CDC PROGRAM REIMBURSEMENT S.B. 311:
SUMMARY OF INTRODUCED BILL
IN COMMITTEE
Senate Bill 311 (as introduced 5-15-25)
Sponsor: Senator Rosemary Bayer
Committee: Housing and Human Services
CDC PROGRAM REIMBURSEMENT S.B. 311:
SUMMARY OF INTRODUCED BILL
IN COMMITTEE
Senate Bill 311 (as introduced 5-15-25)
Sponsor: Senator Rosemary Bayer
Committee: Housing and Human Services
CONTENT
The bill would enact a new law to require reimbursements made to a child care provider under the Child Development and Care Program (Program) to be adjusted for inflation annually using the Detroit-Warren-Dearborn Consumer Price Index, beginning on the bill's effective date.
Under the bill, "Detroit-Warren-Dearborn Consumer Price Index" would mean the most comprehensive index of consumer prices available for the Detroit-Warren-Dearborn area from the United States Department of Labor, Bureau of Labor Statistics
PREVIOUS LEGISLATION
(This section does not provide a comprehensive account of previous legislative efforts on this subject matter.)
Senate Bill 311 is a reintroduction of Senate Bill 836 from the 2023-2024 Legislative Session, which passed the Senate but received no further action.
BACKGROUND
Generally, the Program is a subsidy program wherein the State reimburses licensed child care providers to offer reduced cost services to eligible families. To participate in the Program, a parent or legal guardian must apply to the Michigan Department of Health and Human Services (MDHHS). Once an application has been approved, a parent or guardian must select a licensed child care provider to provide child care services and notify MDHHS, which will begin reimbursing the provider. Depending on a family's income and size, a family may be required to pay a Family Contribution.1
Legislative Analyst: Jessica Gebbie
FISCAL IMPACT
The bill would have an indeterminate fiscal impact on the State at a rate determined by the Detroit-Warren-Dearborn Consumer Price index (CPI).
It is unclear how the adjustment required under the bill would be implemented. For example, the bill does not indicate if the value of the CPI used in the adjustment should be determined on an annual average or an end-of-period basis or whether it should based on a calendar year, fiscal year, or some other period. The bill also does not indicate whether the annual adjustments would have to occur on a calendar year or fiscal year basis.
[1] For more information, see the Michigan Department of Lifelong Education, Advancement, and Potential's CDC Scholarship Handbook for Parents.
In the current fiscal year (fiscal year 2025-26), the State’s appropriation for the Program is $543.3 million, of which $380.8 million in spending comes from Federal assistance and the remaining $162.5 million comes from the State’s General Fund. Consumer price indexes can increase or decrease from year to year, though they most often go up from one to five percentage points per year. The Detroit-Warren-Dearborn index, with its current version established in 1984, averages an annual increase of 2.64% per year. At that rate, the annual increase in child care spending required under the bill would be $14.3 million in the first year, $14.7 million in the second, $15.1 million in the third, etc. The increased appropriations for these adjustments likely would come from the General Fund, as currently the State is maximizing its usage of Federal funds for childcare.
Indirect fiscal impacts could include a more stable child care marketplace statewide, which also could have a positive impact on the child care workforce and on income tax revenues from working parents. These impacts are indeterminate.