Former Treasury Secretary Janet Yellen called child care a “textbook example of a broken market.” The problems plaguing this broken market were aptly summarized by a provider in Maine who shared, “Keeping our rates low for parents but also high enough so we can keep our doors open and give our staff a livable wage is very hard in child care and the number one reason why centers can not keep dedicated staff.” Resolving this crisis necessitates lowering prices for families, expanding the supply of high-quality child care programs for children, and helping providers cover their growing overhead expenses.
When the federal government has stepped in to fix this broken market, the results have been effective. Federal child care investments made during the pandemic demonstrated that public funding is effective at stabilizing the child care sector. However, this funding was temporary, and the more permanent federal and state child care assistance programs and tax credits designed to help families pay for child care currently are narrowly targeted and underfunded, leading to gaps between what families are able to pay and what providers need to operate their programs. The federal Child Care Development Block Grant (CCDBG) program provides child care subsidies to low-income families, but due to underfunding only serves 13 percent of children eligible to receive it. Families who get subsidies often still have child care copayments and the tax credit program that exists to help, the Child and Dependent Care Tax Credit (CDCTC), even with the changes in the recently signed Megabill, is small relative to the national average annual price of child care, which was $13,128 in 2024. While a valuable tool for some families to get reimbursed for care expenses, the CDCTC does not reach most families with children, build needed child care supply, or raise wages for early educators.
As the current administration and Congress decrease the federal funding available for social service programs, straining state budgets, and with the expiration of the federal pandemic-era relief funds, a growing share of states are turning to the business community for child care investment. Tri-Share, one model of child care public–private partnership in which the state government, employers, and their employees each pay a share of the cost, has become an increasingly popular option for state politicians looking to pass child care legislation while keeping the state’s investment in the sector relatively low. Ohio’s legislators, for example, included $10 million for a new Tri-Share program in the budget, but that will help a limited number of families and leave behind many low-income families when Ohio’s eligibility for child care subsidies is already among the lowest in the country. As more state and local governments consider Tri-Share as a solution to their child care problems, it becomes increasingly important to consider its impact on child care affordability, supply, and quality.
The Tri-Share model is not a solution to the child care crisis because it does not build child care supply or substantively improve compensation and benefits for early educators.
While Tri-Share does make it easier for parents in the program to pay for child care, it has not proven scalable and does not fill child care deserts, address workforce shortages, or improve program quality. This commentary expands on these shortcomings, arguing that the Tri-Share model is not a solution to the child care crisis because it does not build child care supply or substantively improve compensation and benefits for early educators. The investment of public funds in child care remains the best way to improve child care affordability, supply, and quality, but states and localities looking to public—private partnerships as a partial policy solution would benefit from replicating cost-sharing models other than Tri-Share.
What Is Tri-Share?
Tri-Share is a cost-sharing model that started as a pilot program in Michigan and has been replicated by other states looking to manage the burden of rising child care prices, including Connecticut, Indiana, Kentucky, New York, North Carolina, North Dakota, Ohio, and West Virginia. It works effectively for the few families who are eligible due to their employer’s participation in the program, but its inefficiency and inability to build supply, scale, or meet the needs of the majority of families in the state limits its efficacy as a solution to the child care crisis. Furthermore, the opportunity costs involved suggest Tri-Share may unintentionally do harm.
While Tri-Share is not a panacea, it does provide some benefits for the few who are eligible to participate. The addition of a third payer, the employer, can reduce the amount parents must pay for child care. According to a 2022 evaluation by Public Sector Consultants, before Michigan’s Tri-Share pilot, employee participants spent an average of 15 percent of their monthly household income on child care, nearly double what would be considered affordable. (The U.S. Department of Health and Human Services recommends that families pay no more than 7 percent of their household income on child care.) Tri-Share reduced their average monthly child care payments by about two thirds—from $716 per month to $252, saving families $464 per month on average. Affordability is Tri-Share’s most consistent positive outcome and 97 percent of the families surveyed for Michigan’s 2024 evaluation said their participation in the program improved their financial stability. Michigan purports to have saved families over $8.6 million since the program began.
Michigan Tri-Share also attempts to tackle one of the challenges currently facing the sector: making child care more affordable for early educators who are also parents of young children. Because providers participate in Tri-Share as employers, early educators who work at these locations can then sign up for the program as employee participants, reducing the cost of care for their own children.
Making child care affordable for early educators is critical to reducing staff turnover, which in turn helps child care programs maintain their quality. Because economic constraints and historic discrimination have led to poor pay for early educators, they would need to spend anywhere from 44 percent to 100 percent of their average annual wage, depending on their state of residence, to afford center-based care for two children. However, Tri-Share is not the best means by which to make care more affordable for early educators. A growing number of states are offering free or subsidized child care for early educators to reduce staff turnover and mitigate employee shortages. These state investments eliminate the cost of child care for participating families and are roughly equivalent in cost to the state as a Tri-Share program.
The Limits of Tri-Share
One major downside of Tri-Share is that it does not build child care supply and so even in communities where the program exists, it has been inadequate to meet the needs of local families. Though the supply of child care has slowly returned to pre-pandemic levels, many parents still live in child care deserts and report difficulty finding programs. Families desperately need more child care capacity, but Tri-Share does not create more child care slots and is only effective in communities in which there is already a sufficient supply, which does not exist in most communities.
Another downside for Tri-Share is that program uptake has been a challenge in the states that have implemented it. Michigan Tri-Share, for example, only serves participating companies’ employees whose household incomes fall within a narrow window; families with the lowest household incomes are ineligible to participate and are served instead by state CCDBG programs. Families are also ineligible if they exceed a certain income. Michigan raised its eligibility window following its 2022 pilot and 2024 evaluation reports, both of which noted the need to expand eligibility to increase uptake, and its Tri-Share program now serves employees with household incomes that fall between 200 and 400 percent of the Federal Poverty Line. Despite Michigan’s efforts to make more families eligible for Tri-Share, four years into the program, it still only serves 702 families and less than one thousand children. Notably, many of these families are early educators: nearly half of the Michigan Tri-Share program’s employer participants are child care providers. By contrast, CCDBG, which due to underfunding only serves 7 percent of the Michigan children eligible to receive it, subsidizes child care tuition for 14,616 children in Michigan.
There are also downsides to tying child care to employment. Doing so limits the number of families eligible to participate because the program is only available to employees of participating companies. Relatively few employers in a given community will be likely to opt in, most families in that community would not be eligible, and thus would have to win the “boss lottery” to be lucky enough to get benefits. Furthermore, families can lose their child care benefits if they change their jobs. One of the most commonly cited reasons for employees to stop participating in Michigan Tri-Share is that they changed jobs and the new employer was not part of the program. Switching child care providers can be stressful for children, who benefit from stable relationships with trusted and nurturing caregivers. (For this reason, CCDBG requires children deemed eligible to receive benefits for at least twelve months before their eligibility is redetermined.) Moreover, child care benefits may also be one of the first things employers end if faced with financial strain or instability.
Finally, there are opportunity costs associated with investing in Tri-Share. States have limited resources to invest in child care and must prioritize programs that have the greatest impact lowering prices for families and building the supply of high-quality programs. States that invest in Tri-Share could instead be using those funds to expand CCDBG, to fully subsidize child care for early educators, or to invest directly in child care, as states such as Connecticut, New Mexico, Texas, and Vermont have done. Policymakers must be held accountable to making these investments in child care. In Indiana and North Carolina, both of which have Tri-Share programs, policymakers have downplayed their responsibility to invest in child care, suggesting that employers should invest in child care benefits to stabilize their workforce. While employers can play a positive role in the child care sector, it is important to prevent policymakers from shifting responsibility for investing in child care from the public to the private sector.
In its review of the Michigan Tri-Share program, Public Sector Consultants concluded, “there are likely other targeted tools that the State could implement to improve child care supply and business sustainability.” What they found for Michigan is true for the model in general: Tri-Share, even if fully scaled, could only ever be one of several state child care solutions. Other programs would need to subsidize care for low-income families and solve supply shortages.
Alternative Elements of Successful Cost-Sharing Programs
The way Tri-Share has been implemented to date has led to limited reach and challenges scaling the program. However, there is merit to the idea that splitting the cost of care among more payers will lower prices for participating families, and can provide more needed resources to the child care sector. Other cost-sharing models, some of which bear similarities to Tri-Share, lower tuition prices for families while avoiding other pitfalls mentioned above. These models offer important alternatives for states considering engaging employers in solutions to child care affordability and supply problems.
Child care funds, which pool public and private investments, are increasingly popular means by which to pay for programs to help mitigate the child care crisis. One fund, Iowa’s Childcare Solutions Fund (CSF), implemented in 2024, was specifically designed to build child care supply. Like Michigan’s Tri-Share, it pools public and private funds and relies on a nonprofit to administer those funds. (In Michigan’s case, the United Way of Northwest Michigan, and in Iowa’s case, the Iowa Economic Development Authority, known as the IEDA Foundation.) However, whereas Tri-Share funds are used to lower prices for families by dividing tuition among more payers, CSF fills the gap between the number of children who need care and the number of available child care slots by directly investing in new child care slots and programs and raising early educator wages to reduce turnover. Though the CSF does not directly subsidize child care tuition, the Iowa Area Women’s Foundation, a CSF partner, suggests that the CSF makes high-quality child care more affordable by raising the wages of qualified and passionate early educators without needing to raise prices for families.
The CSF pilot program made strides toward expanding child care capacity by starting to stem Iowa’s child care supply decline by adding 275 slots. The CSF is projected to add nearly 11,000 new registered or licensed child care slots if scaled statewide. This program offers a promising means of building much needed child care capacity. However, Iowa is estimated to need between 118,000 and 242,000 more child care slots to meet demand, suggesting that the CSF would, like Tri-Share, need to be one of several programs working in synthesis to address child care’s equally important affordability, supply, and quality challenges.
When Travis County, Texas proposed a child care fund to increase access to affordable and high-quality child care, its plans included a strategy for companies to contribute to their employees’ child care costs by matching public funds. This grows the program by adding more money to the overall pool of funds. Unlike Tri-Share, Travis County’s child care fund serves families who do not work for participating employers. It is specifically targeted toward low-income families. And while Tri-Share funds can only be used by providers to cover the cost of care, Travis County’s child care fund is intended to build the child care workforce capacity, including for family-based child care providers, and to provide “gap funding” that makes up the difference between the cost of care and the subsidy reimbursement rate. Public funds, like the one in Travis County, lower child care prices while helping providers pay for overhead expenses and professional development services that will enable them to retain and train staff, preventing child care shortages.
Conclusion
The federal government’s attacks on child care will make it more challenging for state and local governments to meet families’ need for affordable child care. States and localities need financial support to make care more affordable and build supply and see public–private partnerships, including Tri-Share programs, as a solution. But these governments must consider how potential solutions impact child care affordability, supply, and quality. Tri-Share, as it has been implemented, lowers tuition prices, but only for families of participating employers, and fails to build supply or raise wages for early educators. Tri-Share is too limiting in its current form.
However, cost-sharing programs in Iowa and Texas show how states and local governments can expand the supply of affordable, high-quality child care by having businesses contribute to public funds. Rather than simply trusting businesses in unrelated sectors to responsibly implement good child care plans, states and localities that create public child care funds place child education and health experts, parents, providers, and community members in charge of developing and implementing child care plans. Governments considering cost-sharing models to increase investment in child care need to carefully assess how their programs will address all of the pillars of child care—affordability, supply, and quality.
Finally, while engaging employers in child care cost-sharing programs can add an additional source of revenue and make care more affordable for families, there are opportunity costs to relying on companies that are primarily motivated by profit, especially when it comes to a service with so much at stake for child and family well-being. State and local policymakers must continue expanding public funding for child care.
Thank you to Julie Kashen, Ruth Friedman, and Elliot Haspel for the time and thoughtful feedback you provided to improve this commentary.
Tags: child care, child care crisis, gop megabill, tri-share, cost-sharing
The Tri-Share Model Is Not a Solution to the Child Care Crisis
Former Treasury Secretary Janet Yellen called child care a “textbook example of a broken market.” The problems plaguing this broken market were aptly summarized by a provider in Maine who shared, “Keeping our rates low for parents but also high enough so we can keep our doors open and give our staff a livable wage is very hard in child care and the number one reason why centers can not keep dedicated staff.” Resolving this crisis necessitates lowering prices for families, expanding the supply of high-quality child care programs for children, and helping providers cover their growing overhead expenses.
When the federal government has stepped in to fix this broken market, the results have been effective. Federal child care investments made during the pandemic demonstrated that public funding is effective at stabilizing the child care sector. However, this funding was temporary, and the more permanent federal and state child care assistance programs and tax credits designed to help families pay for child care currently are narrowly targeted and underfunded, leading to gaps between what families are able to pay and what providers need to operate their programs. The federal Child Care Development Block Grant (CCDBG) program provides child care subsidies to low-income families, but due to underfunding only serves 13 percent of children eligible to receive it. Families who get subsidies often still have child care copayments and the tax credit program that exists to help, the Child and Dependent Care Tax Credit (CDCTC), even with the changes in the recently signed Megabill, is small relative to the national average annual price of child care, which was $13,128 in 2024. While a valuable tool for some families to get reimbursed for care expenses, the CDCTC does not reach most families with children, build needed child care supply, or raise wages for early educators.
As the current administration and Congress decrease the federal funding available for social service programs, straining state budgets, and with the expiration of the federal pandemic-era relief funds, a growing share of states are turning to the business community for child care investment. Tri-Share, one model of child care public–private partnership in which the state government, employers, and their employees each pay a share of the cost, has become an increasingly popular option for state politicians looking to pass child care legislation while keeping the state’s investment in the sector relatively low.1 Ohio’s legislators, for example, included $10 million for a new Tri-Share program in the budget, but that will help a limited number of families and leave behind many low-income families when Ohio’s eligibility for child care subsidies is already among the lowest in the country. As more state and local governments consider Tri-Share as a solution to their child care problems, it becomes increasingly important to consider its impact on child care affordability, supply, and quality.
While Tri-Share does make it easier for parents in the program to pay for child care, it has not proven scalable and does not fill child care deserts, address workforce shortages, or improve program quality. This commentary expands on these shortcomings, arguing that the Tri-Share model is not a solution to the child care crisis because it does not build child care supply or substantively improve compensation and benefits for early educators. The investment of public funds in child care remains the best way to improve child care affordability, supply, and quality, but states and localities looking to public—private partnerships as a partial policy solution would benefit from replicating cost-sharing models other than Tri-Share.
What Is Tri-Share?
Tri-Share is a cost-sharing model that started as a pilot program in Michigan and has been replicated by other states looking to manage the burden of rising child care prices, including Connecticut, Indiana, Kentucky, New York, North Carolina, North Dakota, Ohio, and West Virginia. It works effectively for the few families who are eligible due to their employer’s participation in the program, but its inefficiency and inability to build supply, scale, or meet the needs of the majority of families in the state limits its efficacy as a solution to the child care crisis. Furthermore, the opportunity costs involved suggest Tri-Share may unintentionally do harm.
While Tri-Share is not a panacea, it does provide some benefits for the few who are eligible to participate. The addition of a third payer, the employer, can reduce the amount parents must pay for child care. According to a 2022 evaluation by Public Sector Consultants, before Michigan’s Tri-Share pilot, employee participants spent an average of 15 percent of their monthly household income on child care, nearly double what would be considered affordable. (The U.S. Department of Health and Human Services recommends that families pay no more than 7 percent of their household income on child care.) Tri-Share reduced their average monthly child care payments by about two thirds—from $716 per month to $252, saving families $464 per month on average. Affordability is Tri-Share’s most consistent positive outcome and 97 percent of the families surveyed for Michigan’s 2024 evaluation said their participation in the program improved their financial stability. Michigan purports to have saved families over $8.6 million since the program began.
Michigan Tri-Share also attempts to tackle one of the challenges currently facing the sector: making child care more affordable for early educators who are also parents of young children. Because providers participate in Tri-Share as employers, early educators who work at these locations can then sign up for the program as employee participants, reducing the cost of care for their own children.
Making child care affordable for early educators is critical to reducing staff turnover, which in turn helps child care programs maintain their quality. Because economic constraints and historic discrimination have led to poor pay for early educators, they would need to spend anywhere from 44 percent to 100 percent of their average annual wage, depending on their state of residence, to afford center-based care for two children. However, Tri-Share is not the best means by which to make care more affordable for early educators. A growing number of states are offering free or subsidized child care for early educators to reduce staff turnover and mitigate employee shortages. These state investments eliminate the cost of child care for participating families and are roughly equivalent in cost to the state as a Tri-Share program.
The Limits of Tri-Share
One major downside of Tri-Share is that it does not build child care supply and so even in communities where the program exists, it has been inadequate to meet the needs of local families. Though the supply of child care has slowly returned to pre-pandemic levels, many parents still live in child care deserts and report difficulty finding programs. Families desperately need more child care capacity, but Tri-Share does not create more child care slots and is only effective in communities in which there is already a sufficient supply, which does not exist in most communities.
Another downside for Tri-Share is that program uptake has been a challenge in the states that have implemented it. Michigan Tri-Share, for example, only serves participating companies’ employees whose household incomes fall within a narrow window; families with the lowest household incomes are ineligible to participate and are served instead by state CCDBG programs. Families are also ineligible if they exceed a certain income. Michigan raised its eligibility window following its 2022 pilot and 2024 evaluation reports, both of which noted the need to expand eligibility to increase uptake, and its Tri-Share program now serves employees with household incomes that fall between 200 and 400 percent of the Federal Poverty Line. Despite Michigan’s efforts to make more families eligible for Tri-Share, four years into the program, it still only serves 702 families and less than one thousand children.2 Notably, many of these families are early educators: nearly half of the Michigan Tri-Share program’s employer participants are child care providers.3 By contrast, CCDBG, which due to underfunding only serves 7 percent of the Michigan children eligible to receive it, subsidizes child care tuition for 14,616 children in Michigan.
There are also downsides to tying child care to employment. Doing so limits the number of families eligible to participate because the program is only available to employees of participating companies. Relatively few employers in a given community will be likely to opt in, most families in that community would not be eligible, and thus would have to win the “boss lottery” to be lucky enough to get benefits. Furthermore, families can lose their child care benefits if they change their jobs. One of the most commonly cited reasons for employees to stop participating in Michigan Tri-Share is that they changed jobs and the new employer was not part of the program. Switching child care providers can be stressful for children, who benefit from stable relationships with trusted and nurturing caregivers. (For this reason, CCDBG requires children deemed eligible to receive benefits for at least twelve months before their eligibility is redetermined.) Moreover, child care benefits may also be one of the first things employers end if faced with financial strain or instability.
Finally, there are opportunity costs associated with investing in Tri-Share. States have limited resources to invest in child care and must prioritize programs that have the greatest impact lowering prices for families and building the supply of high-quality programs. States that invest in Tri-Share could instead be using those funds to expand CCDBG, to fully subsidize child care for early educators, or to invest directly in child care, as states such as Connecticut, New Mexico, Texas, and Vermont have done. Policymakers must be held accountable to making these investments in child care. In Indiana and North Carolina, both of which have Tri-Share programs, policymakers have downplayed their responsibility to invest in child care, suggesting that employers should invest in child care benefits to stabilize their workforce. While employers can play a positive role in the child care sector, it is important to prevent policymakers from shifting responsibility for investing in child care from the public to the private sector.
In its review of the Michigan Tri-Share program, Public Sector Consultants concluded, “there are likely other targeted tools that the State could implement to improve child care supply and business sustainability.” What they found for Michigan is true for the model in general: Tri-Share, even if fully scaled, could only ever be one of several state child care solutions. Other programs would need to subsidize care for low-income families and solve supply shortages.
Alternative Elements of Successful Cost-Sharing Programs
The way Tri-Share has been implemented to date has led to limited reach and challenges scaling the program. However, there is merit to the idea that splitting the cost of care among more payers will lower prices for participating families, and can provide more needed resources to the child care sector. Other cost-sharing models, some of which bear similarities to Tri-Share, lower tuition prices for families while avoiding other pitfalls mentioned above. These models offer important alternatives for states considering engaging employers in solutions to child care affordability and supply problems.
Child care funds, which pool public and private investments, are increasingly popular means by which to pay for programs to help mitigate the child care crisis. One fund, Iowa’s Childcare Solutions Fund (CSF), implemented in 2024, was specifically designed to build child care supply. Like Michigan’s Tri-Share, it pools public and private funds and relies on a nonprofit to administer those funds. (In Michigan’s case, the United Way of Northwest Michigan, and in Iowa’s case, the Iowa Economic Development Authority, known as the IEDA Foundation.) However, whereas Tri-Share funds are used to lower prices for families by dividing tuition among more payers, CSF fills the gap between the number of children who need care and the number of available child care slots by directly investing in new child care slots and programs and raising early educator wages to reduce turnover. Though the CSF does not directly subsidize child care tuition, the Iowa Area Women’s Foundation, a CSF partner, suggests that the CSF makes high-quality child care more affordable by raising the wages of qualified and passionate early educators without needing to raise prices for families.
The CSF pilot program made strides toward expanding child care capacity by starting to stem Iowa’s child care supply decline by adding 275 slots. The CSF is projected to add nearly 11,000 new registered or licensed child care slots if scaled statewide. This program offers a promising means of building much needed child care capacity. However, Iowa is estimated to need between 118,000 and 242,000 more child care slots to meet demand, suggesting that the CSF would, like Tri-Share, need to be one of several programs working in synthesis to address child care’s equally important affordability, supply, and quality challenges.
When Travis County, Texas proposed a child care fund to increase access to affordable and high-quality child care, its plans included a strategy for companies to contribute to their employees’ child care costs by matching public funds. This grows the program by adding more money to the overall pool of funds. Unlike Tri-Share, Travis County’s child care fund serves families who do not work for participating employers. It is specifically targeted toward low-income families. And while Tri-Share funds can only be used by providers to cover the cost of care, Travis County’s child care fund is intended to build the child care workforce capacity, including for family-based child care providers, and to provide “gap funding” that makes up the difference between the cost of care and the subsidy reimbursement rate. Public funds, like the one in Travis County, lower child care prices while helping providers pay for overhead expenses and professional development services that will enable them to retain and train staff, preventing child care shortages.
Conclusion
The federal government’s attacks on child care will make it more challenging for state and local governments to meet families’ need for affordable child care. States and localities need financial support to make care more affordable and build supply and see public–private partnerships, including Tri-Share programs, as a solution. But these governments must consider how potential solutions impact child care affordability, supply, and quality. Tri-Share, as it has been implemented, lowers tuition prices, but only for families of participating employers, and fails to build supply or raise wages for early educators. Tri-Share is too limiting in its current form.
However, cost-sharing programs in Iowa and Texas show how states and local governments can expand the supply of affordable, high-quality child care by having businesses contribute to public funds. Rather than simply trusting businesses in unrelated sectors to responsibly implement good child care plans, states and localities that create public child care funds place child education and health experts, parents, providers, and community members in charge of developing and implementing child care plans. Governments considering cost-sharing models to increase investment in child care need to carefully assess how their programs will address all of the pillars of child care—affordability, supply, and quality.
Finally, while engaging employers in child care cost-sharing programs can add an additional source of revenue and make care more affordable for families, there are opportunity costs to relying on companies that are primarily motivated by profit, especially when it comes to a service with so much at stake for child and family well-being. State and local policymakers must continue expanding public funding for child care.
Thank you to Julie Kashen, Ruth Friedman, and Elliot Haspel for the time and thoughtful feedback you provided to improve this commentary.
Notes
Tags: child care, child care crisis, gop megabill, tri-share, cost-sharing