Congress Weighs Child Tax Credit Expansion

This week, as families across the country filed their 2024 returns, a quieter debate in Washington could reshape next year’s tax season — and the financial outlook for millions of households with children. Chief among the issues in play: whether Congress will preserve or expand the Child Tax Credit (CTC), one of the federal government’s most effective tools for reducing child poverty.

The stakes are high. If Congress fails to act, key provisions of the 2017 Tax Cuts and Jobs Act (TCJA) — including the current design of the CTC — are set to expire at the end of 2025. That would result in a significant reduction in benefits and eligibility, just as many families continue to face economic uncertainty. Lawmakers are now negotiating a broader tax package that could determine the future of the credit for years to come.

What is the Child Tax Credit?

Originally enacted in 1997 with bipartisan support, the CTC aimed to offset the costs of raising children. At the time, it offered $400 per child under age 17 and was nonrefundable. Over time, Congress expanded the credit’s size and scope, making it partially refundable in 2001 and gradually increasing the amount available to families across the income spectrum. Alongside the federal CTC, 16 states have enacted their own CTCs at the state level as well.

The federal credit reached its peak during the pandemic. Under the American Rescue Plan of 2021, it was temporarily expanded to up to $3,600 per child under 6 and $3,000 per child ages 6–17. The expansion made the credit fully refundable and paid it out monthly instead of at tax filing — lifting an estimated 2.9 million children out of poverty in 2021 alone (a 46% decline), according to U.S. Census Bureau data.

Since 2022, the CTC has reverted to the TCJA structure: a $2,000 credit per child under 17, with a refundable portion of up to $1,400 and phaseouts beginning at $400,000 for joint filers. If Congress allows TCJA provisions to expire, the credit will drop to $1,000 per child, with lower income thresholds for eligibility.

Source: How did the Tax Cuts and Jobs Act change personal taxes?, Tax Policy Center

What’s Happening in Congress?

Lawmakers are weighing whether to extend some or all TCJA’s expiring provisions, including the current design of the CTC or a new version altogether. Several competing proposals reflect different visions for the CTC’s future, but strong bipartisan support signals further expansion. For instance:

• The Family First Act (sponsored by Sen. Jim Banks, R-IN) would increase the credit to $4,200 for children under 6 and $3,000 for children ages 6–17. It would also create a $2,800 credit for pregnant mothers beginning at 20 weeks. The credit would be fully refundable, indexed to inflation, and require a minimum income of $20,000 to qualify.
• The American Family Act (sponsored by Sen. Michael Bennet, D-CO) would expand the credit to $6,300 for newborns, $4,320 for children under 6, and $3,600 for children 6–17. It would also restore monthly payments and eliminate income-based phase-ins, ensuring families with little to no income receive the full benefit.

Both proposals reflect broader negotiations over the future of the TCJA and the size and scope of any new tax package. The House recently passed a budget resolution that allows for up to $5.3 trillion in tax cuts over 10 years. The full cost of extending TCJA provisions is estimated at over $4 trillion, making the CTC just one of many high-cost provisions competing for inclusion.

What’s Next?

If no agreement is reached by the end of 2025, the CTC will automatically revert to pre-TCJA levels — cutting the credit amount in half and reducing eligibility for many families. That would also lower the refundable portion of the credit, impacting lower-income households most directly.

As the budget reconciliation process unfolds, lawmakers face difficult choices: extend costly tax cuts, address growing deficit concerns, or invest in targeted support for working families. While short-term extensions remain a possibility, the long-term design of the CTC— and the role it plays in shaping economic opportunity for children — hangs in the balance.

Aligned's Take: The Child Tax Credit has helped families for decades. Rolling it back would strain many households. We’re encouraged by bipartisan efforts to strengthen the credit and hope families stay at the center of the conversation.

Former State Board of Education President Charlie Shields presides over meeting. PHOTO CREDIT: Annelise Hanshaw/Missouri Independent.

Missouri Update

Kehoe replaces state board president

This week, Governor Mike Kehoe removed Charlie Shields from his position as president of the Missouri State Board of Education and appointed four new members. Shields had served on an expired term since his appointment in 2012 and held the presidency since 2015.

Shields led the state board during numerous administrations and championed initiatives that have left a lasting impact on Missouri's education system. He was pivotal in launching the Office of Childhood, establishing the "Science of Reading" framework, and creating the Show Me Standards. His efforts also contributed to the formation of the Blue Ribbon Commission to address teacher recruitment and retention.

Shields' leadership extended beyond education. As a former President Pro Tem of the Missouri Senate and current CEO of University Health. He has consistently demonstrated a deep commitment to public service and community well-being.

What does the State Board of Education do?

The Missouri State Board of Education, established in the state constitution, serves as the policymaking body for K–12 education. Its responsibilities include:

• Adopting rules governing its own proceedings and formulating policies for the guidance of the commissioner of education and the Department of Elementary and Secondary Education.
• Carrying out policies relating to public schools.
• Directing the investment of moneys received to be applied to support of public education.
• Granting professional certification to public school employees.
• Classifying the state's public schools, establishing requirements for the schools of each class, and formulating rules governing the inspection and accreditation of schools.
• Annually reporting to the general assembly.

Missouri vs. Kansas: Two State Boards, Two Approaches

While both Missouri and Kansas have constitutionally established state boards of education, their structure and authority differ:

Missouri’s board holds greater regulatory authority and longer-term appointments, while Kansas’ elected board offers more direct voter input into education leadership and direction.

Senate Committee Advances Revised Open Enrollment Bill

The Senate Education Committee voted out a substitute version of HB 711 (Pollitt) this week, making key changes to the proposed statewide open enrollment program. The updated bill raises the cap on nonresident student transfers from 3% to 5% of a district’s prior-year enrollment, expanding opportunities for families to enroll across district lines.

The substitute also adds charter schools to the program. Currently, charter schools may only enroll students residing within their geographic boundaries. Under the new language, students outside those areas could transfer into a participating charter school, provided there is space, and the school opts in.

The bill must still pass the full Senate and return to the House for consideration. With four weeks left in the legislative session, there is ample time for further negotiations.

Aligned will continue tracking HB 711 and other education proposals as the session progresses.

Read our Priority Bill Update.

Read the Legislative Report.

Budget 

Senator Lincoln Hough, chair of the Senate Appropriations Committee, crafted a budget reflecting a more substantial commitment to public education and supporting the child care providers who serve working families. Under his leadership, the committee prioritized full funding of Missouri's Foundation Formula for PK–12 schools—a $300 million boost not proposed by the Governor or House—and approved a shift in the child care subsidy program to reimburse providers based on enrollment rather than attendance.

These priorities are among several key differences in the Senate committee's version of the Fiscal Year 2026 operating budget. The committee advanced a $49 billion plan—excluding capital improvements and reappropriations of federal relief and stimulus funds—that includes roughly half a billion dollars more in spending than the versions proposed by the Governor or passed by the House. Several differences between the proposals, which we expect the full Senate will debate on April 29, include:

• A $300 million increase to fully fund the state's education Foundation Formula at $3.7 billion, which neither the Governor nor House proposed;
• An elimination of $50 million of General Revenue proposed by the Governor and House for the MOScholars Program to provide vouchers for private school tuition; 
• A $107 million plan to use federal childcare dollars to allow the state to pay providers using an attendance-based model rather than an enrollment model; Governor Kehoe proposed this change; however, the House did not include it in its budget;  
• A cut of $19 million approved by the House to purchase land for a new state park in McDonald County, home of House Budget Chairman Dirk Deaton;
• An elimination of funding for the Office of Child Advocate, which investigates complaints regarding the state's child welfare system; 
• A 3% increase to baseline funding for public colleges and universities in the state, double the amount proposed by Gov. Kehoe and approved by the House;
• Restoration of a proposal made by Gov. Kehoe to raise the salaries of state employees by 1% for every 2 years of service up to 10%, which was reduced by the House to 1% for every 2 years of service up to 10 years;
• Separating federal road funds from the state road fund to provide more oversight and control of road spending by the General Assembly;
• $40 million for highway construction and congestion alleviation on I-70 in Warren County;
• $150 million to extend Highway 57 from Poplar Bluff to the Arkansas state line; and,
• $7 million to help St. Louis Lambert International Airport demolish unused and obsolete buildings in anticipation of a $2.8 billion passenger terminal overhaul.

The House also approved HBs 18, 19, and 20 this week, which fund capital improvements and reappropriations for the state, including nearly $4 billion of General Revenue and federal stimulus funds and 45 new projects throughout the state.

Combined, the regular operating budgets approved by the House and the capital improvement budgets total around $51.7 billion for Fiscal Year 2026, approximately $2 billion less than called for by Governor Mike Kehoe in January. Both chambers must complete and approve the full budget by May 9.

In other news

• MO House advances bill removing MU's exclusive right to confer certain degrees
• Senate Appropriators add $300M in education funding in proposed budget 
• Bill would ban Missouri colleges from using DEI in admissions, hiring
• Amid national push for vouchers, Missouri focuses on open enrollment
• Kehoe appoints new faces to State Board of Education

Kansas Update

Legislative Session Recap

After just a two-day veto session last week, the Kansas Legislature adjourned for the year sticking to their original plan for a quick session. In addition to a new budget process, legislators and advocates had to adjust their historical timelines to account for the compressed policymaking process.

With debates finished and the final gavel struck, let’s look at how Aligned’s priority legislation ultimately fared.

Signed by the Governor

Governor Laura Kelly signed and enacted HB 2185 on Wednesday, March 26, 2025. This bill expands the Kansas National Guard Educational Assistance Act to allow eligible Guard members to sponsor one dependent to receive tuition assistance and would broaden the EMERGE Program to include advanced degrees beyond a master’s, such as professional and doctoral degrees.

Following up on our newsletter from last week, Kansas policymakers and the Governor agreed to a two-year extension of the 20-mill levy for school property taxes until FY 2027. The Senate approved the bill 39-1; the House signed off 122-0.

The Governor also signed SB 44, a piece of legislation designed to combat antisemitism in educational and law enforcement settings. As we previously explained, this legislation used to be related to an expansion of the Kansas Promise Scholarship Program but was substituted during conference committee.

Finally, after multiple attempts at reform over the past two years, the Legislature and Governor enacted HB 2045, advancing a consolidated childcare reform package centered on creating the Kansas Office of Early Childhood and modernizing key licensing rules.

The bill transfers oversight of childcare programs from the Kansas Department of Health and Environment to the newly established Office, eases staffing and training requirements for licensed childcare providers, and authorizes waivers and pilot programs aimed at expanding childcare capacity. Lawmakers ultimately selected HB 2045 over the broader HB 2294, which proposed a more expansive overhaul with additional regulatory, enforcement, and transparency provisions.

Overriding a Veto

HB 2033 was the only priority bill vetoed by the Governor. The legislation allows nonprofit organizations accredited by the International Multisensory Structured Language Education Council (IMSLEC) – an organization that accredits dyslexia services – to receive funding from school districts’ at-risk education funds.

In Governor Kelly’s veto message, she argued that the bill was unnecessary because current law allows the Kansas State Board of Education to approve the use of funds without legislation. However, the legislature ensured they were approved by requiring it by law. The House voted 87-38 and the Senate voted 32-8 to override the veto.

Maybe Next Year?

The Blue Ribbon Commission on Higher Education that would have been established by HB 2402 will have to wait until next year, having only passed out of the House 98-24 and failing to garner a Senate vote.

Read a full legislative recap here.

Kansas Pushes to Preserve $22.6M in Pandemic Education Funds

In late March, U.S. Secretary of Education Linda McMahon announced the federal government would rescind previously approved extensions for spending federal education dollars from the American Rescue Plan. This week, Governor Laura Kelly formally responded, urging the reinstatement of $22.6 million in ESSER funds for Kansas education and early childhood priorities.

So, what’s going on and how did we get here?

What Are ESSER Funds?

During the pandemic, Congress provided ESSER funding to K-12 schools to help address urgent needs: from HVAC upgrades to mitigating learning loss. ESSER (Elementary and Secondary School Emergency Relief) funds were authorized in three rounds of legislation.

• ESSER I (CARES Act, 2020): $13.2 billion
• ESSER II (CRRSA, 2020): $54.3 billion
• ESSER III (American Rescue Plan, 2021): $121.9 billion

In total, $190.5 billion was allocated to states and school districts — making ESSER the largest one-time federal investment in K–12 education in U.S. history.

Each round came with obligation (i.e., legally committing dollars to a project or fund) and spending deadlines. ESSER III funds had to be obligated by September 30, 2024, and spent by January 28, 2025. Due to pandemic-related supply chain delays and construction backlogs, 41 states, Washington D.C., and Puerto Rico — including Kansas and Missouri — requested extensions through March 30, 2026 which were approved last year.

Another Extension Request

Secretary McMahon’s March announcement canceled all previously approved extensions, though it left open the door for project-specific extensions. States must now submit justifications for each request demonstrating how delays were pandemic-related and how the funds support learning recovery.

Which brings us to Governor Kelly’s letter that urged the reinstatement of $22.6 million in ESSER funding. The letter states that funds were used to support student recovery and help educators develop to better assist students with academic issues.

The funding would be used to retrain teachers in reading (using evidence-based practices like science of reading) and math instruction.

Historically, some of the funds were also used to waive more than $3.34 million in fees for childcare providers since 2021, covering application costs for 15,500 providers and background checks for 39,400 providers.

The U.S. Department of Education has not announced whether it will grant Kansas’ request. Meanwhile, 16 states and D.C. have filed lawsuits to challenge the Department’s decision to revoke the extensions. With legal and administrative processes now in motion, Kansas’ access to these remaining federal funds remains uncertain.

In other news

• Kansas legislators seek study on higher education efficiency
• Fiscal analysts increase revenues, but state spending outpaces revenues
• 2025 Legislature: What passed, what didn’t
• U.S. Representative Derek Schmidt asks Department of Education to restore federal pandemic funds
• Kansas City, Kansas, Public Schools principal makes it to NFL as rookie umpire
• Chapman bus driver turns commute into craft time with daily projects for her students

The North Kansas City School District's nationally recognized Automotive Technology Program offers students a hands-on, career-ready alternative to the traditional college track. Founded in 1981 and now accredited by the Automotive Service Excellence (ASE) organization, the program allows students to earn up to 18 college credits and graduate with industry-level certifications, opening doors to employment and further education.

Open to students from all four district high schools, the two-year program begins junior year and includes classroom instruction and real-world shop time. Students train in all eight core automotive areas, including engines, transmissions, brakes, HVAC, electrical systems, and alignments. The program's learning environment mirrors a professional garage, complete with lifts, alignment racks, and state-of-the-art equipment, thanks in part to strong district support and partnerships with local dealerships like Heartland Chevrolet.

Beyond technical skills, the program emphasizes professionalism and work ethic. Many seniors gain experience through internships at local dealerships, sometimes spending their entire school day on the job, earning income, and building career connections.

Students also participate in impactful community projects—like restoring and donating vehicles to individuals in need—and have the opportunity to attend SEMA, a premier automotive convention in Las Vegas, to connect with industry leaders to explore new technologies and growth opportunities.

The North Kansas City Automotive Technology Program combines hands-on training, personal growth, and career preparation, culminating in industry-recognized certifications that give graduates real-world experience, professional credentials, and a direct path into a high-demand, well-paying field.

Listen to students explain more here.

Upcoming Events

Facing the ESSER hangover?

As federal relief funds wane, many districts grapple with sustaining expanded staffing and programs initiated during the ESSER era.

Join us June 10-11 in Kansas City and learn how to realign your district's finances for long-term student success. 

This two-day intensive, led by Dr. Marguerite Roza and the Edunomics Lab team from Georgetown University, offers hands-on training to navigate these fiscal challenges. Participants will explore strategies to prioritize investments directly affecting student outcomes and earn a Certificate in Education Finance. 

Location: Kauffman Foundation Conference Center, Kansas City, Missouri

Who should attend: School board members, district leaders, policymakers, and education advocates 

Register here 

Thank you to our generous event sponsors:

• Venue Sponsor: Ewing Marion Kauffman Foundation
• Platinum Sponsor: Missouri Charter School Association
• Gold Sponsors: U.S. Engineering and Holland 1916 Inc.
• Bronze Sponsors: JE Dunn Construction, KIDaccount, BMG Advisors and the City of Kansas City Missouri

We look forward to seeing you there!

All the best,

Torree Pederson

President

torree@wearealigned.org

Linda Rallo

Vice President

linda@wearealigned.org

Eric Syverson

Director of Policy

erics@wearealigned.org

About Aligned

Aligned is the only state-wide non-profit, nonpartisan business group working in Kansas and Missouri on educational issues impacting the full development of our children, from supporting high-quality early learning to solid secondary programs that provide rigorous academic programs and real-world learning opportunities.

Our vision is that our public education systems in Kansas and Missouri have the resources and flexibility to prepare students to pursue the future of their choice.

We are currently focused on education policies that will strengthen early childhood education, teacher recruitment and retention, and school finance reform.

Learn more about our work.