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. 1419 BY STATE AFFAIRS COMMITTEE AN ACT1 RELATING TO THE IDAHO CHILD CARE PROGRAM; AMENDING TITLE 56, IDAHO CODE, BY2 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 ESTABLISH5 PROVISIONS REGARDING APPLICATION, ELIGIBILITY, AND REDETERMINATION,6 TO PROVIDE AUTHORITY TO CREATE A WAITING LIST AND ADJUST ELIGIBILITY, TO7 ESTABLISH PROVISIONS REGARDING REQUIREMENTS FOR PROVIDERS, TO ESTAB-8 LISH PROVISIONS REGARDING PROGRAM INTEGRITY, TO ESTABLISH PROVISIONS9 REGARDING PROGRAM OVERSIGHT, TO ESTABLISH PROVISIONS REGARDING CON-10 STRUCTION, TO ESTABLISH PROVISIONS REGARDING AUTHORITY OF THE ATTORNEY11 GENERAL, TO ESTABLISH PROVISIONS REGARDING THE STATE PLAN AND LEGISLA-12 TIVE APPROVAL REQUIREMENTS, TO PROVIDE THAT THE DEPARTMENT SHALL ISSUE13 A REQUEST FOR INFORMATION, TO ESTABLISH PROVISIONS REGARDING ADMIN-14 ISTRATIVE RULES, AND TO ESTABLISH PROVISIONS REGARDING USE OF FUNDS15 FOR CAPACITY BUILDING; AMENDING SECTION 39-1111, IDAHO CODE, TO REVISE16 PROVISIONS REGARDING ADMINISTRATIVE RULES; PROVIDING THAT CERTAIN AD-17 MINISTRATIVE RULES CONTAINED IN IDAPA 16.06.12 SHALL BE NULL, VOID, AND18 OF NO FORCE AND EFFECT; PROVIDING A SUNSET DATE; AND DECLARING AN EMER-19 GENCY.20

Be It Enacted by the Legislature of the State of Idaho:21

SECTION 1. That Title 56, Idaho Code, be, and the same is hereby amended22 by the addition thereto of a NEW CHAPTER, to be known and designated as Chap-23 ter 25, Title 56, Idaho Code, and to read as follows:24 CHAPTER 2525 IDAHO CHILD CARE PROGRAM26 56-2501. DEFINITIONS. As used in this chapter:27 (1) "Child care" means care, control, supervision, or maintenance of a28 child provided for compensation by an individual, other than a parent of the29 child, for less than twenty-four (24) hours in a day.30 (2) "Department" means the Idaho department of health and welfare.31 (3) "Eligible child" means a child under thirteen (13) years of age who32 is either a citizen of or lawfully living in the United States. However, a33 child who is thirteen (13) years of age or older remains eligible if the child34 is under court supervision or is verified by either a mental health profes-35 sional or licensed medical professional to be physically or mentally unable36 to care for himself.37 (4) "FPG" means the federal poverty guidelines published annually by38 the United States department of health and human services.39 (5) "Intentional program violation" means an intentionally false or40 misleading action or statement that is one (1) of the following:41

2 (a) An individual makes a false or misleading statement to the depart-1 ment, either orally or in writing, in order to participate in the pro-2 gram;3 (b) An individual misrepresents or conceals one (1) or more facts to the4 department, either orally or in writing, to participate in the program;5 (c) An individual fails repeatedly or substantially to comply with rel-6 evant state or federal laws or rules promulgated under this chapter;7 (d) An individual knowingly violates any term of the individual's8 provider agreement; or9 (e) A provider knowingly fails to meet the qualifications specifically10 required in relevant federal law, in this chapter, in chapter 11, title11 39, Idaho Code, or the rules promulgated under any of the forgoing laws.12 (6) "Parent" means a person responsible for a child because of birth,13 adoption, marriage, legal guardianship, or foster care.14 (7) "Program" means the Idaho child care program.15 (8) "Provider" means an individual, organization, agency, or other en-16 tity providing child care.17 (9) "SMI" means the current state median income estimates determined18 for the low income home energy assistance program.19 56-2502. CREATION OF PROGRAM. There is hereby created in the depart-20 ment the Idaho child care program, which, subject to legislative appro-21 priation, shall use federal child care funds distributed to the states, as22 well as any related state matching funds and maintenance-of-effort funds,23 to improve the quality of child care in Idaho for all children and assist24 low-income families in Idaho who are working or participating in education25 or training activities with help paying for child care, to promote parental26 choice to empower working parents to make decisions regarding the child care27 services that best suit the needs of individual families, and to maximize28 options available to parents. The department shall administer the program29 in a manner consistent with this chapter and with all applicable federal30 requirements.31 56-2503. PARENT QUALIFYING ACTIVITIES. (1) Parents in a child's32 household must participate in qualifying activities as provided in this sub-33 section to be eligible for assistance under this chapter:34 (a) For a two (2) parent household:35 (i) At least one (1) parent is employed or self-employed no less36 than an average of thirty (30) hours per week per month; and37 (ii) The other parent is either:38 1. Employed no less than an average of twenty (20) hours per39 week per month; or40 2. Enrolled and participating in a recognized or accredited41 school, training program, or institution of higher educa-42 tion for a minimum of twenty (20) hours each week, as deter-43 mined by the department; or44 (b) For a one (1) parent household, which shall include a household45 where the parent is under eighteen (18) years of age and is not the head46 of the household:47

3 (i) The parent is employed or self-employed no less than an aver-1 age of thirty (30) hours per week per month; or2 (ii) The parent is enrolled and participating in a recognized or3 accredited school, training program, or institution of higher ed-4 ucation for a minimum of twenty (20) hours each week, as determined5 by the department.6 (2) In a two (2) parent household, an incapacitated parent is not re-7 quired to participate in a qualifying activity pursuant to subsection (1) of8 this section if the other parent participates in a qualifying activity. An9 incapacitated parent in a one (1) parent household is not eligible for the10 program. As used in this subsection, "incapacitated parent" means a parent11 who is determined by a physician, physician assistant, nurse practitioner,12 or clinical nurse specialist licensed under the laws of this state to be un-13 fit, incapable, or significantly limited in the ability to provide adequate14 care for the child or ward. A parent's disability diagnosis alone does not15 qualify a parent as incapacitated without the licensed provider making the16 findings required by this subsection.17 (3) The following restrictions shall apply to training or education ac-18 tivities:19 (a) Online classes shall not be counted as a qualifying activity under20 this chapter;21 (b) Persons who are attending postbaccalaureate classes with no other22 qualifying activity shall not qualify for assistance under this chap-23 ter; and24 (c) No more than forty-eight (48) months of postsecondary education25 shall count as a qualifying activity.26 56-2504. APPLICATION -- ELIGIBILITY -- REDETERMINATION. (1) A family27 who resides in the state of Idaho with no immediate intention of leaving the28 state may apply to be considered for assistance under this chapter for an el-29 igible child.30 (2) An applicant's family assets cannot exceed five hundred thousand31 dollars ($500,000), as certified by the applicant.32 (3) When applying, a family's income cannot exceed one hundred thirty-33 five percent (135%) of FPG for a family of the same size.34 (4) During the eligibility period, a family's income cannot exceed35 eighty-five percent (85%) of the SMI for a family of the same size.36 (5) At least every twelve (12) months, the department shall redeter-37 mine eligibility for assistance under this chapter. At redetermination, if38 a family's income exceeds one hundred thirty-five percent (135%) but is less39 than one hundred seventy percent (170%) of FPG for a family of the same size,40 the family may be eligible to receive a graduated phaseout of child care as-41 sistance that is limited to up to twelve (12) months of assistance following42 the completion of redetermination.43 56-2505. AUTHORITY TO CREATE A WAITING LIST AND ADJUST ELIGIBIL-44 ITY. (1) As necessary to administer the program, the department may estab-45 lish a waiting list for the program. If the department establishes a waiting46 list, the department shall give priority to the following categories:47 (a) Families who are homeless;48

4 (b) Families caring for a child with a disability;1 (c) Foster families;2 (d) Families receiving temporary assistance for needy families from3 the department;4 (e) Families receiving any child welfare preventative services from5 the department designed to reduce or eliminate the need for out-of-home6 placement of a child by the department; and7 (f) Households where at least one (1) parent is nineteen (19) years of8 age or younger.9 56-2506. REQUIREMENTS FOR PROVIDERS. (1) Providers who receive assis-10 tance on behalf of eligible children under this chapter shall enter into and11 abide by the terms of a provider agreement with the department and shall gen-12 erate documentation at the time of service sufficient to support the reim-13 bursement for child care services. Providers are required to keep the fol-14 lowing child care records:15 (a) Proof of enrollment for each eligible child, with authentication of16 a parent;17 (b) Proof of attendance each day with authentication of a parent,18 guardian, or preapproved designee dropping off and retrieving each19 child;20 (c) Billing and receipts;21 (d) Policies or manuals developed by the provider governing procedures22 for billing, attendance, attendance and enrollment tracking and veri-23 fication, copayment collection, and operating hours;24 (e) All rates, fees, and costs of any kind charged by the provider; and25 (f) Any other related records required by the department for adminis-26 tration of the program.27 (2) The department shall be permitted access at any time of business op-28 erations to the child care facilities of a provider who is receiving assis-29 tance on behalf of an eligible child and to monitor and inspect the facility.30 The department shall be permitted to access, inspect, review, copy, or re-31 move any child care records required by this chapter. A provider shall im-32 mediately produce records or provide access upon request by the department.33 Records required by this section shall be kept available by the child care34 facility at all times for a minimum of three (3) years.35 (3) Any business entity or individual providing child care who is re-36 ceiving assistance on behalf of an eligible child under this chapter shall be37 registered as a business entity with the Idaho secretary of state.38 (4) A provider shall receive payment for assistance on behalf of an eli-39 gible child only after substantiating child care attendance and documenting40 legitimate services provided in a manner and on a cadence prescribed by the41 department.42 (5) A provider is prohibited from paying, directly or indirectly or43 overtly or covertly, for an eligible child to attend the provider's child44 care facility.45 (6) Providers are responsible for ensuring families pay the determined46 child care costs and may not waive these costs.47 (7) Providers receiving assistance on behalf of an eligible child shall48 not be considered employees of the department and shall not hold themselves49

5 out as employees of the department by virtue of their participation in the1 program.2 (8) If a provider is an individual, the provider must be either a citi-3 zen of or lawfully living in the United States. If the provider is a business4 entity, the provider must not knowingly hire or employ an employee who is not5 either a citizen of or lawfully living in the United States.6 (9) A provider who is receiving assistance on behalf of an eligible7 child under this chapter shall develop policies, procedures, and controls8 to govern fiscal responsibility. A provider operating a daycare center, as9 defined in 39-1102, Idaho Code, shall:10 (a) In the case of a nonprofit provider, cause an annual financial audit11 to be conducted; or12 (b) In the case of a for-profit provider, adhere to generally accepted13 accounting principles and maintain financial statements and documenta-14 tion of business-related expenses.15 56-2507. PROGRAM INTEGRITY. (1) When the department has reasonable16 suspicion to believe that a provider seeks payment on behalf of an eligible17 child in a manner contrary to state or federal law, the department is autho-18 rized to immediately suspend payment and conduct an investigation. Reasons19 to suspend payment include but are not limited to:20 (a) Any claims for child care services for which the department has a21 reasonable suspicion were not provided;22 (b) Child care services not documented by the provider as required by23 law or the provider agreement;24 (c) Child care services provided contrary to state or federal law or the25 provider agreement;26 (d) Failure to maintain records or provide immediate access to records27 as required by law;28 (e) The department believes a provider is paying for an eligible child29 to attend the provider's child care facility in violation of law or the30 provider agreement; or31 (f) The department has determined that an intentional program viola-32 tion has occurred and has provided notice of this determination.33 (2) If the department determines that an intentional program violation34 has occurred, the department shall send written notice of the determination35 to the family or provider stating the reasons for the determination. The36 decision of the department may be appealed to the office of administrative37 hearings within twenty-eight (28) days of the date of the issuance of the no-38 tice to the family or provider. The department may continue any suspension39 of payment for the duration of the administrative appeal.40 (a) The office of administrative hearings shall, within twenty-eight41 (28) days of receipt of the appeal, review the full record regarding the42 department's decision and hold a hearing. After the hearing, the ad-43 ministrative law judge shall submit a written recommendation to the de-44 partment and the family or provider. The recommendation by the adminis-45 trative law judge either to affirm or reverse the department's decision46 shall be based on the full record of the department's decision and rel-47 evant state and federal law. The recommendation by the administrative48 law judge shall be in writing and accompanied by a reasoned opinion.49

6 (b) Within twenty-eight (28) days following the issuance of the hear-1 ing officer's written recommendation, the department shall either af-2 firm or reverse its initial decision.3 (c) If, upon reconsideration of its initial decision, the department:4 (i) Affirms its initial decision, the family or provider may ap-5 peal pursuant to chapter 52, title 67, Idaho Code; or6 (ii) Reverses its initial decision, then there shall be no fur-7 ther appeal and payments shall resume, including back payments.8 (3) An intentional program violation is established when a family or9 provider admits the violation in writing and waives any right to a hearing10 or appeal pursuant to this section or when determined by the department pur-11 suant to this section. The consequences the department may impose for fraud12 or any established intentional program violations are as follows:13 (a) Any family or provider who is established to have committed an in-14 tentional program violation shall be ineligible for the program for no15 less than one (1) year but up to a period of three (3) years, as deter-16 mined by the department.17 (b) Any family or provider who is established to have committed a second18 intentional program violation shall be ineligible for the program for a19 period of no less than two (2) years but up to a period of five (5) years,20 as determined by the department.21 (c) Any family or provider who is established to have committed a third22 or subsequent intentional program violation shall be permanently inel-23 igible for the program.24 (4) When the department establishes an intentional program violation,25 it shall verify that any other benefits an individual receives pursuant to26 this title strictly conform with state and federal law.27 (5) For a first violation of the provisions of this subsection, the28 department may exercise the authority granted pursuant to section 56-209h,29 Idaho Code, to terminate a provider agreement or otherwise deny provider30 status for up to five (5) years. Any termination for a second or subsequent31 violation shall be for a minimum period of five (5) years up to permanent32 ineligibility for the program, in the discretion of the department. The33 department may terminate provider status for any provider who:34 (a) Submits a claim with knowledge the claim is incorrect;35 (b) Submits a fraudulent claim;36 (c) Knowingly makes a false statement or representation of material37 facts in any document required to be maintained or submitted to the de-38 partment;39 (d) Fails repeatedly or substantially to comply with relevant federal40 law, this chapter, or any rules promulgated under this chapter;41 (e) Knowingly violates any material term or condition of the provider42 agreement;43 (f) Has failed to repay, or was a managing entity or had an ownership44 or control interest in any entity that has failed to repay, any overpay-45 ments or claims previously found to have been obtained contrary to rel-46 evant federal law, this chapter or the rules promulgated thereunder, or47 the provider agreement;48 (g) Has been found, or was a managing employee in any entity that has49 been found, to have engaged in fraudulent conduct or abusive conduct;50

7 (h) Fails to meet the qualifications specifically required in relevant1 state or federal law, including chapter 11, title 39, Idaho Code, for2 providers licensed pursuant to that chapter; or3 (i) Knowingly hires or employs an employee who is not either a citizen4 of or lawfully living in the United States, if the provider is a business5 entity.6 (6) The department may refuse to enter into a provider agreement when:7 (a) The provider has been convicted of a felony offense;8 (b) The provider has failed to repay the department moneys that had been9 previously determined to have been owed to the department;10 (c) The provider has a pending investigation for program fraud or11 abuse;12 (d) The provider was the managing employee, officer, or owner of an en-13 tity whose provider agreement was terminated pursuant to subsection (5)14 of this section; or15 (e) The provider has a current exclusion from participation in federal16 programs by the department of health and human services office of the17 inspector general list of excluded individuals and entities.18 (7) For any overpayment to a provider for assistance on behalf of an19 eligible child, the department is authorized to recoup or recover the full20 amount of overpayment. Interest shall accrue on overpayments at the statu-21 tory rate established in section 28-22-104, Idaho Code, from the date of the22 final determination of overpayment; provided, however, interest shall not23 accrue on overpayments made due to department error. Any overpayment due to24 family or provider error, intentional program violation, or fraud shall be25 recovered in full.26 (8) Department authorities provided pursuant to this section shall not27 be construed to limit any other authorities available to the department in28 other relevant state or federal law to prevent or respond to fraud, waste, or29 abuse and ensure program integrity.30 (9) The department is authorized to collaborate with local, state, and31 federal law enforcement to ensure providers and families comply with state32 and federal law and to aid in the prosecution of any criminal violations of33 the law arising from the program.34 (10) The department may promulgate administrative rules, subject to35 legislative approval, to prevent fraud, waste, or abuse in the program and to36 ensure program integrity.37 (11) The department shall submit a report to the legislature by November38 1 of each year containing relevant results from the program integrity mea-39 sures implemented in this section. The first report in compliance with this40 subsection shall include information about the program dating back to 201941 through the current year and any relevant findings.42 56-2508. PROGRAM OVERSIGHT. The department shall, for the purposes43 of carrying out the provisions of section 56-2507, Idaho Code, implement44 a fraud detection and remediation system that shall assist in detecting,45 preventing, and deterring fraud, waste, and abuse in the Idaho child care46 program.47

8 56-2509. CONSTRUCTION. Nothing in this chapter shall be construed to1 create a right or entitlement to any assistance or benefit to any child, par-2 ent, family, or provider.3 56-2510. AUTHORITY OF THE ATTORNEY GENERAL. The department shall re-4 fer criminal violations of state law that involve or are directly related to5 this program to the attorney general. When the department refers a case to6 the attorney general, he is authorized to exercise concurrent investigative7 and prosecutorial authority and responsibility with county prosecutors to:8 (1) Prosecute persons for the violation of the criminal provisions of9 chapter 2, title 56, Idaho Code, that involve or are directly related to this10 program; and11 (2) Prosecute persons for criminal offenses that are not defined in12 chapter 2, title 56, Idaho Code, but that involve or are directly related to13 this program.14 56-2511. STATE PLAN -- LEGISLATIVE APPROVAL REQUIRED. (1) The depart-15 ment shall not seek or implement a state plan amendment for the program that16 would expand benefits to any additional individuals or class of individuals17 or would increase any net cost to the state without obtaining approval from18 the legislature. Such approval must be provided in statute and, to be effec-19 tive, must be listed in this chapter.20 (2) The department shall prepare and submit to the legislature by21 November 1, 2026, a report containing a proposed state plan amendment for22 the program that shall be consistent with the provisions of this chapter23 and federal law. If approved as required by subsection (1) of this section,24 the department shall submit the state plan amendment to the United States25 department of health and human services.26 56-2512. REQUEST FOR INFORMATION. The department shall issue a formal27 request for information on available child care program integrity and over-28 sight tools and technology and associated costs. As used in this section,29 program integrity and oversight includes platforms that support child care30 providers through training, professional development, and scholarships,31 while also helping families find child care, and that promote program in-32 tegrity. The department shall prepare and submit a summary report to the33 legislature no later than November 1, 2026, on available options.34 56-2513. ADMINISTRATIVE RULES. The department shall seek to move all35 necessary rules related to the provisions of this chapter into this chapter36 and eliminate any existing rules that are duplicative or conflicting with37 the provisions of this chapter by July 1, 2027.38 56-2514. USE OF FUNDS FOR CAPACITY BUILDING. Any appropriation to39 the program for capacity building through contracts, grants, or subgrants40 shall prioritize populations as outlined in section 4.5.4 of the Idaho child41 care and development fund plan to include infants and toddlers, children in42 underserved geographic areas, children with disabilities, children who re-43 ceive care during non-traditional hours, and school-aged children that meet44 one (1) or more of the preceding criteria. Capacity building funds shall45

9 also be prioritized for providers serving children who are in foster care1 or who are homeless. Qualifying providers may be licensed, non-licensed,2 or license-exempt. Any provider the department is investigating or has re-3 ferred to a county prosecutor, to the office of the attorney general, or to4 the United States attorney's office for prosecution of fraud or misuse of5 public funds shall not be eligible for provider capacity building funds.6

SECTION 2. That Section 39-1111, Idaho Code, be, and the same is hereby7 amended to read as follows:8 39-1111. RULES AUTHORIZED. In order to implement the provisions of9 this chapter, the department, in addition to other duties imposed by law,10 is hereby authorized and directed through rulemaking may promulgate rules,11 subject to legislative approval, to establish procedures necessary to im-12 plement the provisions of this chapter including procedure for submission13 of required certificates as provided in sections 39-1109 and 39-1110, Idaho14 Code, and to conduct the criminal history check provided in section 39-1105,15 Idaho Code. The rulemaking authority granted in this section shall be lim-16 ited to the specific standards and procedures required by this chapter. The17 department shall seek to move all necessary rules into this chapter by July18 1, 2026 2027.19

SECTION 3. The rules contained in IDAPA 16.06.12, Department of Health20 and Welfare, relating to Idaho Child Care Program, shall be null, void, and21 of no force and effect on and after the effective date of this act.22

SECTION 4. The provisions of Section 1 of this act shall be null, void,23 and of no force and effect on and after July 1, 2028.24

SECTION 5. An emergency existing therefor, which emergency is hereby25 declared to exist, this act shall be in full force and effect on and after its26 passage and approval.27