The Texas Workforce Commission Tuesday voted to cut 9.5% of the state’s childcare scholarships, which represents approximately 14,000 seats for children. For some regions, those cuts will begin by the fourth quarter of 2026, which begins in September.
Childcare scholarships are a federal funding program administered by each state, similar to SNAP or Medicaid, meant to provide childcare for lowincome working families.
In 2025, Texas lawmakers allocated an unprecedented one-time investment of $100 million to the scholarship program that was supposed to stretch through 2026 and 2027, but the funds were quickly depleted due to inflation. The rising cost of childcare without additional financial assistance from the federal government has exacerbated a growing crisis in Texas’ childcare landscape, where more than 100,000 children are waiting for scholarships. Now, workforce development boards that were tasked with allocating scholarships are being asked to cut the number of children they serve in 2027.
What this means depends on the region. Only the North Central Texas region – including Dallas and Fort Worth — will see any additional funding or growth in its scholarship program, meeting documents show. Other regions were asked to cut 80 to 1,900 seats.
Subsidized childcare, often called scholarships, are a federal program that have been around for a century and have fallen in and out of favor over the decades. States pay a percentage of the cost to run the program in order to receive federal funding. States can opt to pay more than that percentage, and some build those costs into their budgets.
These scholarships cover all or a portion of childcare tuition for families who meet certain criteria. The cost of childcare and widespread childcare deserts, which make childcare providers largely unavailable to parents, has led parents — especially moms — to leave the workforce. In leaving the workforce they instead rely on one income and/or statesupported services to meet their needs. These subsidies allow those parents to reenter the workforce.
The number of children those scholarships cover are referred to as “seats,” which is, essentially, the number of chairs those children occupy in a childcare facility on any given day.
Funding for scholarships in 2026 was meant to cover 146,736 “targeted seats” per day – the state’s goal for butts in seats. The $100 million was supposed to add 10,000 seats in Texas in 2026 and 2027. Now, the commission has had to cut the statewide target to 132,689 in 2027.
This reduction won’t be spread equally across the board. Some regions, such as those near El Paso and the Alamo, will have to reduce their targets by nearly 2,000, whereas the North Central region is actually seeing its numbers increase by more than 500.
“If [Texas Workforce Commission] does not modify the BCY ’26 target, the Boards will have an incentive to continue to enroll more children, in order for TWC to consider them to be Meeting Performance,” commission staff wrote in a supplemental document. “This will exacerbate the impact of next year’s lower target, as the Board will enter BCY ’27 with significantly more children enrolled versus their new target.”
Children typically phase out of the scholarship program when they turn 13, move out of the region or return to in-home care. Their scholarships then go to the next kid on the list.
In the 2025 legislative session, lawmakers tapped into $100 million in the unused Temporary Assistance for Needy Families funds, which is still federal cash, to supplement the state’s childcare subsidy program. The goal was to provide seats for another 10,000 children who were waiting for a scholarship. That didn’t happen.
The cuts will go into effect over the next 18 months. Lawmakers can begin looking at ways to provide a sustainable funding mechanism for childcare in the state.
The $100 million was supported by both sides of the aisle, so this proposal could gain steam in the state house and senate in 2027. However, it has steep competition for the spotlight as Texans rage against the data center boom and demand clarification to the state’s groundwater laws.