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Page 2 Children and Families -- TANF and Economic Support Programs (Paper #211) payment amounts, with downward adjustments made for a family's copay, which depends on the size of the family, income, and other factors. Several groups are exempt from copayments, including foster care parents, subsidized guardians, interim caretakers, and kinship care parents who have court-ordered placement of a child.

Initial eligibility for Wisconsin Shares is limited to families with gross income of no more than 200% of the federal poverty level (FPL), which is $53,300 for a family of three in 2025. This is roughly 54% of the state median income. Rather than lose eligibility once their income equals 200% FPL, copayments increase by $1.00 for every $5.00 by which a participating family's gross income exceeds 200% FPL. These families retain eligibility until either the copayment reduces the subsidy to $0, or their income increases to the exit threshold of 85% of the state median income (SMI), which is approximately $84,000 for a family of three. The policy is intended to avoid a "benefit cliff" at 200% FPL that would cause participants to lose eligibility for all subsidies by increasing their earnings above the threshold. Once a case has been closed for more than a calendar month, the family must reapply using the 200% FPL standard.

Federal law requires that payment rates for child care services are sufficient to ensure equal access to child care services comparable to those provided to families not eligible to receive CCDF assistance. To meet that goal, federal guidance encourages (but do not require) states to waive copayments for families with income at or below 150% of the FPL ($39,975 for a family of 3 in 2025). Further, pursuant to a final rule implemented by the federal Administration for Children and Families (ACF) effective on April 30, 2024, states are required to set copayments to be no higher than 7% of a participating family's income. Previously, federal guidance had established the 7% of income standard as a benchmark to determine whether child care was affordable and whether the copayment was a barrier to families receiving CCDF assistance. DISCUSSION POINTS 1. This paper discusses the funding that would be allocated, by statute, for direct child care services under SB 45/AB 50. This includes the following recommended changes to Wisconsin Shares: (a) the cost to increase maximum reimbursement rates to the 75th percentile under the most recent child care price survey; (b) the cost to continue in 2025-26 of DCF's policy of waiving copays for participating families with income less than 100% of the FPL; and (c) the cost in 2026-27 of rescaling copayments to include two different policy changes: (i) waiving copays for participating families with income less than 150% of the FPL; and (ii) setting a ceiling on copayments so that no families pay more than 7% of their income for copayments. 2. In addition, this paper also presents estimates for the fiscal effect of several different policies to expand to eligibility for Wisconsin Shares subsidies. 3. The cost to support Wisconsin Shares by continuing reimbursement rates under current law and projections of caseloads for the 2025-27 biennium are discussed in Paper #210 (Estimates for TANF-Related Programs under Current Law), and is not included in this paper.