In an emergency hearing Thursday, Oklahoma County District Judge Natalie Mai declined to grant a temporary restraining order in a case filed by the state's largest child care industry trade association against the Oklahoma Department of Human Services (DHS).
The Licensed Child Care Association of Oklahoma wants to stop the department from enforcing its directive on child care subsidies for school-age children. Its suit was filed over a month after DHS sent a letter at 5 p.m. Oct. 30, to child care providers.
The department announced the removal of a $5 per day add-on to providers' subsidy rate schedule – implemented during the COVID-19 pandemic – for children ages six and older. It also halted new applications and renewals for these children, with exceptions for those in foster care, with disabilities and who are unhoused. Subsidies expire on a rolling basis.
Both policies became effective Nov. 1. Providers like Shane Williams said these cuts are devastating.
Williams owns Faith Learning Center in Guymon with his wife. About 80% of their enrollees receive subsidized child care, and 60% of those are school-age. He said how long he can stay open depends on how long he wants to borrow money.
"What happens then is we are basically personally subsidizing child care in our town. And we can't do that very long," Williams said. "Nobody could."
The lawsuit argues DHS treated the $5 per day add-on as a standard component of its reimbursement structure, representing it as a measure "to promote stability, improve quality, expand capacity and support Oklahoma families and providers."
It states DHS "reversed course," characterizing the add-on as "temporary, unplanned and COVID-dependent." The association argues that because the Oct. 30 decision alters eligibility, reimbursement and access for providers serving school-age children, it should require a statewide policy change with formal rulemaking. It adds that DHS did not satisfy the requirements for emergency rulemaking.
The lawsuit asks the court to reinstate the $5 per day add-on, resume school-age applications and renewals and refrain from implementing policy changes absent compliance with state law.
During Thursday's hearing, the association sought a temporary restraining order against these changes.
What did both sides argue?
Eve Spaulding, an attorney representing the child care group, argued this decision should not have been made via email. The lawsuit states that under state law, an agency "may not adopt, amend or repeal a rule by internal policy, memorandum, bulletin, guidance document, directive or letter."
"DHS's use of an internal directive letter to impose sweeping statewide policy changes violates this statutory prohibition," the lawsuit reads.
Spaulding argued this was a "foreseeable collapse" that is now putting families in jeopardy.
DHS has said that factors like the expiration of temporary federal COVID-era funding, rising enrollment and continued uncertainty following the government shutdown resulted in the need for action.
It said the state was given additional, one-time federal incentives, which allowed more families to access care, supported school-age services and increased reimbursement rates for providers.
Andrew Bowman, DHS's chief legal officer, said that although the department isn't happy about the circumstances, this is a funding issue.
Bowman said federal COVID-era funding expired in September 2024, and the department spent what it received by April 2024. In the meantime, DHS has used Temporary Assistance for Needy Families as a short-term bridge.
Bowman said that money is usually spread among other programs. But it has been disproportionately spent on supporting the $5 per day add-on, which he added was also implemented via email.
"We can't set ourselves up to spend money we don't have," Bowman said.
He said DHS has asked for $70 million to "stabilize the child care system and prevent future funding cliffs." But, until then, Bowman said cuts need to be made somewhere.
He also argued that DHS can make these changes, citing a portion of child care providers' contracts. StateImpact obtained one of these contracts in April. Bowman referenced the following clause:
"It is further agreed and understood that OKDHS cannot guarantee the continued availability of funding for this contract. In the event funds to finance this contract become unavailable either in full or in part due to insufficient funding. OKDHS may terminate this contract or reduce this contract consideration, upon written notice to the Provider via electronic mail."
Spaulding said these contracts are usually renewed in September, but providers were asked to sign a new contract in the spring. An email from DHS said this was "due to recent policy changes."
Spaulding said this clause was new.
A DHS spokesperson told StateImpact in April that the "unavailability of funding" clause is standard language and included in other DHS contracts. They said it was added to "ensure uniformity."
Judge Mai declined to grant the temporary restraining order. She said although public interest is high, there is not enough evidence to meet the clear and convincing standard. She also suggested the child care group separately pursue the issues of the $5 per day add-on for school-age children and pause on that group's subsidy applications and renewals.
Bowman said this is a difficult issue, and DHS shares in the frustrations regarding a lack of funding.
"We're doing what we can to focus our efforts on the families and children who are in the most need in this regard," Bowman said. "And we'll do everything we can to try and get that funding in place as soon as we can to help with that."
Spaulding expressed disappointment in the outcome but said there is more to come.
"We're going to go back and regroup and continue to pursue this matter, because there is a lot at stake," Spaulding said.
