One Year Later, Vermont’s Act 76 Is Showing Promise

Just over a year ago, Vermont became a national model for its commitment to young children thanks to passage of Act 76 in June 2023. It resulted in an annual commitment of about $125 million in funds to the state’s child care system, thanks to both general fund revenue and revenue from a new payroll tax that went into effect in July 2024. Not only has the legislation and new funding made an impact, the momentum for change has continued. This year, for example, lawmakers made child care subsidies an entitlement for eligible families.

The addition of $125 million in annual funds was designed to improve the child care system for families, children, and providers in a few different ways. The eligibility cap for child care subsidies in the state has gradually expanded from 350 percent of the federal poverty level (FPL) to 575 percent FPL as of October 6, 2024. This means that a family of four earning up to about $180,000 per year now qualifies for subsidies, making about 80 to 90 percent of Vermont families with young children eligible for help paying for child care. That same family, assuming they have two children in child care, is now seeing substantial savings thanks to the bill, paying about $250 per week for care as opposed to $800 each week. Additionally, families with an annual income of less than 175 percent FPL (about $54,500 for a family of four) now owe no copayments at all, a change from the previous guideline of 150 percent FPL.

Act 76 was also intended to assist child care providers through higher reimbursement rates. As of January 1, the state now reimburses providers at a rate 35 percent higher than they previously did, enabling providers to improve quality and raise staff wages. And those reimbursement payments are now based on child enrollment rather than attendance, an important step towards providing predictable and stable funding.

One year later, there are positive signs that the legislation is working as intended. Over $21 million in readiness payments have been distributed to about 800 programs to support stability, expansion, and quality as the law is implemented. In a recent survey, only five percent of providers in the state said they expected to go out of business in the next two years, a significant decline from a 2023 survey in which 20 percent of providers expressed such pessimism. “Having this much progress in a year just to get started, it shows solving our child care crisis across this country is actually within our reach,” says Aly Richards, CEO of Let’s Grow Kids, a Vermont-based child care advocacy organization.

Additionally, there are indications that child care supply is increasing throughout the state. “The first two quarters of 2024 we've had more child care programs open than close in Vermont for the first time since we began really looking at this data in 2018. I love that statistic because it shows the depth of this crisis and how quickly public investment is really turning the trends around,” says Richards.

Even with the passage last year of Act 76, the fight is far from over for child care advocates to ensure that the legislation is fully funded and properly implemented. In the last legislative session, Governor Scott initially proposed reducing base funding levels for the state’s child care subsidy program by $10 million. The legislature’s reaction to that proposal, however, displayed the results of decades of advocacy by child care organizations. Not only did lawmakers reject the proposed funding cut, they went a step further and strengthened the law through an amendment that deleted the phrase “to the extent that funds permit” from the legislation. This change essentially makes the subsidy program an entitlement, meaning that any family that qualifies for child care subsidies is now guaranteed to receive financial assistance.

The work is still not not over for advocates throughout the state, however. Goals still to be achieved include continuing to spread the word to potentially eligible families about the expanded income guidelines; working to improve program quality through coaching, business technical assistance, and other supports; and improving compensation and benefits for child care staff. While that work will continue, one year after Act 76’s passage it’s clear that what’s happening in Vermont through increased investment in child care can serve as a model for other states. “Americans can't afford to pay more. So there is no way around this other than a public investment. I just think that's really critical, and that's what our work in Vermont is showing,” says Richards.