By: Bumgarner H.B. No. 5529

A BILL TO BE ENTITLED

AN ACT

relating to establishing a child-care innovation pilot program.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subtitle B, Title 4, Labor Code, is amended by adding Chapter 320 to read as follows:

CHAPTER 320. CHILD-CARE INNOVATION PILOT PROGRAM

Sec. 320.001. DEFINITIONS. In this chapter:

(1) "Board" means a local workforce development board created under Subchapter F, Chapter 2308, Government Code.

(2) "Program" means the child-care innovation pilot program established under this chapter.

(3) "Provider" means a child-care provider who is engaging with the program established under this chapter.

Sec. 320.002. ESTABLISHMENT. (a) The commission shall establish and administer the child-care innovation pilot program to address strategic workforce needs of designated pilot regions across the state by increasing the supply of quality, affordable child care and encouraging child-care partnerships with employers.

(b) The program shall enable boards designated by the commission to partner with local employers and high-quality providers to provide grants that will fund innovative child-care expansion projects and employer partnerships that directly impact strategic local workforce needs.

Sec. 320.003. ADMINISTRATION. (a) From funds appropriated to the commission for the program, the program shall be administered by local workforce development boards that serve:

(1) a county with a population greater than 2 million that is adjacent to a county with a population greater than 2.5 million, or

(2) two or more counties adjacent to subsection (1).

(b) If the commission determines there are additional funds available after funding the local workforce development boards in Subsection (a), the commission shall by rule adopt a process for selecting additional local workforce development boards to operate the pilot. Rulemaking shall include a competitive application process and selection criteria.

Sec. 320.004. APPLICATION; STRATEGIC PLAN. (a) Any local workforce development board that participates in the program shall submit a letter of intent to the commission including:

(1) a strategic plan proposing:

(A) measurable performance goals and progress measures related to increasing the supply and accessibility of quality, affordable child-care services;

(B) plans for engaging regional stakeholders, including local employers, business associations, and organizations that provide services to children and families, to develop and meet regional performance goals that are based on strategic workforce needs;

(C) the number of providers to whom the board plans to award grants;

(D) staffing structures to support the effective implementation of the program, including technical assistance for child-care providers; and

(E) plans to maximize the results of the program and support the future sustainability of child-care providers participating in the program if state funding is not continued; and

(2) the total amount of money requested to implement that board's strategic plan.

Sec. 320.005. AGREEMENTS WITH PARTICIPATING BOARDS. The commission shall develop and enter into a performance agreement with each participating local workforce development board. Each of those boards shall comply with the terms of the performance agreement during its participation in the program. The performance agreement must:

(1) include measurable performance goals and progress measures that are:

(A) related to increasing the supply and accessibility of quality, affordable child-care services in the pilot region; and

(B) aligned to that board's strategic plan; and

(2) allocate responsibilities for accessing and reporting progress and outcome information.

Sec. 320.007. ALLOCATION OF FUNDS. From the funds appropriated to the commission for the program, the commission shall award an amount of money to each local workforce development board participating in the program. In determining the allocation of money, the commission shall consider:

(1) the size and population of the pilot region;

(2) the unmet child-care needs in the region and the proposed funding required to address the needs;

(3) the proposed number of eligible providers in each region to whom that board intends to award grants;

(4) the budget requested in that board's proposed strategic plan under Section 320.004(a)(2); and

(5) other factors determined by the commission.

Sec. 320.008. GRANTS. (a) From funds awarded to a local workforce development board participating in the program, the board, after conducting a competitive selection process, shall award grants to eligible providers that enter into a grant contract with the board to expand quality, affordable child-care services in accordance with the region's strategic workforce needs and the local workforce development board's approved strategic plan.

(b) In awarding a grant under the program, a local workforce development board shall give preference to an eligible provider that demonstrates capacity to:

(1) provide high-demand child-care services identified by the board; and

(2) partner with one or more local employers.

Sec. 320.009. PROVIDER ELIGIBILITY. (a) To be eligible to receive a grant under the program, a child-care provider must:

(1) be a Texas Rising Star Program provider with a three-star rating or higher;

(2) be accredited by the National Association for the Education of Young Children;

(3) have an accreditation from a Montessori accreditation organization; or

(4) meet an alternative quality criterion or waiver prescribed by the commission.

(b) A provider under Subsection (a) may not be owned or operated by the organization that administers grants for the local workforce development board under the state child care services program administered by the commission.

(c) In consultation with local employers and other regional stakeholders, the board shall develop a competitive application and scoring process for eligible providers to apply for a grant under the program to meet the goals in the board's approved strategic plan under Section 320.004.

(d) A local workforce development board shall develop and enter into a grant contract with each eligible provider awarded a grant under the program. Each eligible provider awarded a grant shall comply with the terms of the grant contract. At a minimum, grant contracts must require eligible providers to:

(1) maintain the ability to enroll the required number of children within each designated service area outlined in the board's grant contract;

(2) ensure all educators employed by the provider earn a minimum wage that is equal to or above the self-sufficient wage required by Section 2308A.012, Government Code, in the county in which the provider is located;

(3) maintain participation in the child-care services program administered by the commission and accept participating children as openings become available;

(4) maintain tuition rates at the provider's posted rate or at a rate lower than the posted rate for families who do not receive subsidized child-care services;

(5) maintain all program eligibility requirements;

(6) provide regular reports demonstrating compliance with the board's grant contract; and

(7) provide any additional data requested by the board.

Sec. 320.010. SUBCONTRACTING. (a) In accordance with Section 2308.264(e), Government Code, a local workforce development board may subcontract with a coordinating entity to administer the program.

(b) The commission may adopt rules establishing requirements for a coordinating entity with which a board subcontracts under this section.

Sec. 320.011. USE OF FUNDS. (a) From money appropriated by the legislature to implement the program, the commission may use not more than:

(1) 9 percent of the total amount appropriated to pay costs related to administering the program by the commission and participating local workforce development boards, including technical assistance provided to providers under the program; and

(2) 1 percent of the total amount appropriated to pay costs related to research and evaluation of the program.

(b) The commission shall use at least 90 percent of the total amount appropriated for grants administered under the program.

(c) The commission shall adopt rules relating to the award of grants under the program that are designed to maximize the impact of the program and ensure the funding is sufficient to execute on the terms of the grant contract.

(d) In awarding a grant under the program, the commission or local workforce development boards may adjust reimbursement rates as necessary to account for the costs of providing care to specialized populations, including children with disabilities, infants, toddlers, and children needing after-hours care.

(e) Each local workforce development board participating in the program shall ensure that all grant money has been allocated not later than December 31, 2027.

(f) In addition to funds appropriated by the legislature, to administer and expand the impact of the program, the commission or local workforce development boards may:

(1) seek and apply for any available federal or local funds; and

(2) solicit and accept gifts, grants, and donations from any other public or private source.

Sec. 320.012. QUARTERLY REPORT TO THE COMMISSION. (a) Each local workforce development board participating in the program shall submit a quarterly report to the commission, detailing the use of grant money received under the program and related outcomes, including:

(1) a list of providers receiving grant money and the provider's monthly grant awards;

(2) each provider's compliance with performance goals outlined in the provider's grant contract with the board; and

(3) that board's progress toward outcomes identified in the approved strategic plan under Section 320.004.

(b) A local workforce development board shall submit the first report required by this section not later than the 120th day after the date the board awards its first grant to a provider under the program and submit subsequent reports every 120 days thereafter.

Sec. 320.013. REPORT. Not later than December 1, 2026, the commission shall review the effectiveness of the program and submit to the governor, the lieutenant governor, the speaker of the house of representatives, and the members of each legislative standing committee with primary jurisdiction over economic development a written report regarding the outcomes, challenges, and opportunities of the program.

Sec. 320.014. RULES. The commission shall adopt rules necessary to implement this chapter.

Sec. 320.015. EXPIRATION. This chapter expires September 1, 2029.

SECTION 2. The Texas Workforce Commission is required to implement a provision of this Act only if the legislature appropriates money specifically for that purpose. If the legislature does not appropriate money specifically for that purpose, the commission may, but is not required to, implement a provision of this Act using other appropriations that are available for that purpose.

SECTION 3. This Act takes effect September 1, 2025.