Maryland Waives Recoupment of Childcare Overpayments

State officials will not seek repayment of $10.7 million in funds sent to 2,227 childcare providers.

Updated on Oct. 28, 2026 in Child Care

Gouache-painted illustration of a wooden house block balanced on a stack of geometric blocks, representing community childcare stability. — Maryland state officials have waived the repayment of $10.7 million in childcare subsidies, aiming to protect the financial stability of local providers. AI Illustration. Upload story photo >

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Should the state forgive accidental overpayments to local small businesses to ensure their continued operation?

The Maryland State Department of Education confirmed in October 2026 that it will not recover $10.7 million in overpayments issued to childcare providers due to past implementation errors. Officials stated the decision aims to prevent instability within the industry, as small businesses could face disruption from such repayments.

Why it matters

The decision to forgive these funds highlights the administrative challenges faced by the agency following the rapid expansion of the Child Care Scholarship Program. State leadership determined that reclaiming money issued under former staff would disproportionately impact the stability of local small businesses.

A total of 2,227 providers received an average overpayment of $4,479, with one recipient receiving $132,661. Funding for the program grew from $132 million in 2022 to $560 million in 2026.

The players

Maryland State Department of Education

This is the state agency responsible for implementing and overseeing educational policies and programs, including child care scholarships.

J.B. Jennings

He is a Maryland State Senator representing Harford and Baltimore counties who has requested a legal opinion on the department's repayment policy.

The details

The overpayments were tied to implementation errors by former Maryland State Department of Education staff. The state opted against recoupment to avoid destabilizing childcare businesses that received the excess funds.

Program funding was $132 million in 2022.
Suspected overpayments totaling $66.5 million were identified between 2023 and 2025.
Program funding reached $560 million in 2026.
The department announced the decision regarding the $10.7 million in October 2026.

Culture Shift

The Child Care Scholarship Program has undergone rapid expansion, with funding jumping from $132 million in 2022 to $560 million by 2026. This administrative pivot reflects the struggle of state agencies to maintain oversight while managing significantly increased public service budgets.

Local childcare businesses that were identified as recipients of the overpayments will no longer face the risk of state-mandated clawbacks. This decision provides financial relief for those impacted by the past agency errors, helping maintain current service levels for families.

The takeaway

The forgiveness of these overpayments reflects an effort by the state to prioritize industry stability over full recovery of lost funds. Providers should maintain accurate records of all government subsidies to avoid future complications during administrative audits.