Proposed Federal Funding Changes to State and Territory Early Childhood Care and Education Systems – National Governors Association

Proposed Federal Funding Changes to State and Territory Early Childhood Care and Education Systems – National Governors Association

 

Report on the Human Services Advisors Network Meeting of July 23rd

Analysis of Federal Policy Impacts on State Human Services and Sustainable Development Goals

On July 23rd, the National Governors Association (NGA) convened the Human Services Advisors Network to analyze the collateral repercussions of new federal legislation on state human services programs. The meeting focused on the “One Big Beautiful Bill Act” (OBBBA) and its significant implications for early childhood and nutrition systems. The discussions highlighted how these changes challenge states’ progress toward several key Sustainable Development Goals (SDGs), including SDG 1 (No Poverty), SDG 2 (Zero Hunger), SDG 3 (Good Health and Well-being), SDG 4 (Quality Education), and SDG 10 (Reduced Inequalities).

Impact on Early Childhood Systems and Strategic Responses

Threats to SDG 4: Quality Education

Presentations underscored that while federal cuts to programs like Medicaid and SNAP may not directly target Early Childhood Education (ECE), the ripple effects pose a significant threat to the sector’s stability. This instability jeopardizes progress on SDG 4 (Quality Education), particularly Target 4.2, which aims to ensure all children have access to quality early childhood development, care, and pre-primary education.

  • Budgetary pressures on families and providers could limit access to care and impact operational viability.
  • A history of federal investment has stabilized ECE systems; however, impending tighter state budget cycles will force difficult decisions regarding funding priorities.
  • Many states lack coordinated governance structures, complicating the strategic disbursement of funds to support families and providers effectively.

Challenges for the ECE Workforce and SDG 8

A significant downstream impact of OBBBA involves the ECE workforce, a demographic that has historically relied on social benefits like SNAP and Medicaid. New restrictions could create barriers to workforce recruitment and retention, undermining SDG 8 (Decent Work and Economic Growth).

  • Potential employees may seek other fields of employment if they no longer qualify for essential support programs.
  • Potential funding cuts to related federal programs (SSBG, CSBG, TANF) present a further threat to the community-based organizations that form the backbone of the early childhood sector, impacting both service delivery and employment.

NGA Strategic Initiative

In response to these challenges, the NGA announced an action lab workshop scheduled for October 2025. This initiative is designed to equip states and territories with strategic financing tools to preserve early childhood systems, thereby safeguarding progress on SDG 4 and related social development goals.

Analysis of SNAP Program Modifications and Impact on SDG 2: Zero Hunger

Overview of OBBBA’s SNAP Provisions

A briefing from the American Public Human Services Association (APHSA) provided an in-depth overview of new SNAP requirements under OBBBA. These changes present immediate administrative and financial challenges for all states, directly impacting their capacity to achieve SDG 2 (Zero Hunger) by ensuring stable access to food assistance.

  1. Compliance Issues: All states are currently out of compliance, as numerous policy changes went into effect immediately upon the bill’s passage.
  2. Lack of Guidance: States are awaiting critical implementation guidance from the federal Food and Nutrition Service (FNS) on new eligibility rules, work requirements, and timelines.
  3. Budgetary Strain: While programs like WIC and Summer EBT are not directly affected, states face difficult decisions on how to manage increased state spending on SNAP administration, potentially diverting funds from other anti-poverty initiatives.

Financial and Administrative Changes

The legislation mandates significant shifts in the financial structure of SNAP administration, which could reduce program effectiveness and outreach.

  • Increased State Contribution: Starting in FY27, the required state contribution for SNAP administrative costs will increase from 50% to 75%.
  • Payment Error Rate Penalties: Beginning in FY28, states with Payment Error Rates (PER) above 6% will be required to fund a portion of the individual benefits paid in error.
  • Program Sunsetting: The SNAP-Ed nutrition education program will sunset at the end of the current fiscal year, representing a setback for SDG 3 (Good Health and Well-being).

State-Level Implementation Challenges and Threats to SDG 1 and SDG 10

Concerns from SNAP Administrators

State administrators expressed significant concern over the lack of federal guidance, which creates uncertainty and risks non-compliance. These implementation hurdles threaten to disrupt benefits for vulnerable populations, undermining SDG 1 (No Poverty) and SDG 10 (Reduced Inequalities).

  • Work Requirement Changes: New guidelines for SNAP work requirements are a primary concern. Categorical exemptions for veterans, youth aging out of foster care, and individuals experiencing homelessness have been removed, while new exemption classes have been added. This complexity requires significant adjustments to eligibility verification systems.
  • Impacts to Outreach and Staffing: Reduced federal reimbursement for administrative activities may force states to reduce staffing or end contracts for SNAP outreach. This could limit the ability of agencies to connect eligible households with vital food assistance, disproportionately affecting marginalized communities.
  • Implementation Timelines: With the October 1st deadline approaching, states are bracing for a tight implementation window without essential tools from FNS, such as the state plan checklist and cost-of-living adjustment (COLA) information.
  • Hold Harmless Period: Clarity is urgently needed from FNS regarding the 120-day “hold harmless” period, which protects states from being penalized for errors during the initial implementation of new policies.

Which SDGs are addressed or connected to the issues highlighted in the article?

  • SDG 1: No Poverty – The article focuses on the Supplemental Nutrition Assistance Program (SNAP), a key social protection system in the U.S. designed to alleviate poverty by providing food assistance to low-income individuals and families.
  • SDG 2: Zero Hunger – The core subject of the article is SNAP, a program directly aimed at ending hunger and ensuring food security. Changes to its administration, funding, and eligibility requirements have a direct impact on achieving this goal.
  • SDG 4: Quality Education – The article discusses the “ripple effects” of budget cuts on early childhood education (ECE) systems, impacting providers’ ability to operate and families’ access to care, which is fundamental to early learning and development.
  • SDG 8: Decent Work and Economic Growth – The text addresses SNAP work requirements and the potential impact of program changes on the ECE workforce, a demographic that often relies on social benefits and faces recruitment and retention challenges.
  • SDG 10: Reduced Inequalities – The article highlights how changes to SNAP eligibility affect vulnerable populations differently, including veterans, youth aging out of foster care, and individuals experiencing homelessness, thereby relating to the goal of reducing inequality.
  • SDG 16: Peace, Justice and Strong Institutions – The challenges states face with implementation, compliance, and the lack of clear guidance from federal agencies (FNS) on the new OBBBA requirements point to issues of institutional effectiveness and governance.

What specific targets under those SDGs can be identified based on the article’s content?

SDG 1: No Poverty

  • Target 1.3: Implement nationally appropriate social protection systems and measures for all.

    Explanation: The article is centered on changes to SNAP, which is a primary social protection system in the United States. The discussion of new eligibility requirements, funding changes, and administrative burdens directly relates to the implementation and effectiveness of this system.

SDG 2: Zero Hunger

  • Target 2.1: By 2030, end hunger and ensure access by all people, in particular the poor and people in vulnerable situations… to safe, nutritious and sufficient food all year round.

    Explanation: The article details how new SNAP requirements and funding cuts could impact access to food. For example, it notes that changes to work requirements and deductions will create a “learning curve for SNAP eligibility verification systems,” potentially affecting access for eligible individuals. The sunsetting of the SNAP Ed program also impacts nutrition education.

SDG 4: Quality Education

  • Target 4.2: By 2030, ensure that all girls and boys have access to quality early childhood development, care and pre-primary education.

    Explanation: The article explicitly states that cuts to programs like SNAP will have “ripple effects” on ECE systems, which “may impact providers ability to operate and/or families access to care.” This directly connects to the availability and accessibility of early childhood education.

SDG 8: Decent Work and Economic Growth

  • Target 8.5: By 2030, achieve full and productive employment and decent work for all women and men…

    Explanation: The article discusses two key aspects of this target. First, it details the “new conditions for work requirements” for SNAP recipients. Second, it highlights that one of the “biggest OBBBA downstream impacts to state systems may entail the ECE workforce,” as new program restrictions may present “challenges to recruitment and retention.”

SDG 10: Reduced Inequalities

  • Target 10.4: Adopt policies, especially fiscal, wage and social protection policies, and progressively achieve greater equality.

    Explanation: The entire article analyzes the impact of fiscal and social protection policy changes (OBBBA’s effects on SNAP). It points out how these changes affect vulnerable groups, noting that “Veterans, youth aging out of foster care, and individuals experiencing homelessness are no longer categorically exempt from SNAP work requirements,” which is a direct policy change impacting equality of access.

SDG 16: Peace, Justice and Strong Institutions

  • Target 16.6: Develop effective, accountable and transparent institutions at all levels.

    Explanation: A major theme is the institutional challenge states face. The article repeatedly mentions “Awaiting critical SNAP implementation guidance from FNS,” “unanswered questions from states,” and a lack of clarity on timelines. This points to a breakdown in the effectiveness and transparency of the institutional relationship between federal and state program operators.

Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

For Target 1.3 & 2.1 (Social Protection & Food Access)

  • Mentioned Indicator: State contribution for SNAP Administrative costs. The article specifies this will increase from “50%–> 75%,” which can be tracked to measure the financial burden on states to deliver the program.
  • Mentioned Indicator: SNAP Payment Error Rates (PER). The article notes that states with a PER “above 6%” will face financial penalties, making PER a key metric for program administration efficiency.
  • Implied Indicator: Number of individuals subject to SNAP work requirements. The article mentions changes to “ABAWD age limits” and the removal of exemptions for groups like veterans, implying that tracking the number of people affected by these rules is a relevant measure.

For Target 4.2 (Quality Early Childhood Education)

  • Implied Indicator: Funding levels for ECE systems. The article refers to “tighter budget cycles” and “tough decisions ahead as they plan out funding priorities,” suggesting that state and federal ECE funding allocations are a key indicator of system stability.
  • Implied Indicator: Number of operational ECE providers. The text states that budget effects “may impact providers ability to operate,” implying that tracking the number of providers is a measure of the sector’s health.

For Target 8.5 (Decent Work)

  • Implied Indicator: Recruitment and retention rates for the ECE workforce. The article identifies “challenges to recruitment and retention” as a potential downstream impact, making these rates a key indicator of workforce stability.

For Target 16.6 (Strong Institutions)

  • Implied Indicator: Timeliness of federal guidance issuance. The article’s repeated emphasis on states “awaiting critical SNAP implementation guidance” and the lack of “expected timelines” implies that the time lag between policy passage and guidance release is a measure of institutional effectiveness.
  • Mentioned Indicator: State compliance status. The article opens by stating, “All states are currently out of compliance,” making the number or percentage of states in compliance a direct indicator of institutional performance and clarity of rules.

Table of SDGs, Targets, and Indicators

SDGs Targets Indicators
SDG 1: No Poverty 1.3: Implement nationally appropriate social protection systems. Changes in eligibility criteria for social protection programs (e.g., new work requirements).
SDG 2: Zero Hunger 2.1: End hunger and ensure access to food for all. State Payment Error Rates (PER); State contribution to SNAP Administrative costs (increasing from 50% to 75%).
SDG 4: Quality Education 4.2: Ensure access to quality early childhood development and care. (Implied) Funding levels for ECE systems; (Implied) Number of operational ECE providers.
SDG 8: Decent Work and Economic Growth 8.5: Achieve full and productive employment and decent work. (Implied) Recruitment and retention rates in the ECE workforce; Changes to SNAP work requirement rules (e.g., ABAWD age limits).
SDG 10: Reduced Inequalities 10.4: Adopt social protection policies to achieve greater equality. Changes in categorical exemptions for SNAP (e.g., for veterans, youth aging out of foster care).
SDG 16: Peace, Justice and Strong Institutions 16.6: Develop effective, accountable and transparent institutions. (Implied) Timeliness of federal guidance to states; State compliance status with new regulations.

Source: nga.org