SB 902 - HB 992
FISCAL NOTE
Fiscal Review Committee
Tennessee General Assembly
March 4, 2025
Fiscal Analyst: Christine Drescher | Email: christine.drescher@capitol.tn.gov | Phone: 615-741-2564
SB 902 - HB 992
SUMMARY OF BILL: Creates the Child Care Workforce Improvement Act (Act), which requires
the Commissioner of the Department of Human Services (DHS) to develop and implement the
Child Care WAGE$ Tennessee Program (WAGE$ Program) by January 1, 2026, to provide
supplemental payment to child care workers if they meet certain specifications.
Requires the Commissioner to develop and implement a program to provide assistance payments to
eligible early childhood educators through the Child Care Payment Assistance Program (Payment
Assistance Program) by January 1, 2026.
Requires the Commissioner to annually adjust payments for the WAGE$ and Payment Assistance
Programs by the percentage increase in the consumer price index’s United State average for all urban
consumers, beginning January 1, 2026, and every January 1 thereafter.
Authorizes the Commissioner to use funds from the Child Care Improvement Fund to support and
supplement the WAGE$ and Payment Assistance Programs. Requires the Commissioner include the
Payment Assistance Program eligibility requirements in the next available application for the federal
Child Care Development Fund grant.
FISCAL IMPACT:
STATE GOVERNMENT
EXPENDITURES General Fund
FY25-26 $125,973,900
FY26-27 $257,530,100
FY27-28 & Subsequent Years > $264,756,500
Total Positions Required: 22
OTHER FISCAL IMPACT
The extent to which the Child Care Improvement Fund may be used to cover the costs of the
proposed legislation cannot be reasonably determined since there was no unobligated balance
within that fund as of June, 2024.
The extent to which the federal Child Care Development Fund may be used to cover the future
costs of the proposed legislation is unknown; however, there was a carried forward amount of
$82,868,521 in FY24-25.
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Assumptions:
WAGE$ Program
• Per the language of the proposed legislation, a child care worker is eligible to receive a
supplemental payment under the WAGE$ Program if they:
o Work at a child care program licensed by DHS;
o Earn $20 or less per hour;
o Have worked at least six months in the same child care program, at least 10
classroom hours per week, and with children from birth to five years of age; and,
o Are employed at the same child program at a time when funding is available and a
final confirmation has been completed.
• There are currently 49,648 child care workers registered in the Tennessee Professional
Archive of Learning who would be eligible for the WAGE$ Program.
• Child Care WAGE$ Tennessee is currently a federally funded salary supplemental program
for child care educators employed in DHS licensed child care agencies, and is administered
by a third-party.
• According to information provided by DHS, the average yearly Child Care WAGE$
Tennessee supplement is $3,466. This analysis assumes the average payment under the
newly formed WAGE$ Program will be the same in FY25-26.
• Due to the January 1, 2026 enactment date, the increase in state expenditures in FY25-26 is
estimated to be $86,039,984 [(49,648 x $3,466) x 50%].
• As of January, 2025, the consumer price index’s United States average for all urban
consumers, as prepared by the United States Department of Labor’s Bureau of Labor
Statistics, has had an average increase over the last 10 years of 2.85 percent.
• Therefore, it is assumed that the WAGE$ Program payment amount will increase by
approximately 2.85 percent each year, which will result in an average payment of $3,565
[$3,466 + ($3,466 x 2.85%)] in FY26-27 and exceed $3,667 [$3,565 + ($3,565 x 2.85%)] in
FY27-28 and subsequent years.
• It is estimated that the total increase in state expenditures as a result of the supplemental
payment will be $176,995,120 ($3,565 x 49,648) in FY26-27 and exceed $182,059,216
($3,667 x 49,648) in FY27-28 and subsequent years.
• In order to administer the supplemental payments, DHS will contract with their vendor that
currently administers the WAGE$ education supplemental program.
• Based on the additional workload relative to the current WAGE$ participation and
workload, there will be additional administrative and operational costs to the contracted
vendor, estimated to be $3,325,000 in state expenditures per year, with $1,662,500
($3,325,000 x 50%) paid in FY25-26 due to the January 1, 2026 enactment date.
• The total increase in state expenditures as a result of the WAGE$ Program will be
$87,702,484 ($86,039,984 + $1,662,500) in FY25-26; $180,320,120 ($176,995,120 +
$3,325,000) in FY26-27, and exceed $185,384,216 ($182,059,216 + $3,325,000) in FY27-28
and subsequent years.
Payment Assistance Program
• Per the language of the proposed legislation, an early childhood educator is eligible to
receive the Payment Assistance Program if:
o The educator is a resident of this state;
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o The educator is the parent of a child that attends a licensed child care facility that
accepts child care assistance payments; and,
o The educator provides proof of employment.
• Based on information provided by DHS, it is estimated that 5,844 individuals will qualify
for the Payment Assistance Program, with an average payment assistance cost of $12,608
per year.
• Due to the January 1, 2026 enactment date, the increase in state expenditures is estimated to
be $36,840,576 [(5,844 x $12,608) x 50%] in FY25-26.
• It is assumed that this payment amount will increase by approximately 2.85 percent each
year, which will result in an average payment of $12,967 [$12,608 + ($12,608 x 2.85%)] in
FY26-27, and exceed $13,337 [$12,967 + ($12,967 x 2.85%)] in FY27-28 and subsequent
years.
• It is estimated that the total increase in state expenditures as a result of supplemental
payment will be $75,779,148 ($12,967 x 5,844) in FY26-27 and exceed $77,941,428 ($13,337
x 5,844) in FY27-28 and subsequent years.
• According to DHS, there are currently 17,321 participating children. Increasing the total by
an additional 5,844 is a 34 percent increase [(5,844 / 17,321) x 100%] in workload, and will
require a 34 percent increase in staffing.
• There are currently 54 child care certificate specialists, so a 34 increase will require 18 (54 x
34%) additional child care certificate specialist positions.
• In order to comply with required ratios, there will need to be an additional four field
supervisors.
• Therefore, the proposed legislation will require DHS to hire an additional 22 positions to
begin July 1, 2025.
Title Salary Benefits # Positions Total
Child Care Certificate Specialist $42,936 $15,151 18 $1,045,566
Field Supervisor $75,720 $20,590 4 $385,240
Total: $1,430,806
• The additional positions will result in an increase in state expenditures of $1,430,806 in
FY25-26 and subsequent years.
• The Payment Assistance Program will result in an increase in state expenditures of
$38,271,382 ($36,840,576 + $1,430,806) in FY25-26, $77,209,954 ($75,779,148 +
$1,430,806) in FY26-27, and at least $79,372,234 ($77,941,428 + $1,430,806) in FY27-28
and subsequent years.
Total Fiscal Impact
• The proposed legislation will result in a total fiscal impact of $125,973,866 ($87,702,484 +
$38,271,382) in FY25-26, $257,530,074 ($180,320,120 + $77,209,954) in FY26-27, and at
least $264,756,450 ($185,384,216 + $79,372,234) in FY27-28 and subsequent years.
• The extent to which the Child Care Improvement Fund may be used to cover the costs of
the proposed legislation cannot be reasonably determined since there was no unobligated
balance within that fund as of June, 2024.
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• The extent to which the federal Child Care Development Fund may be used to cover the
future costs of the proposed legislation is unknown; however, there was a carried forward
amount of $82,868,521 in FY24-25.
CERTIFICATION:
The information contained herein is true and correct to the best of my knowledge.
Bojan Savic, Executive Director