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SENATE BILL 2062
By Watson
HOUSE BILL 1979
By White
HB1979
011953
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AN ACT to amend Tennessee Code Annotated, Title 4;
Title 43; Title 49; Title 57; Title 67 and Title 71,
relative to child care.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Title 71, Chapter 1, is amended by adding
the following as a new part:
71-1-301. Short title.
This part is known and may be cited as the "Promising Futures Act."
71-1-302. Findings and purpose.
(a) The general assembly finds that:
(1) Access to affordable, reliable child care is essential to workforce
participation, economic stability for working families, and the long-term well-being
of children;
(2) Employers across multiple sectors in this state report that the lack of
available and affordable child care is a significant barrier to employee recruitment
and retention;
(3) The child care workforce experiences persistent shortages and high
turnover, in part due to the cost of child care for workers with young children;
(4) Strategic, targeted investments in child care assistance can
strengthen the workforce, support employers, and promote economic growth;
and
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(5) Dedicated revenues derived from vapor products and hemp-derived
cannabinoid products provide an opportunity to support child care initiatives
without reliance on general fund revenues.
(b) The purpose of this part is to establish the promising futures fund to support
pilot programs and targeted child care assistance initiatives that:
(1) Strengthen and stabilize this state's child care workforce;
(2) Support employer participation in shared child care cost models;
(3) Expand access to child care for working families who are ineligible for
existing subsidy programs; and
(4) Provide accountability, transparency, and data-driven evaluation to
inform future programming and policy decisions.
71-1-303. Part definitions.
As used in this part, unless the context otherwise requires:
(1) "Department" means the department of human services;
(2) "Eligible child care provider" means a child care provider licensed by
the department of human services or certified by the department of education to
provide child care services in this state;
(3) "Fund" means the promising futures fund created in this part;
(4) "State median income" means the most recent estimate of the median
household income for residents of this state, as determined by the United States
census bureau, adjusted for family size; and
(5) "Third-party administrator" means a private entity under contract with
the department to administer a program authorized in this part.
71-1-304. Promising futures fund - Revenue dedication.
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(a) There is created in the state treasury a special fund to be known as the
promising futures fund, hereinafter referred to as the fund.
(b) The fund consists of:
(1) Any amounts credited to the fund pursuant to title 57, chapter 7, part
1 or pursuant to title 67, chapter 4, part 10;
(2) Moneys specifically appropriated to the fund by the general assembly;
(3) Any federal funds, grants, gifts, or donations received by the
department for purposes consistent with this part; and
(4) Any other moneys authorized by law to be deposited into the fund.
(c) Moneys in the fund must be used solely for the purposes authorized in this
part and used as funds are available, subject to appropriation by the general assembly.
(d) Notwithstanding § 9-4-205 or another law to the contrary, interest earned on
moneys in the fund must be credited to and remain in the fund. Any moneys in the fund
remaining unexpended at the end of any fiscal year do not revert to the general fund.
(e) From any amounts credited to the fund, the department may retain and use
up to ten percent (10%) of the fund balance for administrative purposes and to
implement, operate, oversee, evaluate, and report on the programs created in this part,
including payments to third-party administrators or vendors. Any amounts used by the
department pursuant to this subsection (e) are separate from, and may not be used for,
the regulation, enforcement, or collection of any taxes, fees, or assessments.
(f) This section must not be construed to limit the authority of any state agency
to expend moneys, pursuant to appropriation, for the administration, enforcement, or
collection of any taxes, fees, or assessments authorized under title 57 or title 67.
71-1-305. Programs supported by the fund.
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(a) Moneys in the fund must be used to establish and operate the following
programs, in the following order:
(1) The child care workforce scholarship pilot program created in § 71-1-
306 to provide categorical eligibility for free child care for children of eligible child
care workers. It is the general assembly's intent that the child care workforce
pilot program receives allocations from the fund over each three-year period of
the pilot program's operation totaling five million dollars ($5,000,000);
(2) The CareShare Tennessee pilot program created in § 71-1-307,
which is an employer-supported child care assistance program. It is the general
assembly's intent that the CareShare Tennessee pilot program receive
allocations from the fund over each three-year period of the pilot program's
operation totaling five million dollars ($5,000,000); and
(3) The smart steps plus program created in § 71-1-308, if any funds
remain available in the promising futures fund after the funding goals expressed
in subdivisions (a)(1) and (2) are met for the respective programs.
(b) Subject to available funding, the department may continue or expand the
child care workforce scholarship pilot program created in § 71-1-306, and the CareShare
Tennessee pilot program created in § 71-1-307, if the department's continuation or
expansion of one (1) or more of the programs are approved by the governor.
71-1-306. Child care workforce scholarship pilot program.
(a) As used in this section:
(1) "Categorical eligibility" means eligibility for child care assistance
based solely on an individual's employment in the child care workforce, without
regard to the individual's household income;
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(2) "Child care workforce" means individuals employed in this state by an
eligible child care provider in a position involving the direct care, supervision, or
education of children, including, but not limited to, teachers, assistant teachers,
aides, and other instructional or caregiving staff, as determined by the
department;
(3) "Eligible child care worker" means a member of the child care
workforce who works at least thirty (30) hours per week on average and who
meets any additional employment, residency, and participation requirements
established by the department;
(4) "Free child care" means child care services provided to an eligible
child care worker at no cost to the worker, after application of any federal or state
child care assistance for which the worker or child is otherwise eligible;
(5) "Marketing and outreach vendor" means a private entity under
contract with the department to conduct recruitment, outreach, and related
activities for the pilot program;
(6) "Pilot program" means the child care workforce scholarship pilot
program created in this section; and
(7) "Scholarship" means financial assistance paid on behalf of an eligible
child to an eligible child care provider to cover the costs of child care services
through the pilot program.
(b) The department shall administer a child care workforce scholarship pilot
program to provide categorical eligibility for free child care for children of eligible child
care workers employed in this state after application of any federal or state child care
assistance for which the child or family is otherwise eligible to receive.
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(c) The department shall enter into a contract with one (1) or more marketing
and outreach vendors to conduct recruitment and outreach activities for the pilot
program. Any contract entered into pursuant to this subsection (c) must be
performance-based and include measurable targets and key performance indicators tied
to the recruitment of new child care workers into the workforce.
(d) A marketing and outreach vendor under contract with the department
pursuant to subsection (c) is responsible for collecting, maintaining, and reporting data
necessary to measure performance against the key performance indicators established
in the contract and documenting all outreach and recruitment activity.
(e) The department shall submit the report required in § 71-1-309 for purposes
of evaluating the pilot program. The following are the minimum key performance
indicators that must be used to evaluate the pilot program:
(1) The number of individuals entering the child care workforce for the
first time that is attributable to outreach and recruitment activities;
(2) The number of eligible child care workers with categorical eligibility;
(3) Child care workforce retention rates for each three-year period for
which the pilot program is in operation;
(4) Geographic distribution of eligible child care workers and eligible child
care providers participating in the pilot program; and
(5) Outreach efficiency measures, including costs per recruited worker.
(f) All reports submitted for purposes of the pilot program must be independently
verified by the office of research and education accountability in the office of the
comptroller of the treasury or by an independent entity selected by the comptroller.
(g) The department shall coordinate eligibility criteria and benefit administration
for the pilot program with existing child care subsidy programs.
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(h) At the end of each three-year period for which the pilot program operates, the
department may, subject to available funding, continue or expand the pilot program if the
pilot program's continuation or expansion is approved by the governor.
(i) The department shall complete procurement and selection of any marketing
and outreach vendors required for the pilot program by November 1, 2026, and, subject
to available funding, begin operating the pilot program by January 1, 2027.
71-1-307. CareShare Tennessee pilot program.
(a) The department shall establish a CareShare Tennessee pilot program within
the department to provide employer-supported child care assistance through shared
contributions by participating employers, participating employees, and the state.
(b) As used in this section:
(1) "Contribution" means a payment made by an employer or employee,
whether directly or through a third-party administrator, to subsidize eligible child
care costs;
(2) "Eligible child care costs" means the costs incurred for child care
services provided by an eligible child care provider;
(3) "Employee" means an individual employed in this state by a
participating employer;
(4) "Employer" means a for-profit or nonprofit entity, including, but not
limited to, a local government or local education agency, that employs one (1) or
more employees in this state;
(5) "Participating employer" means an employer approved by the
department or a third-party administrator to participate in the program;
(6) "Pilot program" means the CareShare Tennessee pilot program
created in this section; and
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(7) "State match" means the funds paid from the promising futures fund
created in § 71-1-304 to an eligible child care provider to match employer and
employee contributions received through the pilot program.
(c)
(1) The state match for the pilot program must be used to supplement
employer and employee contributions toward eligible child care costs.
(2) Subject to available funds, the state match must be determined using
a declining match formula based on household income as follows:
(A) The state match may equal up to one hundred percent
(100%) of the employer contribution for participating employees with
household incomes at or below one hundred percent (100%) of the state
median income;
(B) The state match must decrease by ten percent (10%) for each
twenty percent (20%) increase in household income over one hundred
percent (100%) of the state median household income up to one hundred
fifty percent (150%) of the state median household income; and
(C) The state match is fifty percent (50%) if the employee's
household income exceeds one hundred fifty percent (150%) of the state
median household income.
(d)
(1) The department shall contract with one (1) third-party administrator to
administer the pilot program. The contract must be performance-based and
include measurable targets and key performance indicators.
(2) The third-party administrator is responsible for:
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(A) Developing and managing standardized participation
agreements among employers, employees, and child care providers;
(B) Verifying eligibility of employers, employees, and child care
providers for purposes of the pilot program;
(C) Collecting and disbursing employer and employee
contributions and issuing state match payments to child care providers;
(D) Collecting, maintaining, and reporting data necessary to
measure performance against the key performance indicators established
in the contract and documenting all pilot program activity;
(E) Ensuring that state match payments are made only when
sufficient funds are available and that program obligations do not exceed
the balance of the promising futures fund created in § 71-1-304; and
(F) Maintaining waitlists when sufficient funding is unavailable.
(3) The department shall submit the report required in § 71-1-309 for
purposes of evaluating the pilot program. The following are the minimum key
performance indicators that must be used to evaluate the pilot program:
(A) The number of participating employers, disaggregated by
size, sector, and geographic region;
(B) The number of participating employees receiving child care
assistance;
(C) The total amount of employer, employee, and state
contributions made through the pilot program;
(D) The number and characteristics of participating child care
providers;
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(E) Utilization rates of approved child care assistance by
participating employees; and
(F) Administrative timeliness and accuracy, including contract
processing times and payment disbursement timelines.
(e) All reports submitted for purposes of the pilot program must be independently
verified by the office of research and education accountability in the office of the
comptroller of the treasury or by an independent entity selected by the comptroller.
(f) Participation in the pilot program is voluntary for employers, employees, and
child care providers.
(g) At the end of each three-year period for which the pilot program operates, the
department may, subject to available funding, continue or expand the pilot program if the
pilot program's continuation or expansion is approved by the governor.
(h) The department shall complete procurement and selection of the third-party
administrator for the pilot program by November 1, 2026, and, subject to available
funding, begin operating the pilot program by January 1, 2027.
71-1-308. Smart Steps Plus program.
(a) There is established the Smart Steps Plus program to provide child care
scholarships to eligible working families whose household income exceeds eligibility
thresholds for existing child care assistance programs.
(b) As used in this section:
(1) "Eligible working family" means a household with one (1) or more
children requiring child care in which the household income is greater than
eighty-five percent (85%) of the state median income, but does not exceed one
hundred fifty percent (150%) of the state median income; and
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(2) "Program" means the Smart Steps Plus program created in this
section.
(c) Subject to available funding, the department shall administer a Smart Steps
Plus program to provide child care scholarships on a sliding scale basis, after application
of any federal or state child care assistance for which the child or family is otherwise
eligible to receive.
(d) The department may establish eligibility criteria, benefit levels, copayment
requirements, and prioritization schedules for the program by rule; provided, that the
assistance must be targeted to support workforce participation and employment stability.
Any rules promulgated by the department must be promulgated in accordance with the
Uniform Administrative Procedures Act, compiled in title 4, chapter 5.
(e) The department may administer and begin operating the program on or after
January 1, 2027, subject to available funding.
71-1-309. Reporting and evaluation.
(a) The department shall submit an annual report for evaluating each of the
programs created in this part. Each report must be submitted to the governor, the
speaker of the senate, the speaker of the house of representatives, the chair of the
finance, ways and means committee of the senate, and the chair of the committee of the
house of representatives having jurisdiction over finance by March 31 immediately
following a year for which one (1) or more of the programs operated in this state.
(b) Each report must include, at a minimum:
(1) A summary of fund revenues, expenditures, and balances, including
amounts expended for administrative, regulatory, and evaluation purposes;
(2) Verified performance data for the child care workforce scholarship
pilot program, including the key performance indicators specified in § 71-1-306;
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(3) Verified performance data for the CareShare Tennessee pilot
program, including the key performance indicators specified in § 71-1-307;
(4) Participation and utilization data for the Smart Steps Plus program,
including the number of families served, income distribution of participating
families, and average benefit levels;
(5) An assessment of the effectiveness of each program in meeting its
stated goals, based on independently verified data;
(6) Identification of any barriers to implementation or participation; and
(7) Any recommendations for continuation, modification, expansion, or
termination of one (1) or more of the programs.
(c) Performance data used in the report must be based on reports submitted by
third-party administrators or vendors and independently verified by the office of research
and education accountability in the office of the comptroller of the treasury or by an
independent entity selected by the comptroller.
(d) The department shall make the report publicly available on its website.
SECTION 2. Tennessee Code Annotated, Section 57-7-106, is amended by deleting
subsection (e) and substituting instead the following:
(e)
(1) The revenue collected from fees established under subdivision
(b)(1)(B) must be deposited with the state treasurer and earmarked for and
allocated to the commission and used solely for the administration of this title.
(2) Notwithstanding subdivision (e)(1), if the revenue collected from fees
established under subdivision (b)(1)(B) exceeds the costs to the commission for
the administration of this title, then any such excess revenue must be reallocated
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and deposited into the promising futures fund created in § 71-1-304 and used
solely for the purposes authorized in title 71, chapter 1, part 3.
SECTION 3. Tennessee Code Annotated, Section 57-7-106(f), is amended by deleting
subdivision (8) and substituting instead the following:
(8)
(A) The revenue collected from fees established under this subsection (f)
must be deposited with the state treasurer to be earmarked for and allocated to
the commission and used solely or the administration of this title.
(B) Notwithstanding subdivision (f)(8)(A), if the revenue collected from
fees established under this subsection (f) exceeds the costs to the commission
for the administration of this title, then any such excess revenue must be
reallocated and deposited into the promising futures fund created in § 71-1-304
and used solely for the purposes authorized in title 71, chapter 1, part 3.
SECTION 4. Tennessee Code Annotated, Section 57-7-108, is amended by deleting
subsection (d) and substituting instead the following:
(d)
(1) All moneys collected under this section must be turned over to the
state treasurer for deposit in accordance with this subsection (d).
(2) Eighty percent (80%) must be deposited into the promising futures
fund created in § 71-1-304 and used solely for the purposes authorized in the
Promising Futures Act, compiled in title 71, chapter 1, part 3.
(3) Ten percent (10%) must be deposited into a special account in the
state general fund to be appropriated for use by the commission. At least fifty
percent (50%) of the amount described in this subdivision (d)(3) must be used for
the administration and enforcement of this chapter, and not more than fifty
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percent (50%) of the amount described in this subdivision (d)(3) may be used for
the administration and enforcement of this title.
(4) Ten percent (10%) must be deposited into a special account in the
state general fund to be appropriated for use by the department of revenue in the
administration and enforcement of this chapter.
(5) Notwithstanding subdivisions (d)(3) and (4), any unexpended funds
remaining in the special accounts referenced in subdivisions (d)(3) and (4) at the
end of a fiscal year do revert to the general fund, but must be reallocated and
deposited into the promising futures fund created in § 71-1-304 and used solely
for the purposes authorized in title 71, chapter 1, part 3.
SECTION 5. Tennessee Code Annotated, Section 57-7-112, is amended by adding the
following as a new subsection:
(f) The amount of any fees collected pursuant to this section must, except as
provided in this subsection (f), be used by the department for the administration and
enforcement of this section. Any funds generated by the fees collected pursuant to this
section that remain unexpended at the end of a fiscal year do not revert to the general
fund, but must be reallocated and deposited into the promising futures fund created in §
71-1-304 and used solely for the purposes authorized in the Promising Futures Act,
compiled in title 71, chapter 1, part 3.
SECTION 6. Tennessee Code Annotated, Section 57-7-113, is amended by adding the
following as a new subsection:
(d) The amount of any civil penalties assessed and collected pursuant to this
section must, except as provided in this subsection (d), be used by the commission for
the administration and enforcement of this section. Any funds generated by the civil
penalties assessed and collected pursuant to this section that remain unexpended at the
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end of a fiscal year do not revert to the general fund, but must be reallocated and
deposited into the promising futures fund created in § 71-1-304 and used solely for the
purposes authorized in the Promising Futures Act, compiled in title 71, chapter 1, part 3.
SECTION 7. Tennessee Code Annotated, Section 67-4-1025, is amended by deleting
subsection (f) and substituting instead the following:
(f)
(1) Eighty seven and one-half percent (87.5%) of the revenue from taxes
on vapor products collected under this part must be deposited into the promising
futures fund created in § 71-1-304 and used solely for the purposes authorized in
the Promising Futures Act, compiled in title 71, chapter 1, part 3.
(2)
(A) Twelve and one-half percent (12.5%) of the revenue from
taxes on vapor products collected under this part must be deposited with
the state treasurer to be earmarked for and allocated to the alcoholic
beverage commission for the administration and enforcement of this part.
(B) Notwithstanding subdivision (f)(2)(A), any funds allocated to
the commission for the administration and enforcement of this part that
remain unexpended at the end of a fiscal year must be reallocated and
deposited into the promising futures fund created in § 71-1-304 and used
solely for the purposes authorized in title 71, chapter 1, part 3.
SECTION 8. Tennessee Code Annotated, Section 67-4-1034, is amended by deleting
subsection (p) and substituting instead the following:
(p)
(1) All fees and penalties collected by the department pursuant to this
section must be used for the administration and enforcement of this section.
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(2) Funds collected pursuant to this section must be placed in a special
account within the general fund.
(3) Notwithstanding subdivisions (p)(1) and (2), if, in any fiscal year, the
fees and penalties assessed and collected pursuant to this section exceed the
costs of the administration and enforcement of this section, then any such funds
remaining unexpended at the end of a fiscal year must be reallocated and
deposited into the promising futures fund created in § 71-1-304 and used solely
for the purposes authorized in title 71, chapter 1, part 3.
SECTION 9. Tennessee Code Annotated, Section 67-4-1035, is amended by adding
the following as a new subsection:
(f) The amount of any fines collected pursuant to this section must, except as
provided in this subsection (f), be used by the commission for the administration and
enforcement of this section. Any funds generated by the fines collected pursuant to this
section that remain unexpended at the end of a fiscal year do not revert to the general
fund, but must be reallocated and deposited into the promising futures fund created in §
71-1-304 and used solely for the purposes authorized in the Promising Futures Act,
compiled in title 71, chapter 1, part 3.
SECTION 10. The headings in this act are for reference purposes only and do not
constitute a part of the law enacted by this act. However, the Tennessee Code Commission is
requested to include the headings in any compilation or publication containing this act.
SECTION 11. This act takes effect July 1, 2026, the public welfare requiring it.