Despite a new infusion of state money, subsidized childcare programs will be serving less than 20% of eligible Hoosier children by the end of 2026, according to an Indiana Fiscal Policy Institute analysis released Saturday.
“There are surely hundreds of thousands of Hoosier children who need childcare so that their parents can work that are not able to access this system,” the institute wrote.
The families of approximately 300,000 kids are at or below 135% of the federal poverty line — $43,980 for a family of four this year — and are eligible for childcare vouchers through a pair of state-administered programs: the Child Care and Development Fund and On My Way Pre-K.
Just 43,000 were enrolled as of February, according to the Indiana Family and Social Services Administration, or 19% of those who are eligible. That doesn’t include children in the Head Start and Early Head Start programs, which aren’t directly run by the state, the institute noted.
About 14,000 more could nab vouchers in the coming months, after the State Budget Committee approved a $200 million injection sought by Gov. Mike Braun.
Enrollment was set to begin at the end of May and continue through the fall. FSSA can process about 3,000 applications per month.
“Once the state hits its target enrollment of 57,000 by the end of 2026, there will still be more than 20,000 children still on the waitlist and not receiving services,” the institute’s analysis notes.
FSSA leaders have cautioned that not every child on the waitlist is eligible — estimating a conversion rate of 50-60% on pandemic-era applicants — but that the waitlist could grow as the 15-month admissions freeze ends.
CCDF had until recently been closed to new children since December 2024, when enrollment peaked at 69,000 and the waitlist was created.
“As federal funding tapered off, the state found itself in a cash flow crisis where current enrollments and provider rates exceeded sustainable funding sources by about $225 million,” the analysis reads.
Indiana used Temporary Assistance for Needy Families money and a “hold harmless” budget line item to bridge the gap and continue serving the children already participating.
The state takes a “pay-as-you-go” approach to the programs, according to the institute — and isn’t changing that yet.
FSSA leaders acknowledged that enrollees stay in the program for an average of 2 and a half years, so this year’s $200 million infusion won’t cover the entire lifespan of the 14,000 new vouchers.
“These recent investments by the State should not be seen as an expansion of the program, but rather an infusion that allows for a ‘right sizing’ of subsidized childcare for the time being,” the analysis says.
The institute plans to release a report this summer exploring long-term funding and service delivery solutions for the state.
Although Indiana’s total spending of nearly $120 million ranked 38th among the 50 states in 2025 — with California at the top — its per-child spending of $45.68 ranked ninth. Kentucky was No. 1 at $52.93 per child.
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