National Momentum: State-Led Child Care

National Momentum: State-Led Child Care Reforms

Noting that “a growing acknowledgement of the economic and labor concerns related to child care has fueled political momentum for state-backed initiatives,” The Washington Post reported in December 2025 that about two dozen states last year passed new child care programs, “often backed by business leaders concerned with recruiting and retaining workers.”

Approaches vary across the nation, but what states have in common is a growing recognition of the importance of child care in today’s economy. At least 11 states recently allocated millions of dollars to subsidy or voucher programs that give families money to pay for child care, The Post reported, and “others approved funding aimed at helping child care operators, increasing the number of available spots, creating new funding streams for child care or establishing public-private partnerships.”

“We have seen more states invest their own dollars in child care over the last five years than ever before,” Julie Kashen, a senior fellow at the Twentieth Century Foundation, told The Post. “We have seen it in red, blue, and purple states.”

Below is snapshot of representative state efforts:

CONNECTICUT

ENDOWMENT

Connecticut instituted the nation’s first state early childhood endowment and funded it with $300 million from the state surplus. In years to come, the endowment will receive unappropriated surplus funds, with yearly drawdowns of up to 12%. As a permanent, independent investment vehicle for child care and early childhood education, the endowment is isolated from the uncertainty of the annual state budget process. The fund will go toward free Head Start child care for families making under $100,000 a year, limiting child care costs to 7% of household income for families over $100,000 per year, expanding child care capacity for infants and toddlers, and improving accountability by requiring providers to participate in a state quality improvement system.

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NEW MEXICO

UNIVERSAL CARE

In November 2025, New Mexico became the first state to offer free universal child care, funding it with revenues from oil and gas extraction. The initiative makes child care available to all families regardless of income. The state is also creating a low-interest loan fund to build, expand, and renovate child care facilities; targeting growth in the child care system to focus on infants, toddlers, low-income families, and children with special needs; partnering with employers and school districts to expand child care options for working parents; launching a statewide campaign to recruit licensed and registered home providers; and raising rates of reimbursement to providers to reflect the true cost of care.

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NEW YORK

CAPITAL PLUS EXPANSION

In January 2026, New York Governor Kathy Hochul announced plans to spend $4.5 billion on statewide universal child care as part of an effort to expand state-funded child care for three-year-olds and eventually two-year-olds. Last year the state launched the $100 million Child Care Capital Construction Funding Program, which includes money to build child care facilities and expand existing ones. It follows previously adopted programs to expand access to affordable child care to 170,000 children statewide, increase reimbursement for providers, and establish tax credits employers can use to help meet employees’ child care needs.

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COLORADO

expanded educator tax credit

When Colorado began offering a state income tax credit of up to $1,200 to early childhood educators and other child care providers, it became the first state to include informal family, friend, and neighbor care providers. To be eligible, providers must have a gross household income of less than $75,000 for single filers or $100,000 for joint filers who provide at least 720 hours of child care in a year.

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MASSACHUSETTS

grants to providers

Massachusetts expanded state subsidies and made permanent grants that provide monthly payments directly to early education and child care providers. The grants, which support more than 90% of early education and child care programs in the state, helped many providers stay open during the pandemic, increased compensation for early educators, and expanded the number of child care slots statewide.

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MISSOURI

EMPLOYER PARTNERSHIP

Under Missouri’s state-funded Child Care Works initiative, employers can offer child care benefits to workers and share the cost with parents and the state. Funded by a $2.5 million allocation in the state’s current fiscal year budget, the pilot program will subsidize up to 450 seats in early childcare centers across Missouri. The focus is on supporting families that don’t qualify for state subsidies, with incomes up to 5.5 times the federal poverty level. It’s estimated that families could save up to as much as 75% on their child care costs.

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MONTANA

PERMANENT TRUST

Montana used a state budget surplus to put a $10 million permanent child care trust in infrastructure legislation. The trust’s uses include technical assistance grants, recruitment and retention efforts, grants to support providers pursuing training and continuing education, quality improvement initiatives, and expanding the availability of before- and after-school care.

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WASHINGTON, D.C.

PAY EQUITY FUND

The District of Columbia created the Early Childhood Educator Pay Equity Fund to augment child care workers’ compensation by $5,000 to $14,000 annually, depending on their role. Early findings show a 7% increase in employment in the child care sector and improved retention.