States Leading on Child Care Affordability as Trump Administration Tries to Take Funds Away

After years of organizing and advocacy by parents and child care policy advocates, state and local leaders have finally begun to make universal child care a central component of their plans to lower the cost of living.¹ In January, 2026, San Francisco’s Mayor Lurie announced the expansion of free, universal child care² to all families with household incomes less than $230,000 a year. Also in January, New York Governor Kathy Hochul announced that she would, in partnership with Mayor Zohran Mamdani, take the next step toward affordable, universal child care for all children under age 5.³ In New York, where families are relocating out of the city and state⁴ as a result of child care prices twice⁵ the federal benchmark for affordability,⁶ this investment will make it easier for families to find and afford hiqh-quality child care by stabilizing and lowering prices, expanding the supply of programs, and retaining early educators with higher wages and increased benefits.

Many states share New York’s vision for more affordable child care and are attempting to make child care easier to find and afford.⁷ Rather than partnering with states in supporting families, the Trump administration has tried to freeze federal child care funding for five states, including California and New York,⁸ and put up barriers to accessing child care funding in all fifty states.⁹ These actions risk destabilizing families as they could trigger the closure of small child care businesses while doing nothing to address the ongoing child care crisis parents face.

Despite federal attempts to defund child care, continued momentum in state progress toward universal child care has been remarkable. In 2019, Julie Kashen and Katie Hamm laid out a blueprint for states to follow to guarantee good, publicly funded child care options to all families and called on state policymakers to initiate bold new child care policies.¹⁰ At the time, Washington, D.C. had made the most progress, with Birth to Three DC, but no state was close to achieving universal child care.¹¹ Seven years later, states such as New York and New Mexico have set the stage for rolling out universal child care and two other states have made transformative investments that enable tremendous progress toward reaching this ambitious goal. Some states have prioritized child care in a more limited way by allocating one time funding or implementing innovative, small-scale policies to improve affordability, availability, or quality.

With all of the recent progress that states have made on moving toward publicly funded child care options for all families, what models provide the best lessons for other states and the federal government for how to expand child care affordability and access?

This report lays out what effective child care policy looks like and how states are building toward it. It focuses first on how four states—New York, New Mexico, Vermont, and Connecticut—have taken steps to guarantee public financing to transform their child care sectors. Then, it turns to how three states—Arizona, Texas, and Iowa—have made incremental progress toward expanding affordable child care options. These examples are not comprehensive, but show that investing in child care can be politically feasible in states across the political spectrum. While no state has yet “solved” the child care crisis, and continued advocacy is needed to fill remaining gaps in coverage and ensure funded programs are successfully implemented, the important actions these states have taken serve as a national model and show how other states can expand child care affordability and access.¹²

Child Care Blueprint for the States

The child care crisis poses a problem for families as well as the economy—but one that could be addressed by treating child care as a public good, guaranteeing high-quality options for all families. Toward that end, it is important for child care advocates to offer a policy vision for what child care for all looks like and how it can be achieved.

“Child Care for All: A Blueprint for States,” published by The Century Foundation in partnership with the Center for American Progress, laid out a pathway for state and local policymakers to guarantee good, publicly funded child care options to all families. It argued that bold child care policy must:

• guarantee public financing that expands with need in order to make care more affordable for every family;
• build supply by providing diverse, inclusive options;
• improve program quality by investing in high-quality care options; and
• value the workforce by offering early educators fair wages, benefits, and opportunities to unionize.¹³

Developing this policy would necessitate input from all stakeholders including parents, providers, community members, and other child care advocates. These principles would ideally reduce inequality and give all children the opportunity to start school on equal footing.

Figure 1

New York: Universal Child Care (2025)

Governor Hochul and Mayor Mamdani’s ambitious plans to make life more affordable for New Yorkers include implementing universal child care for all children under age 5.¹⁴ This proposal is the culmination of years of organizing by parents, providers, and child care advocates, and builds on the success of several existing state and local programs that have made high-quality child care easier for some families to find and afford. For example, in 1997, New York became the second state in the country to create a publicly funded pre-K program.¹⁵ In 2014, New York City worked with the state to fully fund its universal pre-k (UPK) program¹⁶ and in 2017, the city launched its seminal 3K program.¹⁷ In 2018, the state first convened its Child Care Availability Task Force, bringing child care providers, unions, advocacy groups, academics, business leaders, and local social service departments to evaluate the need for and availability of child care throughout the state.¹⁸ During the past four years, under Governor Hochul’s leadership, New York state has increased funding and expanded eligibility for child care assistance, more than doubling the number of children served by child care vouchers.¹⁹

Governor Hochul’s new proposal would build on these achievements in several ways. It would make child care more affordable by improving New York state’s UPK program so that it reaches all four year olds and expanding eligibility for child care assistance from 200 percent of federal poverty level ($64,000 for a family of four) to 85 percent of statewide median income ($114,000 for a family of four), capping child care copays for most families who receive vouchers at $15 per week.²⁰ The governor also plans to, in partnership with Mayor Mamdani, expand 3K²¹ and launch a new 2-Care program to meet the early education needs of all two and three year olds in New York City.²²

Funding for New York state’s child care and early education programs comes from city and state general funds as well as federal investments. Mayor Mamdani proposed a millionaire income tax during his campaign to raise city revenue for universal child care, free buses, and other services.²³ 2-Care advocates argue that the program pays for itself by keeping taxpaying families in the city and could contribute $603 million to New York City’s economy.²⁴ But as the Fiscal Policy Institute writes in its plan to pay for universal child care, “The most important factor in phasing in a truly universal system is the availability of stable, recurring revenue that can support the full costs of the program.”²⁵ New York could improve on its plans for funding child care by identifying and implementing a dedicated funding stream.

New York is building child care supply most directly through its Child Care Capital Program, which invests in building new child care facilities and renovating existing facilities. The state budgeted more than $100 million for the program in 2026 and estimates that this investment will create up to 10,000 new child care slots.²⁶ Building new facilities and upgrading existing ones will improve child care availability and quality in the state.

New York has also attempted to maintain and expand its child care supply by improving working conditions to recruit and retain early educators. In New York City, unionized, center-based early educators are paid a minimum of $18 an hour. Mayor Mamdani promised during his campaign to fight for pay parity between early educators and K–12 teachers.²⁷ In New York State, the Domestic Workers Bill of Rights²⁸ ensures domestic workers caring for children in their homes are paid at least the state minimum wage ($16 an hour).²⁹ Investments in good early educators are also investments in child care quality.

New York faces a long road toward achieving universal child care, but each of the aspirational child care policy goals it has set for itself so far have made child care more affordable for many families. New York would benefit from creating a dedicated revenue stream to finance universal child care. Its success currently hinges on support from New York’s legislature in passing the governor’s 2027 budget. Providers are quick to note that the state will need to raise wages to attract enough early educators to staff new child care programs.³⁰ New York will need to address these and other policy challenges as it seeks to implement the largest universal child care initiative in the country, but the model offers an important look at how states can create a patchwork of programs to address affordability, supply, and quality issues in child care.

New Mexico: Universal Child Care (2025)

New Mexico is the national leader in child care policy, launching universal child care on November 1, 2025 after four years of progress. In 2021, under the leadership of Governor Michelle Lujan Grisham, New Mexico expanded eligibility for child care assistance from 200 percent to 400 percent of the federal poverty level³¹ (FPL), freeing up household budgets for other essential expenses.³² It later used its land grant permanent fund to make this change permanent.³³ During 2022, it became the first state to guarantee annual funding for child care to stabilize and grow the child care sector, expand child care access to more families, and increase pay for early educators.³⁴ Then in September 2025, Governor Lujan Grisham announced plans to implement free, universal child care.³⁵ Most recently, on March 10, 2026, Governor Lujan Grisham signed SB241, a bill that will provide funding for the universal child care program and support the early educator wage scale.³⁶ The governor’s office estimates that free child care will save families on average $12,000 annually.³⁷ This monumental policy win was made possible by a decade of community organizing, advocacy efforts, and political leadership that built support for publicly funded child care among policymakers and constituents.³⁸

New Mexico prioritized building child care supply when in 2021 it increased provider reimbursement rates³⁹ to reflect the true cost of care,⁴⁰ and used its land grant permanent fund to make these rate increases permanent.⁴¹ From 2023 to 2024, New Mexico increased their supply—as measured by child care programs—by 34 percent.⁴² When Governor Lujan Grisham announced her intention to make child care free, she also outlined a plan to build enough child care supply, including both centers and licensed or registered child care homes, to support an additional 12,000 children.⁴³ The state plans to provide capital funds to renovate or construct licensed facilities and encourage employers to invest in child care benefits.⁴⁴ It will also make it easier for family, friend, and neighbor (FFN) caregivers to become registered.⁴⁵

Finally, New Mexico is raising wages for early educators. Investing in early educators is among the best ways to improve program quality. In 2022, New Mexico announced that it would use pandemic-era stabilization funds to raise the base pay for entry-level educators to $15 per hour and for lead teachers to $20 an hour. The state later used its land grant permanent fund to make these pay raises permanent, but realized it would need to raise wages even higher to remain competitive with other jobs. Its new plan for universal child care incentivizes providers to increase their hours of operation and raise entry-level educator wages to $18–$21 an hour. New Mexico is also developing a data system to track compensation rates and staff retention.

There is still work to be done. As of 2023, more than one in five New Mexicans resided in a child care desert.⁴⁶ While New Mexico is seeing growth in the number of providers, there is still a gap between parent demand for program options and program availability⁴⁷ and recruitment and retention of early educators is stymied by frustration over salaries and wage increases that are insufficient to keep up with inflation.⁴⁸ And even with funding, it will take time, continued resources, and ongoing support from policymakers and advocates for the state to effectively implement its plans for universal child care. Toward this end, the state may solicit input from its Early Childhood Education and Care Department (ECECD), which supports six councils to ensure policymakers, parents, providers, educators, health care professionals, tribal community members, policy advocates, researchers, and business leaders and agency staff collaborate to improve New Mexico’s early childhood system.⁴⁹ But the significant progress New Mexico has made provides a strong model for guaranteeing public financing for child care and expanding affordable and accessible options to all families.

Vermont: Act 76 (2023)

Vermont’s Act 76, spearheaded by Let’s Grow Kids and passed in 2023, established a dedicated stream of child care funding to provide child care assistance to more families, bolster child care staffing and capacity, and improve compensation, benefits, and professional development opportunities for early educators.⁵⁰ Act 76 created a new Child Care Contribution (a payroll tax) to raise an estimated $80 million annually for the Child Care Financial Assistance Program (CCFAP).⁵¹ This, supplemented with $50 million annually from the state general fund, generates a total $125 million annually for child care.⁵² The achievement was the result of a decade-long campaign to address the state’s shortage of affordable child care options.⁵³

Act 76 increased the income level at which families qualify for free child care from 150 percent of the federal poverty level (FPL) to 175 percent FPL and expanded eligibility for CCFAP from 350 percent FPL to 575 percent FPL.⁵⁴ A study by Child Trends and Vermont’s Child Development Division (CDD) concluded that between 2023 and 2024, Act 76 had a positive impact on the state’s child care supply.⁵⁵ The overall number of providers—including home-based providers—increased, and for the first time since 2018, more child care programs opened in Vermont than closed. The study notes that the number of providers increased most steeply after Vermont implemented provider supports such as increased reimbursement rates and readiness payments.⁵⁶ By 2024, Vermont had created 1,000 new child care slots, 90 new child care programs, and 220 new early educator jobs.⁵⁷ Nationwide, Vermont was among the states that added the most child care slots and the most child care programs between 2023 and 2024, relative to their previous levels.

Finally, Vermont’s Act 76 prioritizes program quality through the establishment of a child care quality and capacity incentive program that pays CCFAP-participating providers for achieving higher quality rating levels, increasing and maintaining capacity, and providing nonstandard hours of care.⁵⁸ The General Assembly noted in the bill their intent to establish inflation-adjusted minimum pay standards for providers in the future.⁵⁹ A new bill, which will come to a vote this year,⁶⁰ would also make Vermont the first state⁶¹ in the country to recognize early childhood education (ECE) as a profession if enacted.⁶² Vermont’s state advisory council, Building Bright Futures (BBF), identifies early childhood policy priorities each year and develops policy recommendations around these priorities.⁶³ BBF includes policymakers, agency staff, parents, educators, health care professionals, and a representative from the business community.⁶⁴ This is one way for the state to determine how to improve child care affordability, supply, and quality through future policies and programs.

Connecticut: SB1 (2025)

In 2025, Connecticut passed SB1, a landmark bill to create an Early Childhood Education Endowment⁶⁵ that would initially be funded with up to $300 million in unappropriated surplus funding from the state’s 2025 budget.⁶⁶ Over time, the intention is that the fund will grow with annual funding from budget surpluses and investments.⁶⁷ This legislation makes child care free for all families with annual incomes below $100,000 and families earning more will not pay more than 7 percent of their annual income—a benchmark set by the U.S. Department of Health and Human Services (HHS) for child care affordability.⁶⁸ Senate Democrats, who introduced the bill, estimate that it will create 16,000 additional child care and preschool slots by 2030.⁶⁹ The bill also increases provider payment rates; funds wage parity, health insurance, and professional development opportunities for early educators; and invests in facility and digital infrastructure improvements. Though it is early to see how this legislation impacts the supply of child care programs and early educators in the state, this trust is a promising investment in the well-being and future of Connecticut’s families. Connecticut can utilize its Early Childhood Cabinet, which brings together members from state government, higher education, child care, nonprofit and community organizations, and Connecticut families, to provide input on how these investments would most benefit families and child care providers.⁷⁰

Texas: SB1 (2025)

Texas’ final budget put $106.8 million in unexpended federal TANF funds toward child care scholarships.⁷¹ These funds were intended to reduce its waitlist for child care scholarships, which contained nearly 95,000 children.⁷² State administrators also hoped it would keep providers in business: providers struggle to keep prices affordable for parents while also maintaining quality programs and paying early educators living wages.⁷³ This funding enabled the Texas Workforce Commission, which manages Texas’ Child Care Services program, to reimburse providers at a higher rate. The Texas Workforce Commission provides opportunities for the public to give feedback⁷⁴ on child care subsidies and regulations. Another state department, the Early Learning Council, provides feedback on Head Start.⁷⁵

One-time funding is not a solution to Texas’ child care crisis. Providers were forced to increase child care prices to keep up with inflation, so most of the money Texas invested went toward higher child care scholarships rather than its waitlist.⁷⁶ However, Texas’ significant investment in child care is expected to make care more affordable for thousands of children and to help keep providers in business.

Iowa: Childcare Solutions Fund (2024)

The Statewide Childcare Solutions Fund (CSF) is a program designed to meet Iowa’s need to build child care supply. This is a critical need in Iowa, which was among the states that saw the greatest decline in child care programs from 2023 to 2024.⁷⁷ The CSF pools public and private funds and utilizes a nonprofit, the Iowa Economic Development Authority (IEDA Foundation), to administer those funds.⁷⁸ CSF fills some of 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 CSF does not directly subsidize child care tuition, the Iowa Women’s Foundation (IWF), a CSF partner, suggests that CSF makes high-quality child care more affordable by raising the wages of qualified early educators without needing to raise prices for families.

From November 2023 when the Child Care Solutions pilot started, to September 2024 when local funds reported their findings back to IWF, CSF added 275 slots.⁷⁹ In May 2025, Governor Kim Reynolds expanded the pilot statewide.⁸⁰ It is projected to add nearly 11,000 new registered or licensed child care slots.⁸¹ The program offers one means of building child care capacity, but its reliance on private contributions, lack of a dedicated public revenue stream, and lack of a direct mechanism to lower child care prices means it can only be a partial policy solution to Iowa’s child care problems. Iowa’s Child Care Task Force, which includes providers, academics, state agency workers, and business leaders, issues reports recommending additional policy solutions to the state’s child care crisis.⁸²

Arizona: State Budget (2025)

In 2025, under the leadership of Governor Hobbs, Arizona allocated $45 million to expand its Child Care Assistance Program.⁸³ This one-time funding was the largest investment of state general funds in child care in over a decade and followed another $12 million investment made last year intended to increase payments to providers who met certain quality standards.⁸⁴ Part of it will be used to take families off the waitlist for the Child Care Assistance Program, which subsidizes care for children in low-income households. First Things First is a statewide organization that works with regional councils to distribute child care funds, ensuring that local communities make decisions about which programs to fund and how best to meet the needs of Arizona children.⁸⁵ Funding will also be used to extend reimbursement rates that Arizona was able to increase during the height of the pandemic using ARPA funds and to create an enhanced reimbursement rate to reward program quality.

Looking Ahead

Seven years ago when Kashen and Hamm first published “Child Care for All: A Blueprint for States,” the guarantee of good, publicly funded child care options for all families was a seemingly far off policy goal.⁸⁶ And yet, numerous dedicated child care advocates and community organizers were already years into state-level campaigns to make universal child care a reality. Their hard work and dedication paved the way for states to make unprecedented investments in the child care sector⁸⁷ and to expand their federal–state child care programs⁸⁸ to lower costs, reduce waiting lists, and improve provider payments. Now, these states are serving as important models for political candidates and policymakers looking to help families afford the high cost of child care.⁸⁹

Moving forward, these states will need to build on the investments they have made by continuing to fill gaps in child care coverage and ensuring programs to improve affordability and build supply are well implemented. This will take ongoing support from policymakers and advocates, and additional resources that may be in short supply as Republicans’ Megabill depletes state budgets.⁹⁰ Despite this challenge, we recommend that these states continue working toward universal, free child care that fairly compensates early educators as a means to lessen families’ financial burdens, ensure children are safe and nurtured while their parents are at work, make it possible for providers to improve and expand their programs, and recruit and retain early educators.

We recognize that some states are pursuing alternative models, such as Tri-Share, to make child care more affordable or to build supply. While we commend these states for recognizing that child care affordability is an urgent issue and for taking steps to lower prices for families, we also believe for the reasons laid out in this report that public funding is the best way to build a child care system that meets the needs of families, children, and early educators. Some of the state models described above stand as powerful examples of what is possible when states use their public funds to ensure all families have access to places where their children will be cared for and educated in safe and nurturing environments.

Acknowledgment: The authors would like to thank Joe Barba and Ginger Sandweg for answering their questions about Arizona’s child care investments and Diane Girourard and Ruth Friedman for your work improving this report.

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Tags: child care, child care policy, affordability