Secretary Kelly, head of the Early Childhood Education and Care Department, told a Senate committee that state investments have meaningfully expanded access to early childhood services and outlined cost estimates and funding priorities tied to the department’s budget request.

Kelly said the department has seen “a 9% increase in childcare assistance, almost another 16,000 children served in 3 years,” plus an “18% increase in childcare capacity” and a “31 percent increase in pre k.” She told the committee the department now serves more than 75,000 children across its core programs, up from about 46,000 when the department began.

The department’s budget priorities included the House budget vehicle and several line items Kelly discussed: funding for Dolly Parton’s Imagination Library, additions to the state’s home‑visiting and tribal investment strategies, a proposed wage scale and career lattice that would target infant and toddler workers, replacement funding to modernize the department’s “FIT Kids” billing system, and an expanded child‑care quality pilot. Kelly said some items are “contingent on enactment of House Bill 71,” which she said would affect distributions from the early childhood trust fund.

Nut graf: The hearing focused on how the department’s funding translates into classroom costs, the assumptions used in the department’s cost model and whether rate increases yield higher worker pay. Committee members pressed for specific revenue and cost detail, and department staff agreed to return with an itemized cost and revenue breakdown for both a licensed (larger) center and a 5‑star center serving infants through school age.

Kelly walked the committee through the department’s cost model for a 5‑star center serving 78 children (six weeks through age 12). She said the department’s per‑infant subsidy in the 5‑star example is $23,100; the model’s estimated “true cost” to serve that infant is about $24,901. The 5‑star infant group size is limited to eight children and requires two teachers in the infant room, Kelly said. The example center in the presentation required roughly 16 staff total, about 12–13 of them teaching staff, with additional costs for occupancy and nonpersonnel operating expenses.

Kelly gave the committee the salary assumptions embedded in the model: assistant teacher wages for licensed settings and higher assumed floors in 5‑star programs (the department’s examples used roughly $15 per hour for some assistant teacher assumptions and an $18‑per‑hour floor in 5‑star settings). She said raising the assumed wage floor to $18 per hour would increase program expenses by about 14 percent.

Committee members focused on whether rate increases translate into higher take‑home pay for classroom staff. Senator Lanier pressed the department on the difference between a department assumption about benefits and how employers actually deploy those dollars. Kelly said the department models a benefit amount “at least $6,000 per employee” that the provider receives and may use for health insurance, retirement or other benefits; she said the department provides the lump‑sum estimate and the private provider chooses how to allocate it.

Several senators raised the concern that past rate increases did not always lead to higher wages for front‑line workers. To address that uncertainty, Kelly described a targeted pilot: a wage‑supplement pilot for infant and toddler staff designed to test whether additional funds result in higher pay for the intended workers before any larger roll‑out. Kelly said the pilot is one mechanism the department is proposing to ensure rate increases have the intended effect.

Other specifics discussed:
- The department showed a 250 percent increase in Medicaid‑funded home visiting since an earlier baseline and said Medicaid now pays for more than 1,300 home visiting slots (department figure for the end of 2024).
- The department said about 24 percent growth since 2021 in the number of children receiving services for developmental delays and disabilities.
- The department requested $3,000,000 for technology replacement for the FIT Kids billing system in addition to funds already in the House bill, and it requested a larger childcare quality pilot (department materials referenced a figure and requested adjustment; the department described the requested amount as contingent on other legislative action).

Senator Padilla asked the department to include a “holistic” revenue view when it returns — including subsidy rates, child care food program revenues, wage supplements and any wrap‑around hours tied to pre‑K — so the committee can see total center revenue rather than rate lines in isolation. Kelly agreed to bring detailed revenue outputs the next day for both a licensed center and a 5‑star center and to provide the department’s cost‑calculator link so members and staff can run additional scenarios.

The discussion also touched outcomes: Senator Lanier asked whether the investments are producing measurable long‑term gains (for example, third‑grade reading outcomes). Kelly said the department maintains an early childhood integrated data system and participates in the state longitudinal data system; she said pre‑K investments show stronger long‑term education outcomes than short‑term childcare assistance evaluations, which have shown benefits that can attenuate over time. Kelly offered to bring outcome reports and relevant evaluations to the committee at a future meeting.

Ending: Committee members scheduled a follow‑up session in which the department will present the detailed cost and revenue breakdowns for the sample centers and additional outcome material. The department emphasized that the proposed wage scale and many program augmentations are tied to pending legislation and trust‑fund distributions.