NASHVILLE — Sen. Charlane Oliver today sounded the alarm after quietly posted state documents reveal that President Donald Trump’s administration has slashed $44.5 million in federal child care funding for Tennessee families.
On its website, the Human Services Department explains the Trump administration is reducing Tennessee’s annual award through the Child Care Development Fund for Fiscal Year 2025. The decision has forced the department to make major policy changes that will raise costs for parents, cut support for child care providers, and weaken the child care workforce.
“Tennessee is taking a huge step backwards from the progress our state has made to end the child care crisis. These cuts from Donald Trump’s administration will undermine recent state investments and will raise costs for Tennessee parents, destabilize our fragile child care network, and undermine businesses that rely on working parents,” said Sen. Charlane Oliver, D–Nashville. “Tennessee is already a child care desert. Instead of helping families, the Trump administration is pulling the rug out from under them. These devastating cuts are hurting low-income families who already can’t afford the real costs of childcare. I’ll keep fighting to expand child care access because every parent deserves the peace of mind that their child is safe and cared for while they work.”
The biggest impact will be felt by the 16,000 families enrolled in Smart Steps, a state program that helps working families afford child care so parents can stay on the job. In 2024, the Human Services Department structured Smart Steps to waive co-pays for the lowest income families.
But due to Trump’s funding cuts, the department says the program is changing again so that every family approved for child care payment assistance will be assessed a co-pay equal to 5% of their monthly income beginning Oct. 1. The department also capped enrollment in the Smart Steps program and launched a waitlist for new applications.
Human Services says it is also eliminating payment enhancements that dedicated additional funding to child care providers when they enrolled toddlers, for operating in rural and economically distressed counties, and for operating at non-traditional hours. These cuts will have a disproportionate effect for families in already underserved communities.
The child care workforce pipeline is also taking a hit. The department says state contracts with organizations that help recruit and retain child care workers will be ended or reduced, worsening a staffing crisis in an already underpaid, under-supported industry.
Adding more pain for the industry, Human Services says reimbursement rates for child care providers will remain flat this year, despite inflation and rising operating costs.
Trump cuts stress Tennessee’s child care network
These Trump funding cuts mean higher costs for parents, fewer providers willing to accept state-assisted families, and a weaker workforce pipeline for the child care providers who keep Tennessee’s economy running.
“This is the workforce behind the workforce,” Oliver said. “If we want Tennessee families to succeed and our economy to grow, we need a robust child care system. These cuts do the exact opposite.”
Sen. Oliver has consistently led the charge to lower child care costs and increase availability by sponsoring legislation to expand the Smart Steps program and by introducing bills to make universal pre-K available for all four-year-olds.
According to the University of Tennessee’s 2024 Child Care Desert Fact Sheet, 59 counties have a deficit of child care slots, showing unmet needs for child care in those communities.
Separately, a Tennesseans for Quality Early Education study in 2022 found that child care challenges in Tennessee cost parents $1.7 billion in annual earnings while businesses lose nearly $500 million each year.
Background
Tennessee relies on CCDF dollars to fund the Smart Steps Child Care Payment Assistance program, expand available child care slots, and support quality initiatives that build a strong early childhood workforce.
Since 2020, Tennessee’s CCDF award has fluctuated between a low of $202 million in 2020 and a high of $319 million in 2024, according to data from the legislative budget office. After Trump’s unexpected budget cut, Tennessee’s award for 2025 will be $276 million.
