d uring the fiscal 34
year. 35
4 HOUSE BILL 1321
(4) [The] EXCEPT AS PROVIDED IN § 9.5–113(D) OF THIS SUBTITLE , 1
THE Department may not increase the copayment levels of the Program in effect as of 2
January 1, 2024. 3
(E) (1) (I) A FREEZE IN PROGRAM ENROLLMENT MAY NOT APPLY TO: 4
1. A FAMILY OR AN INDIVID UAL WHO IS ENROLLED IN 5
THE TEMPORARY CASH A SSISTANCE PROGRAM UN DER § 5–312 OF THE HUMAN 6
SERVICES ARTICLE; 7
2. A FAMILY OR AN INDIVID UAL WHO IS ENROLLED IN 8
THE FEDERAL TEMPORARY ASSISTANCE FOR NEEDY FAMILIES PROGRAM; 9
3. A CHILD WHO IS ENROLLED IN THE FEDERAL SOCIAL 10
SECURITY INCOME PROGRAM; AND 11
4. A CHILD WHO IS HOMELESS. 12
(II) AN INDIVIDUAL DESCRIBED UNDER SUBPARAGRAPH (I) OF 13
THIS PARAGRAPH SHALL OTHERWISE MEET THE C RITERIA FOR ENROLLME NT IN 14
THE PROGRAM. 15
(2) (I) IF THE DEPARTMENT ESTABLISHES A FREEZE IN PROGRAM 16
ENROLLMENT, THE DEPARTMENT SHALL ESTA BLISH A WAITLIST FOR ELIGIBLE 17
INDIVIDUALS WHO APPLY TO THE PROGRAM AFTER THE FREEZE IS IN EFFECT. 18
(II) THE WAITLIST SHALL RE MAIN IN EFFECT AS LO NG AS 19
THERE ARE FEWE R AVAILABLE AWARDS U NDER THE PROGRAM THAN ELIGIBLE 20
APPLICANTS FOR THE PROGRAM. 21
(III) THE WAITLIST SHALL GIVE PRIORITY FOR ENROLLMENT IN 22
THE PROGRAM TO QUALIFIED APPLICANTS WHO: 23
1. HAVE THE GREATEST FIN ANCIAL NEED , BASED ON 24
HOUSEHOLD INCOME; AND 25
2. APPLY TO ENROLL A CHI LD UNDER THE AGE OF 3 26
YEARS. 27
(3) (I) IF THE DEPARTMENT ESTABLISHES A FREEZE IN PROGRAM 28
ENROLLMENT, THE DEPARTMENT SHALL IDENTIFY APPLICANTS TO THE PROGRAM 29
WHOSE CHILDREN QUALIFY FOR THE: 30
HOUSE BILL 1321 5
(I) THE PUBLICLY FUNDED PREK INDERGARTEN PROGRAM 1
UNDER TITLE 7, SUBTITLE 1A OF THIS ARTICLE; OR 2
(II) A HEAD START OR EARLY HEAD START PROGRAM. 3
(II) (2) THE DEPARTMENT SHALL INFO RM AN APPLICANT 4
IDENTIFIED UNDER SUBPARAGRAPH (I) OF THIS PARAGRAPH (1) OF THIS 5
SUBSECTION ABOUT THE PUBLICLY FUNDED PREKINDERGARTEN PROGRAM, HEAD 6
START PROGRAM, OR EARLY HEAD START PROGRAM, INCLUDING BY PROVIDI NG 7
INFORMATION ON: 8
1. (I) AVAILABLE PREKINDERGA RTEN SLOTS, HEAD 9
START, OR EARLY HEAD START PROGRAMS IN THE COUNTY IN WHI CH THE 10
APPLICANT RESIDES; 11
2. (II) CONTACT INFORMATION F OR PRIVATE AND PUBLI C 12
PREKINDERGARTEN HOW TO CONTACT PROVIDERS WHO MAY HAVE AVAILABLE 13
PREKINDERGARTEN PROGRAM SLOTS; AND 14
3. (III) HOW TO APPLY FOR PUBLICLY FUNDED 15
PREKINDERGARTEN THE PROGRAMS. 16
(III) (3) ON REQUEST , THE DEPARTMENT SHALL ASSIST 17
PROVIDE ELIGIBLE FAMILIES ID ENTIFIED UNDER SUBPARAGRAPH (I) OF THIS 18
PARAGRAPH (1) OF THIS SUBSECTION WITH INFORMATION ON THE PUBLICLY 19
FUNDED PREKINDERGARTEN ENROLLMENT PROCESS PROCESSES. 20
(IV) (4) THE PROCESS FOR IDENT IFYING AND ASSISTING 21
ELIGIBLE PROGRAM APPLICANTS WH OSE CHILDREN QUALIFY FOR THE PUBLICLY 22
FUNDED PREKINDERGART EN A PROGRAM SHALL CONTIN UE AS LONG AS THE 23
WAITLIST IS IN EFFECT. 24
[(e)] (F) The Governor shall, from all fund sources, appr opriate funds in the 25
annual State budget in an amount sufficient to raise the Program’s reimbursement rates 26
for each region to: 27
(1) For fiscal year 2020, not less than the 30th percentile of the most recent 28
market rate survey or its equivalent if an alt ernative methodology defined by the 29
Department is used; and 30
(2) For fiscal year 2021 and each fiscal year thereafter, not less than the 31
60th percentile of the most recent market rate survey or its equivalent if an alternative 32
methodology defined by the Department is used. 33
6 HOUSE BILL 1321
SECTION 2. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 1
as follows: 2
Article – Education 3
9.5–113. 4
(a) In this section, “Program” means the Child Care Scholarship Program. 5
(b) The Department shall administer the Program in accordance with federal law. 6
(c) (1) The Department shall: 7
(i) Establish a process that meets the requirements of this 8
subsection for granting presumptive eligibility for a subsidy under the Program 9
(1) PROVIDE TO PROGRAM APPLICANTS IN FORMATION ON 10
INCOME–BASED GOVERNMENT ASS ISTANCE PROGRAMS AND TAX CREDITS FOR 11
WHICH THE APPLICANTS MAY BE ELIGIBLE; and 12
(ii) (2) Incorporate the framework of the Youth Transitioning 13
From Foster Placement to Successful Adulthood Program as established under § 9.5–113.2 14
of this subtitle. 15
(2) An individual shall attest that the individual meets the eligibility 16
requirements for a subsidy under the Program by completing and electronically submitting 17
a form provided by the Department, including a statement of the individual’s estimated 18
annual household income. 19
(3) The Department shall provide a subsidy under the Program to an 20
individual who submits a form under paragraph (2) of this subsection for a period: 21
(i) Beginning on the day on which the individual submits the form; 22
and 23
(ii) Ending: 24
1. If the individual does not fill out an application within 15 25
days in accordance with paragraph (4) of this subsection, 60 days after the date on which 26
the individual submits the form under paragraph (2) of this subsection; or 27
2. If the Department determines that the individual does not 28
qualify for a subsidy under the Program after reviewing the individual’s application 29
submitted in accordance with paragraph (4) of this subsection, the later of: 30
A. 60 days after the date on which the individual submits the 31
form under paragraph (2) of this subsection; or 32
HOUSE BILL 1321 7
B. The date on which the Department makes the 1
determination. 2
(4) To continue to receive a subsidy under the Program, an individual who 3
submits a form under paragraph (2) of this subsection shall submit an application for a 4
subsidy under the Program within 15 days after the date on which the individual submits 5
the form under paragraph (2) of this subsection. 6
(5) The Department or the Compt roller may not seek reimbursement or 7
repayment of a subsidy provided to an individual under paragraph (3) of this subsection if 8
the Department determines the individual does not qualify for a subsidy under the Program 9
under paragraph (3)(ii)2 of this subsection, except for suspected fraud. 10
(6) (i) In this paragraph, “Fund” means the Child Care Scholarship 11
Program Presumptive Eligibility Fund. 12
(ii) There is a Child Care Scholarship Program Presumptive 13
Eligibility Fund. 14
(iii) The Department shall administer the Fund. 15
(iv) 1. The Fund is a special, nonlapsing fund that is not subject 16
to § 7–302 of the State Finance and Procurement Article. 17
2. The State Treasurer shall hold the Fund separately, and 18
the Comptroller shall account for the Fund. 19
(v) The Fund consists of: 20
1. Money appropriated in the State budget to the Fund; 21
2. Reimbursements made in accordance with subparagraph 22
(viii) of this paragraph; and 23
3. Any other money from any other source accepted for the 24
benefit of the Fund. 25
(vi) The Fund may be used only to award a subsidy under the 26
Program in an amount sufficient to provide child care for an individual who is granted 27
presumptive eligibility until: 28
1. The individual either fails to complete the full application 29
within 15 days or is found ineligible for a subsidy under the Program and the time period 30
described under paragraph (3) of this subsection lapses; or 31
8 HOUSE BILL 1321
2. The individual is found eligible to participate in the 1
Program. 2
(vii) For fiscal year 2024 and each fiscal year thereafter, the Governor 3
shall include in the annual budget bill an appropriation to the Fund at least equal to the 4
amount recommended by the Department in the study conducted in accordance with 5
Section 3 of Chapters 525 and 526 of t he Acts of the General Assembly of 2022 that is 6
necessary to provide payment of the subsidy amount for which an individual who is 7
presumptively eligible qualifies. 8
(viii) If an individual is found eligible to participate in the Program, 9
federal and mat ching State funds available under the federal Child Care Development 10
Fund shall be used to reimburse the Fund for any expenditures made in accordance with 11
subparagraph (vi) of this paragraph. 12
(ix) 1. The State Treasurer shall invest the money of the Fund in 13
the same manner as other State money may be invested. 14
2. Any interest earnings of the Fund shall be credited to the 15
General Fund of the State. 16
(d) (1) The Department shall award a scholarship under the Program in an 17
amount sufficient to ensure that an individual will not be required to pay a copay for child 18
care if the individual provides proof, as determined by the Department, of: 19
[(1)] (i) 1. Participation in one of the following programs: 20
[1.] A. Federal Special Supplemental Food Program for 21
Women, Infants, and Children; 22
[2.] B. Federal Supplemental Nutrition Assistance 23
Program; 24
[3.] C. Federal Housing Act Housing Choice Voucher 25
Program; 26
[4.] D. Supplemental Security Income benefits; or 27
[5.] E. Temporary cash assistance; and 28
[(ii)] 2. Employment or enrollment in an education or career 29
training program; or 30
[(2)] (II) Participation in the Youth Transitioning From Foster Placement 31
to Successful Adulthood Program established under § 9.5–113.2 of this subtitle. 32
HOUSE BILL 1321 9
(2) THE DEPARTMENT SHALL AWAR D A SCHOLARSHIP UNDE R THE 1
PROGRAM IN AN AMOUNT SUFFICIENT TO ENSURE THAT AN INDIVIDUAL W HO HAS 2
AN ANNUAL HOUSEHOLD INCOME OF NOT MORE THAN 50% OF THE REGIONAL 3
MEDIAN INCOME WHERE THE INDIVIDUAL RESID ES AT OR BELOW THE FEDERAL 4
POVERTY LINE IS NOT REQUIRED TO PAY A COPAY FOR CHILD CARE. 5
(3) (I) SUBJECT TO SUBPARAGRAPH (II) OF THIS PARAGRAPH, THE 6
DEPARTMENT MAY AWARD A SCHOLARSHIP UNDER THE PROGRAM IN AN AMOUNT 7
THAT RESULTS IN AN I NDIVIDUAL PAYING A C OPAY IF THE INDIVID UAL’S ANNUAL 8
INCOME IS MORE THAN 50% OF THE REGIONAL MEDI AN INCOME WHERE THE 9
INDIVIDUAL RESIDES. 10
(II) THE DEPARTMENT MAY NOT AW ARD A SCHOLARSHIP 11
UNDER THE PROGRAM IN AN AMOUNT THAT RESULTS IN AN INDIVIDUAL PAYING: 12
1. IF THE INDIVIDUAL HAS AN ANNUAL INCOME OF NOT 13
MORE THAN 65% OF THE REGIONAL MEDI AN INCOME WHERE THE INDIVIDUAL 14
RESIDES, 3% OR MORE OF THE INDIVIDUAL’S ANNUAL INCOME AS A COPAY; OR 15
2. IF THE INDIVIDUAL HAS AN ANNUAL INCOME OF MORE 16
THAN 65% OF THE REGIONAL MEDI AN INCOME WHERE THE INDIVIDUAL RESIDES, 17
7% OR MORE OF THE INDIVIDUAL’S ANNUAL INCOME AS A COPAY. 18
(3) THE DEPARTMENT MAY AWARD PARTIAL SCHOLARSHIPS UNDER 19
THE PROGRAM THROUGH A SLIDING FEE SCALE FOR COPAYMENTS THAT: 20
(I) APPLIES TO AN INDIVIDUAL WHO: 21
1. HAS AN ANNUAL HOUSEHOLD INC OME ABOVE THE 22
FEDERAL POVERTY LINE; AND 23
2. IS NOT DESCRIBED UNDER PARAGRAPH (1)(I) OF THIS 24
SUBSECTION; 25
(II) IS BASED ON AN INDIVI DUAL’S ANNUAL HOUSEHOLD 26
INCOME ABOVE THE FEDERAL POVERTY LINE; 27
(III) REQUIRES AN INDIVIDUA L TO PROVIDE AN INCREASED 28
PERCENTAGE OF THE IN DIVIDUAL’S ANNUAL HOUSEHOLD I NCOME AS A COPAY AS 29
THE INDIVIDUAL’S INCOME INCREASES; 30
(IV) INCREASES COPAY PERCE NTAGES GRADUALLY BET WEEN 31
HOUSEHOLD INCOME CAT EGORIES, CULMINATING IN A MAX IMUM COPAY NOT 32
10 HOUSE BILL 1321
EXCEEDING 7% OF AN INDIVIDUAL ’S ANNUAL HOUSEHOLD I NCOME FOR AN 1
INDIVIDUAL WITH THE HIGHEST INCOME CATEGORY UNDER THE PROGRAM; 2
(V) INCLUDES A SUFFICIENT NUMBER OF HOUSEHOLD INCOME 3
CATEGORIES TO MINIMI ZE SIGNIFICANT INCRE ASES IN COPAY AMOUNT S FOR AN 4
INDIVIDUAL WHO MOVES FROM ONE HOUSEHOLD INCOME CATEGORY TO ANOTHER; 5
AND 6
(VI) REQUIRES A COPAY FOR EACH CHILD IN A FAMI LY 7
RECEIVING A PARTIAL SCHOLARSHIP, BUT REQUIRES A LOWER COPAY AMOUNT FOR 8
EACH SUBSEQUENT CHILD. 9
(4) (I) SUBJECT TO SUBPARAGRAPH (I) OF THIS PARAGRAPH, THE 10
DEPARTMENT MAY SET A MINIMUM COPAY AMOUNT FOR A PARTIAL SCHOLARSHIP 11
AWARD UNDER THE PROGRAM. 12
(II) A MINIMUM COPAY AMOUNT MAY NOT BE MORE THAN $10 13
EACH MONTH. 14
(e) An individual is eligible to continue to receive a scholarship under the 15
Program: 16
(1) For at least 90 days in a year if the individual is unemployed and 17
seeking employment; and 18
(2) If the individual meets any other eligibility criteria determined by the 19
Department. 20
(f) The Department may not require an individual to pur sue or receive child 21
support payments or apply for services from a child support agency to be eligible for a 22
scholarship under the Program. 23
(g) (1) The Department shall notify the Comptroller within 10 days after the 24
date on which the Department receives an invoice from a child care provider. 25
(2) The Comptroller shall pay a child care provider within 5 days after the 26
date on which the Comptroller receives a notice under paragraph (1) of this subsection. 27
(h) The Department shall adopt regulations to i mplement the provisions of this 28
section. 29
SECTION 3. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 30
as follows: 31
Article – Education 32
HOUSE BILL 1321 11
9.5–111. 1
(d) (4) [Except as provided in § 9.5 –113(d) of this subtitle, the ] THE 2
Department may not increase the copayment levels of the Program in effect as of January 3
1, 2024. 4
SECTION 4. AND BE IT FURTHER ENACTED, That Section 3 of this Act shall take 5
effect July 1, 2028. 6
SECTION 2. AND BE IT FURTHER ENACTED, That, in order to f ulfill the 7
requirement to share information about publicly funded prekindergarten slots with 8
applicants to the Child Care Scholarship Program under § 9.5 –111(e) of the Education 9
Article, as enacted by Section 1 of this Act, the State Department of Education: 10
(1) may, before the date on which the Department implements the Early 11
Childhood Pre –K Enrollment System for publicly funded prekindergarten, provide 12
information on available publicly funded prekindergarten slots in the county in which the 13
applicant resides as of the most recent enrollment count; and 14
(2) shall, beginning on the date the Department implements the Early 15
Childhood Pre –K Enrollment System for publicly funded prekindergarten, provide 16
up–to–date information on available publicly funded prekindergarten slots in the county in 17
which the applicant resides. 18
SECTION 3. AND BE IT FURTHER ENACTED, That: 19
(a) If the State Department of Education implements a system of copayments for 20
the Child Care Scholarship Program in accordance with § 9.5–113(d) of the Education 21
Article, as enacted by Section 1 of this Act, the Department shall provide ample notice of 22
incoming copayments, notifying current scholarship recipients and the child care providers 23
that accept the scholarships multiple times, b eginning with a first notice at least 90 days 24
before a system of copayments is implemented. 25
(b) (1) On or before December 1, 2027, the State Department of Education 26
shall report to the General Assembly, in accordance with § 2–1257 of the State Government 27
Article, on a system of copayments for the Child Care Scholarship Program adopted in 28
accordance with § 9.5–113(d) of the Education Article, as enacted by Section 1 of this Act. 29
(2) The report shall include information on: 30
(i) income bands used to generate copayments; 31
(ii) the number of scholarships in each income band; and 32
(iii) the average copayment in each income band. 33
SECTION 4. AND BE IT FURTHER ENACTED, That: 34
12 HOUSE BILL 1321
(a) The State Department of Education shall monitor the waitlist for the Child 1
Care Scholarship Program in effect on July 1, 2026. 2
(b) (1) If the Department determines that there will no longer be any 3
applicants on the waitlist within 6 months, the Department shall report to the General 4
Assembly, in accordance with § 2–1257 of the State Government Article, on: 5
(i) the possibility of the waitlist ending; and 6
(ii) whether the Child Care Scholarship Program should include a 7
process that allows applicants to the program to enroll through presumptive eligibility. 8
(2) In issuing its report, the Department shall review the presumptive 9
eligibility process in place before July 1, 2026, and consider possible changes to make the 10
program more effective. 11
SECTION 5. AND BE IT FURTHER ENACTED, That, except as provided in Section 12
4 of this Act, this Act shall take effect July 1, 2026 . Section 2 of this Act shall remain 13
effective for a period of 2 years and, at the end of June 30, 2028, Section 2 of this Act, with 14
no further action required by the General Assembly, shall be abrogated and of no further 15
force and effect, contingent on the taking effect of Chapter ____ (H.B. 849) of the Acts of the 16
General Assembly of 2026, and if Chapter ____ (H.B. 849) does not take effect, this Act, 17
with no further action required by the General Assembly, shall be null and void. 18
Approved:
________________________________________________________________________________
Governor.
________________________________________________________________________________
Speaker of the House of Delegates.
________________________________________________________________________________
President of the Senate.