Amends and adds to existing law to establish the Idaho Child Care Program.

LEGISLATURE OF THE STATE OF IDAHO
Sixty-eighth Legislature Second Regular Session - 2026
IN THE SENATE
SENATE BILL NO. 1374
BY STATE AFFAIRS COMMITTEE
AN ACT	1
RELATING TO THE IDAHO CHILD CARE PROGRAM; AMENDING TITLE 56, IDAHO CODE, BY	2
THE ADDITION OF A NEW CHAPTER 25, TITLE 56, IDAHO CODE, TO DEFINE TERMS,	3
TO PROVIDE FOR THE CREATION OF THE IDAHO CHILD CARE PROGRAM, TO ESTAB-	4
LISH PROVISIONS REGARDING PARENT QUALIFYING ACTIVITIES, TO ESTABLISH	5
PROVISIONS REGARDING APPLICATION, ELIGIBILITY, AND REDETERMINATION,	6
TO PROVIDE AUTHORITY TO CREATE A WAITING LIST AND ADJUST ELIGIBIL-	7
ITY, TO ESTABLISH PROVISIONS REGARDING REQUIREMENTS FOR PROVIDERS, TO	8
ESTABLISH PROVISIONS REGARDING PROGRAM INTEGRITY, TO ESTABLISH PROVI-	9
SIONS REGARDING PROGRAM OVERSIGHT, TO ESTABLISH PROVISIONS REGARDING	10
A PROGRAM VENDOR, TO ESTABLISH PROVISIONS REGARDING CONSTRUCTION, TO	11
ESTABLISH PROVISIONS REGARDING AUTHORITY OF THE ATTORNEY GENERAL, TO	12
ESTABLISH PROVISIONS REGARDING THE STATE PLAN AND LEGISLATIVE APPROVAL	13
REQUIREMENTS, AND TO ESTABLISH PROVISIONS REGARDING THE USE OF FUNDS	14
FOR CAPACITY BUILDING; AMENDING SECTION 39-1111, IDAHO CODE, TO REVISE	15
PROVISIONS REGARDING ADMINISTRATIVE RULES; AND DECLARING AN EMERGENCY.	16
Be It Enacted by the Legislature of the State of Idaho:	17
SECTION 1. That Title 56, Idaho Code, be, and the same is hereby amended	18
by the addition thereto of a NEW CHAPTER, to be known and designated as Chap-	19
ter 25, Title 56, Idaho Code, and to read as follows:	20
CHAPTER 25	21
IDAHO CHILD CARE PROGRAM	22
56-2501. DEFINITIONS. As used in this chapter:	23
(1) "CCMS" means a child care management solution.	24
(2) "Child care" means care, control, supervision, or maintenance of a	25
child provided for compensation by an individual, other than a parent of the	26
child, for less than twenty-four (24) hours in a day.	27
(3) "Child care finder" means a child care search tool.	28
(4) "Department" means the Idaho department of health and welfare.	29
(5) "Eligible child" means a child under thirteen (13) years of age who	30
is either a citizen of or lawfully living in the United States. However, a	31
child who is thirteen (13) years of age or older remains eligible if the child	32
is under court supervision or is verified by either a mental health profes-	33
sional or licensed medical professional to be physically or mentally unable	34
to care for himself.	35
(6) "FPG" means the federal poverty guidelines published annually by	36
the United States department of health and human services.	37
(7) "Fraud detection and remediation system" means a software platform	38
utilizing statistical modeling, predictive analytics, and machine learning	39
techniques to assess the likelihood of fraud, waste, or abuse.	40

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2
(8) "Intentional program violation" means an intentionally false or	1
misleading action or statement that is one (1) of the following:	2
(a) An individual makes a false or misleading statement to the depart-	3
ment, either orally or in writing, in order to participate in the pro-	4
gram;	5
(b) An individual misrepresents or conceals one (1) or more facts to the	6
department, either orally or in writing, to participate in the program;	7
(c) An individual fails repeatedly or substantially to comply with rel-	8
evant state or federal laws or rules promulgated under this chapter;	9
(d) An individual knowingly violates any term of the individual's	10
provider agreement; or	11
(e) A provider knowingly fails to meet the qualifications specifically	12
required in relevant federal law, in this chapter, in chapter 11, title	13
39, Idaho Code, or the rules promulgated under any of the forgoing laws.	14
(9) "License management" means a child care license management system	15
for the department to process licensing applications for new and existing	16
providers.	17
(10) "Parent" means a person responsible for a child because of birth,	18
adoption, marriage, legal guardianship, or foster care.	19
(11) "Program" means the Idaho child care program.	20
(12) "Provider" means an individual, organization, agency, or other en-	21
tity providing child care.	22
(13) "SMI" means the current state median income estimates determined	23
for the low income home energy assistance program.	24
(14) "Subsidy management" means a child care subsidy management system	25
for the department's processing of subsidy funding on behalf of eligible	26
children to providers.	27
(15) "Vendor" means a third-party vendor that will provide child care	28
technology solutions or create new family child care programs that shall be	29
procured via an existing competitively bid contract with the state.	30
56-2502. CREATION OF PROGRAM. There is hereby created in the depart-	31
ment the Idaho child care program, which, subject to legislative appropria-	32
tion, shall use federal child care funds distributed to the states, as well	33
as any related state matching funds and maintenance-of-effort funds, to im-	34
prove the quality of child care in Idaho for all children and assist low-	35
income families in Idaho who are working or participating in education or	36
training activities with help paying for child care. The department shall	37
administer the program in a manner consistent with this chapter and with all	38
applicable federal requirements.	39
56-2503. PARENT QUALIFYING ACTIVITIES. (1) Parents in a child's	40
household must participate in one (1) of the following qualifying activities	41
to be eligible for assistance under this chapter:	42
(a) The parent is currently employed or self-employed;	43
(b) The parent is currently attending an accredited education or train-	44
ing program; or	45
(c) The parent is receiving child welfare preventative services from	46
the department.	47

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(2) The following restrictions shall apply to training or education ac-	1
tivities:	2
(a) Online classes shall not be counted as a qualifying activity under	3
this chapter;	4
(b) Persons who are attending postbaccalaureate classes with no other	5
qualifying activity shall not qualify for assistance under this chap-	6
ter; and	7
(c) No more than forty-eight (48) months of postsecondary education	8
shall count as a qualifying activity.	9
56-2504. APPLICATION -- ELIGIBILITY -- REDETERMINATION. (1) A family	10
who lives within the state of Idaho with no immediate intention of leaving	11
the state may apply to be considered for assistance under this chapter for an	12
eligible child.	13
(2) An applicant's family assets cannot exceed one million dollars	14
($1,000,000).	15
(3) When applying, a family's income cannot exceed one hundred fifty-	16
five percent (155%) of FPG for a family of the same size.	17
(4) During the eligibility period, a family's income cannot exceed	18
eighty-five percent (85%) of the SMI for a family of the same size.	19
(5) At least every twelve (12) months, the department shall redeter-	20
mine eligibility for assistance under this chapter. At redetermination, if	21
a family's income exceeds one hundred fifty-five percent (155%) but is less	22
than one hundred seventy percent (170%) of FPG for a family of the same size,	23
the family may be eligible to receive a graduated phaseout of child care as-	24
sistance that is limited to up to twelve (12) months of assistance following	25
the completion of redetermination.	26
56-2505. AUTHORITY TO CREATE A WAITING LIST AND ADJUST ELIGIBIL-	27
ITY. (1) As necessary to administer the program, the department may estab-	28
lish a waiting list for the program. If the department establishes a waiting	29
list, the department shall give priority to the following categories:	30
(a) Families who are homeless;	31
(b) Families caring for a child with a disability;	32
(c) Foster families;	33
(d) Families receiving temporary assistance for needy families from	34
the department;	35
(e) Families receiving any child welfare preventative services from	36
the department designed to reduce or eliminate the need for out-of-home	37
placement of a child by the department; and	38
(f) Households where at least one (1) parent is nineteen (19) years of	39
age or younger.	40
(2) Notwithstanding the provisions of section 56-269, Idaho Code, the	41
department may, by administrative rule, subject to legislative approval,	42
adjust the asset cap, the FPG percentage cap, the SMI percentage cap, or	43
the length of graduated phaseout after determination, as long as any such	44
adjustments comply with federal law, do not exceed the statutory maximums	45
established in section 56-2504, Idaho Code, and do not cause the program to	46
exceed its appropriation.	47

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56-2506. REQUIREMENTS FOR PROVIDERS. (1) Providers who receive assis-	1
tance on behalf of eligible children under this chapter shall enter into and	2
abide by the terms of a provider agreement with the department and shall gen-	3
erate documentation at the time of service sufficient to support the reim-	4
bursement for child care services. Providers are required to keep the fol-	5
lowing child care records:	6
(a) Proof of attendance each day with authentication of a parent,	7
guardian, or preapproved designee dropping off and retrieving each	8
child;	9
(b) Billing and receipts;	10
(c) Policies or manuals developed by the provider governing procedures	11
for billing, attendance, copayment collection, operating hours, and	12
signing a child into and out of child care;	13
(d) All rates, fees, and costs of any kind charged by the provider; and	14
(e) Any other related records required by the department.	15
(2) The department shall be permitted access at any time of business op-	16
erations to the child care facilities of a provider who is receiving assis-	17
tance on behalf of an eligible child and to monitor and inspect the facility.	18
The department shall be permitted to access, inspect, review, copy, or re-	19
move any child care records required by this chapter. A provider shall im-	20
mediately produce records or provide access upon request by the department.	21
Records required by this section shall be kept available by the child care	22
facility at all times for a minimum of three (3) years.	23
(3) Any business entity or individual providing child care who is re-	24
ceiving assistance on behalf of an eligible child under this chapter shall be	25
registered as a business entity with the Idaho secretary of state.	26
(4) A provider shall receive payment for assistance on behalf of an eli-	27
gible child only after substantiating child care attendance and documenting	28
legitimate services provided in a manner and on a cadence prescribed by the	29
department.	30
(5) A provider is prohibited from paying, directly or indirectly or	31
overtly or covertly, for an eligible child to attend the provider's child	32
care facility.	33
(6) Providers are responsible for ensuring families pay the determined	34
child care costs and may not waive these costs.	35
(7) Providers receiving assistance on behalf of an eligible child shall	36
not be considered employees of the department and shall not hold themselves	37
out as employees of the department by virtue of their participation in the	38
program.	39
56-2507. PROGRAM INTEGRITY. (1) When the department has reasonable	40
suspicion to believe that a provider seeks payment on behalf of an eligible	41
child in a manner contrary to state or federal law, the department is autho-	42
rized to immediately suspend payment and conduct an investigation. Reasons	43
to suspend payment include but are not limited to:	44
(a) Any claims for child care services for which the department has a	45
reasonable suspicion were not provided;	46
(b) Child care services not documented by the provider as required by	47
law or the provider agreement;	48

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(c) Child care services provided contrary to state or federal law or the	1
provider agreement;	2
(d) Failure to maintain records or provide immediate access to records	3
as required by law;	4
(e) The department believes a provider is paying for an eligible child	5
to attend the provider's child care facility in violation of law or the	6
provider agreement; or	7
(f) The department has determined that an intentional program viola-	8
tion has occurred and has provided notice of this determination.	9
(2) If the department determines that an intentional program violation	10
has occurred, the department shall send written notice of the determination	11
to the family or provider stating the reasons for the determination. The	12
decision of the department may be appealed to the office of administrative	13
hearings within twenty-eight (28) days of the date of the issuance of the no-	14
tice to the family or provider. The department may continue any suspension	15
of payment for the duration of the administrative appeal.	16
(a) The office of administrative hearings shall, within twenty-eight	17
(28) days of receipt of the appeal, review the full record regarding the	18
department's decision and hold a hearing. After the hearing, the ad-	19
ministrative law judge shall submit a written recommendation to the de-	20
partment and the family or provider. The recommendation by the adminis-	21
trative law judge either to affirm or reverse the department's decision	22
shall be based on the full record of the department's decision and rel-	23
evant state and federal law. The recommendation by the administrative	24
law judge shall be in writing and accompanied by a reasoned opinion.	25
(b) Within twenty-eight (28) days following the issuance of the hear-	26
ing officer's written recommendation, the department shall either af-	27
firm or reverse its initial decision.	28
(c) If, upon reconsideration of its initial decision, the department:	29
(i) Affirms its initial decision, the family or provider may ap-	30
peal pursuant to chapter 52, title 67, Idaho Code; or	31
(ii) Reverses its initial decision, then there shall be no fur-	32
ther appeal and payments shall resume, including back payments.	33
(3) An intentional program violation is established when a family or	34
provider admits the violation in writing and waives any right to a hearing	35
or appeal pursuant to this section or when determined by the department pur-	36
suant to this section. The consequences the department may impose for fraud	37
or any established intentional program violations are as follows:	38
(a) Any family or provider who is established to have committed an in-	39
tentional program violation shall be ineligible for the program for no	40
less than one (1) year but up to a period of three (3) years, as deter-	41
mined by the department.	42
(b) Any family or provider who is established to have committed a second	43
intentional program violation shall be ineligible for the program for a	44
period of no less than two (2) years but up to a period of five (5) years,	45
as determined by the department.	46
(c) Any family or provider who is established to have committed a third	47
or subsequent intentional program violation shall be permanently inel-	48
igible for the program.	49

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(4) When the department establishes an intentional program violation,	1
it shall verify that any other benefits an individual receives pursuant to	2
this title strictly conform with state and federal law.	3
(5) For a first violation of the provisions of this subsection, the	4
department may exercise the authority granted pursuant to section 56-209h,	5
Idaho Code, to terminate a provider agreement or otherwise deny provider	6
status for up to five (5) years. Any termination for a second or subsequent	7
violation shall be for a minimum period of five (5) years up to permanent	8
ineligibility for the program, in the discretion of the department. The	9
department may terminate provider status for any provider who:	10
(a) Submits a claim with knowledge the claim is incorrect;	11
(b) Submits a fraudulent claim;	12
(c) Knowingly makes a false statement or representation of material	13
facts in any document required to be maintained or submitted to the de-	14
partment;	15
(d) Fails repeatedly or substantially to comply with relevant federal	16
law, this chapter, or any rules promulgated under this chapter;	17
(e) Knowingly violates any material term or condition of the provider	18
agreement;	19
(f) Has failed to repay, or was a managing entity or had an ownership	20
or control interest in any entity that has failed to repay, any overpay-	21
ments or claims previously found to have been obtained contrary to rel-	22
evant federal law, this chapter or the rules promulgated thereunder, or	23
the provider agreement;	24
(g) Has been found, or was a managing employee in any entity that has	25
been found, to have engaged in fraudulent conduct or abusive conduct; or	26
(h) Fails to meet the qualifications specifically required in relevant	27
state or federal law, including chapter 11, title 39, Idaho Code, for	28
providers licensed pursuant to that chapter.	29
(6) The department may refuse to enter into a provider agreement when:	30
(a) The provider has been convicted of a felony offense;	31
(b) The provider has failed to repay the department moneys that had been	32
previously determined to have been owed to the department;	33
(c) The provider has a pending investigation for program fraud or	34
abuse;	35
(d) The provider was the managing employee, officer, or owner of an en-	36
tity whose provider agreement was terminated pursuant to subsection (5)	37
of this section; or	38
(e) The provider has a current exclusion from participation in federal	39
programs by the department of health and human services office of the	40
inspector general list of excluded individuals and entities.	41
(7) For any overpayment to a provider for assistance on behalf of an	42
eligible child, the department is authorized to recoup or recover the full	43
amount of overpayment. Interest shall accrue on overpayments at the statu-	44
tory rate established in section 28-22-104, Idaho Code, from the date of the	45
final determination of overpayment; provided, however, interest shall not	46
accrue on overpayments made due to department error. Any overpayment due to	47
family or provider error, intentional program violation, or fraud shall be	48
recovered in full.	49

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(8) Department authorities provided pursuant to this section shall not	1
be construed to limit any other authorities available to the department in	2
other relevant state or federal law to prevent or respond to fraud, waste, or	3
abuse and ensure program integrity.	4
(9) The department is authorized to collaborate with local, state, and	5
federal law enforcement to ensure providers and families comply with state	6
and federal law and to aid in the prosecution of any criminal violations of	7
the law arising from the program.	8
(10) The department may promulgate administrative rules, subject to	9
legislative approval, to prevent fraud, waste, or abuse in the program and to	10
ensure program integrity.	11
56-2508. PROGRAM OVERSIGHT. (1) The department shall, for the pur-	12
poses of executing section 56-2507, Idaho Code, implement a fraud detection	13
and remediation system no later than July 1, 2027, that shall assist in	14
detecting, preventing, and deterring fraud, waste, and abuse in the Idaho	15
child care program.	16
(2) The system shall assess relative risk using statistical and expert-	17
defined analytical models to support the prioritization of cases for review	18
and investigation and to prevent fraudulent applications. The system shall	19
be capable of incorporating predictive analytics or machine learning tech-	20
niques that improve risk assessment over time based on reviewed cases and	21
documented outcomes, while remaining subject to agency oversight. If any	22
payments to a provider through the program are deemed improper due to error	23
and not suspected fraud, the department shall notify the provider for the	24
specific basis for suspension. The department shall provide the child care	25
program with technical assistance in addressing any reporting errors. The	26
analysis required by this subsection shall include, at a minimum, the fol-	27
lowing data domains:	28
(a) Enrollment and attendance patterns;	29
(b) Billing and reimbursement data;	30
(c) Provider profiles and ownership structures;	31
(d) Licensing status, inspection history, and compliance records;	32
(e) Family eligibility and redetermination data;	33
(f) Historical audit or investigation outcomes; and	34
(g) Cross-program or cross-agency data, as permitted by law.	35
(3) The system shall include functionality to support agency staff in	36
reviewing, investigating, documenting, and tracking the resolution of iden-	37
tified risks, including the ability to record findings, actions taken, and	38
outcomes. The system may also support the temporary suspension or pausing of	39
payments associated with identified cases or entities during the pendency of	40
an investigation, in accordance with agency policy and applicable law, and	41
subject to human review, approval, and oversight.	42
(4) The system shall track relevant data through technology platforms,	43
including but not limited to:	44
(a) CCMS, in order to monitor digitally or manually submitted atten-	45
dance records submitted by a parent upon drop off and pick up of an eli-	46
gible child;	47
(b) Child care finder, in order to incorporate publicly available	48
provider data, such as:	49

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(i) Cost of service;	1
(ii) Subsidy eligibility of program;	2
(iii) Vacancies; and	3
(iv) Hours of operation;	4
(c) Licensing management, in order to incorporate agency-accessible	5
provider data, such as:	6
(i) Licensed capacity; and	7
(ii) Current violations; and	8
(d) Subsidy management, in order to incorporate agency-accessible data	9
relevant to subsidy program payment processing and all provider-rele-	10
vant data necessary for payment receipt, such as:	11
(i) Total subsidy payment amount to provider;	12
(ii) Overpayment tracking; and	13
(iii) Historical tracking of subsidy receipts by provider.	14
(5) In the department's discretion, in order for the functionality of	15
the fraud detection and remediation system, the department shall procure all	16
required programs and services through a single vendor in order to support	17
program integrity through technology modernization.	18
(6) For the purpose of executing this section, if any necessary exist-	19
ing program or software platforms are not capable of tracking and sharing	20
necessary information to enable program oversight, the department shall im-	21
plement new technology solutions, including but not limited to:	22
(a) CCMS or application programming interface with commercially avail-	23
able CCMS;	24
(b) Child care finder;	25
(c) Licensing management;	26
(d) Subsidy management; and	27
(e) Any additional relevant technology management solutions.	28
(7) Any data collected or monitored in order to execute this section	29
shall be done solely for program administration and integrity. No data shall	30
be sold, shared, or used for unrelated enforcement purposes without express	31
written consent from relevant parties. Any personally identifiable infor-	32
mation shall be protected in accordance with federal law.	33
(8) Any and all detection through this system shall not be used to es-	34
tablish guilt absent corroborating evidence reviewed and provided by the de-	35
partment.	36
(9) Any new technology management solutions deemed necessary by the	37
department shall be procured from a vendor, as defined in section 56-2501,	38
Idaho Code.	39
56-2509. PROGRAM VENDOR. The department shall select a vendor that	40
shall be responsible for creating up to six hundred (600) licensed child care	41
programs. Such vendor shall have experience in deploying technology that	42
does all of the following:	43
(1) Facilitates the recruitment and support of prospective providers;	44
(2) Supports providers in business planning and implementation; and	45
(3) Demonstrates the ability to execute both in-person and virtual	46
provider recruitment events in high-need areas.	47

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56-2510. CONSTRUCTION. Nothing in this chapter shall be construed to	1
create a right or entitlement to any assistance or benefit to any child, par-	2
ent, family, or provider.	3
56-2511. AUTHORITY OF THE ATTORNEY GENERAL. When the department en-	4
gages the attorney general, he is authorized to exercise concurrent inves-	5
tigative and prosecutorial authority and responsibility with county prose-	6
cutors to:	7
(1) Prosecute persons for the violation of the criminal provisions of	8
chapter 2, title 56, Idaho Code, that involve or are directly related to this	9
program; and	10
(2) Prosecute persons for criminal offenses that are not defined in	11
chapter 2, title 56, Idaho Code, but that involve or are directly related to	12
this program.	13
56-2512. STATE PLAN -- LEGISLATIVE APPROVAL REQUIRED. (1) The depart-	14
ment shall submit a revised and updated state plan for the program, which	15
shall be consistent with the provisions of this chapter, by October 1, 2026.	16
(2) After the updated state plan is submitted pursuant to subsection	17
(1) of this section, the department shall not seek or implement a state plan	18
amendment for the program that would expand benefits to any additional indi-	19
viduals or class of individuals or would increase any net cost to the state	20
without first obtaining approval from the legislature. Such approval must	21
be provided in statute and, to be effective, must be listed in this chapter.	22
56-2513. USE OF FUNDS FOR CAPACITY BUILDING. Any appropriation to the	23
program for capacity building through contracted spots, grants, or sub-	24
grants shall give first priority to family child care, relative child care,	25
group child care, after-school child care, child care provided by a non-	26
profit corporation with a board of directors acting as fiduciary, or child	27
care services managed through vendors as defined in section 56-2501, Idaho	28
Code, and addressing child care for underserved populations as defined in	29
the state plan.	30
SECTION 2. That Section 39-1111, Idaho Code, be, and the same is hereby	31
amended to read as follows:	32
39-1111. RULES AUTHORIZED. In order to implement the provisions of	33
this chapter, the department, in addition to other duties imposed by law,	34
is hereby authorized and directed through rulemaking may promulgate rules,	35
subject to legislative approval, to establish procedures necessary to im-	36
plement the provisions of this chapter including procedure for submission	37
of required certificates as provided in sections 39-1109 and 39-1110, Idaho	38
Code, and to conduct the criminal history check provided in section 39-1105,	39
Idaho Code. The rulemaking authority granted in this section shall be lim-	40
ited to the specific standards and procedures required by this chapter. The	41
department shall seek to move all necessary rules into this chapter by July	42
1, 2026.	43

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SECTION 3. An emergency existing therefor, which emergency is hereby	1
declared to exist, this act shall be in full force and effect on and after its	2
passage and approval.	3

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