Requires the Department of Health and Human Services, Division of Child Development and Early Education (Division) to increase the child care subsidy market rates to the 75th percentile for children in three-, four-, and five-star-rated child care centers and homes beginning July 1, 2026 as recommended by the 2023 Child Care Market Rate Study (2023 Study). Mandates Division automatically increase the rates to the 75th percentile of those recommended rates whenever new rates are recommended in subsequent studies to begin July 1 of the next fiscal year. Appropriates $60 million in recurring funds for 2026-27 from the General Fund and $20 million in recurring funds for 2026-27 from the Child Care and Development Fund Block Grant to the Division, to be used to implement these market rate increases.

Beginning July 1, 2026, payment rates for child care providers in counties that have a county rate below the State rate for center-based and home-based care are set at the 75th percentile statewide market rate as recommended by the 2023 Study for children birth through five years old for licensed centers and homes, unless it is demonstrated that statewide rate application to a county with less than 50 children in each age group is lower than the county market rate and would inhibit the county’s ability to purchase child care for low-income children. If that is the case, the county market rate may be applied. Appropriates $160 million in recurring funds for 2026-27 from the General Fund to the Division to implement this statewide floor.

Effective July 1, 2026.