Reconciliation update – Consolidated Senate version moves toward the Senate floor

On June 16, the Senate Finance Committee released its portion of the “One Big Beautiful Bill” legislation being moved through Congress through the reconciliation process. (See a recent blog that differentiates between the reconciliation and annual appropriations processes Congress is currently undertaking.) Like the House bill, the Senate bill’s reconciliation provisions on child care and nutrition will have an impact on the afterschool field.

The Reconciliation Process

With the June 16 release, all Senate committees finished amending their portions of the bill from the House package. Committees bypassed individual committee votes and put forth a consolidated Senate bill. On the Senate floor, in addition to more traditional amendments, the reconciliation process allows senators to challenge provisions in the bill if they violate the Byrd Rule by raising a point of order on whether the provision meets the intents of a reconciliation bill (such as having a budgetary impact, not increasing the deficit beyond a set window, and addressing only mandatory spending).[1] Once on the floor, a limited 20-hour debate time begins followed by a vote-a-rama where all amendments and Byrd Rule violations will be voted upon. Then the full Senate votes on the bill, which only requires a simple majority to pass. If passed, the Senate bill would then return to the House, which must pass identical language, again with a simple majority, for the bill to make it to the President’s desk to be signed into law.

Child Tax Credit

The bill makes some changes to the Child Tax Credit (CTC) Provision from the House version of the bill. A table below summarizes the changes from what would be current law and the different chambers proposals—both would offer to increase the credit amount but would also include provisions that limit eligibility. Studies have concluded that the proposed changes to the CTC in the House and Senate bills would mostly benefit middle-class households who are able to claim the full amount of the credit.

Child and Dependent Care Tax Credit

Unlike the House Bill, the Senate Finance text also includes an enhancement of the Child and Dependent Care Tax Credit[2] (CDCTC), which has not increased in decades. Costs of child care range between $6,000 and $9,000 for one school-age child. The language would lift the eligible percentage of expenditures a family could claim from a current cap of 35% to a higher cap of 50%, with a phase-out for higher income households, aligning it to a policy established in the American Rescue Plan for the tax year 2021. Therefore, if a family paid $1,000 that year in child care expenses for a child, instead of claiming 35% ($350) they could claim 50% ($500). The proposal would not change the maximum amount a household could claim (still $3,000 for one child or $6,000 for 2 or more children). Child care advocates unsuccessfully lobbied to index this credit to inflation and/or make it refundable in this package. However, other bipartisan child care legislation in both chambers this Congress does support more comprehensive changes to child care tax policy.

The bill includes changes to tax provisions such as the employer-provided child care credit, increasing significantly the allowable credit for businesses, and includes the Educational Choice for Children Act (ECCA), a private school scholarship program outlined in our prior blog. It does not include the Physical Fitness Tax Credit.

Impacts of changes to Medicaid and federal nutrition programs

The bill’s proposed Medicaid changes, while similar to the House bill will add additional restrictions on access, including work requirements for parents of older children. As with the House version, these changes could also affect school-age children, by reducing the overall number of people able to access benefits and therefore making automatic enrollment in school meal programs through direct certification pilots less accessible.

In addition to the finance committee’s proposal for the bill, other important components are embedded in other sections of the bill. The Agriculture Committee proposed to significantly change the federal nutrition program, formally known as the Supplemental Nutrition Assistance Program (SNAP), also referred to as “food stamps.” The legislation would shift more of the cost burden to states, make it harder for families to access nutrition benefits, and add work requirements for families with children over age 10 (the House bill would require work requirements at age 7).

The Education Committee’s bill text focuses mainly on higher education and does not appear to have many implications for school-age children or afterschool programs.

The bill still maintains a number of highly controversial pieces among the Republican party members in both the Senate and House. Additionally, a number of provisions regarding some SNAP and Medicaid changes as well as the Educational Choice for Children Act have already been flagged by the Senate Parliamentarian, so the final language to be included in the Senate package expected to be brought to the floor and voted on before the July 4 holiday remains to be seen.

As a reminder, reconciliation is an optional process that Congress may choose to undertake in any given year. If negotiations break down, they can choose to not do anything during this budget cycle, although that result is highly unlikely.

Republican leaders would like to pass the bill before engaging in the annual appropriations process. If passed, the significant costs of the reconciliation bill are expected to result in Congress aiming to reduce costs in discretionary spending, which could have indirect but potentially substantial effects on programs such as the 21^st CCLC learning centers.

We will update this blog as the process continues.

For those interested in raising their voice on any topics of relevance or simply to remind Congress to prioritize the needs of families including for high quality child care and wrap around supports in their final negotiations, there is still time to reach out to the Senate and House.