Maine LD1955: Child Care Wage Supplement Pass-Through Rule

Most Maine child care business owners haven't heard about a specific requirement buried in LD1955, An Act to Increase Child Care Affordability. But if your facility receives state salary supplement funding, it directly affects how you handle that money.

What the Rule Says

Under Section 3, §3737-B(1) of LD1955, any licensed child care facility or family child care provider that receives government salary supplement funds must pass 100% of those funds through as increased wages to their workers. The law is explicit: you cannot retain any portion for overhead, operations, administrative costs, or profit.

This is a compliance mandate, not a guideline. Facilities that fail to pass through the full amount face potential clawback of funds or penalties.

Who This Affects

The rule applies to:

• Licensed child care centers
• Family child care providers operating under state licensure
• Any operation receiving appropriated state salary supplement funds

If your business model depends on using supplement revenue to offset operational costs—even partially—you'll need to restructure how you budget and allocate those funds.

Timeline and Reporting

The state has appropriated $500,000 annually for wage supplements beginning in fiscal year 2025-26. Annual reporting on how these funds are distributed to workers begins January 2, 2026.

This means you should expect:

• Funds to become available in FY 2025-26
• Documentation requirements starting early 2026
• Ongoing annual reporting obligations

What This Means for Your Business

The practical impact depends on your current staffing structure and budget. If you've been planning to use supplement funds to help cover facility costs, you'll need a different approach. All supplement revenue must go directly to worker compensation.

This also means:

• You should clarify in advance which staff positions will receive supplements
• Your accounting and payroll systems need to track supplement funds separately
• You'll need documentation ready for the January 2026 reporting deadline
• Budget planning should assume zero operational benefit from these funds

Next Steps

If your facility currently receives or plans to apply for state salary supplements, review your budget assumptions now. Confirm with your accountant how to structure payroll and accounting to ensure full pass-through compliance. Document your wage distribution process before funds arrive, so you have clear records for the mandatory annual reporting.

Contact your state licensing agency or child care trade association if you have questions about eligibility, fund distribution, or reporting requirements.

Source: LD1955, An Act to Increase Child Care Affordability, Section 3, §3737-B(1), State of Maine Legislature.