Nebraska governor, lawmakers celebrate permanent extension of childcare subsidy eligibility

Nebraska Gov. Jim Pillen was accompanied by lawmakers on Tuesday for the ceremonial signing of a law that eliminates a sunset date for expanded eligibility for federal childcare subsidies.

The subsidies provide vouchers to families to pay some or all of the cost of childcare. Nebraska passed a law to temporarily increase household income eligibility for the subsidies in 2021, which raised the eligibility threshold from 130% of the federal poverty level to 185%. For a family of four, that equates to raising the income cap from about $42,000 per year to $61,050 per year.

That increase was set to expire on Oct. 1.

LB304 eliminated the sunset date and made the 185% threshold permanent. The law passed final reading on a 43-6 vote.

Pillen and State Sens. Wendy DeBoer, a Democrat, and Brad Von Gillern, a Republican, all highlighted the importance of bipartisan cooperation on bills that will benefit children. LB304 was DeBoer’s priority legislation for the 2026 session, and she said its passage was a kind of “crowning achievement” in her final term as a legislator.

“We can’t talk enough about these little folks, our future, and how important it is that we have great care for them, no matter what the set of circumstances are,” Pillen said.

Childcare subsidies are largely funded through the federal Child Care and Development Block Grant Act, but states have broad discretion to set eligibility thresholds. According to advocacy group First Five Nebraska, the 130% cap that Nebraska would have reverted to would be one of the most restrictive in the country.

According to a fiscal note submitted to the Legislature in March, more than 4,800 families have become newly eligible for the subsidy since eligibility was expanded in 2021. It will cost about $4.2 million per year to maintain the current subsidy levels, according to the fiscal note.

The Nebraska Health Care Cash Fund will cover any increased costs to the state as a result of the expanded eligibility. That fund receives money from cigarette taxes, the Nebraska Tobacco Settlement Trust Fund and the Nebraska Medicaid Intergovernmental Trust Fund. While the fund is currently considered sustainable, a new sustainability report will be released before October.

Asked about next steps to make childcare more accessible and affordable, Pillen said he’s a believer in getting regulation out of the way. He also said business leaders need to utilize “creative models” to help their employees access childcare – like having childcare centers in workplaces.