Inadequate state investment in child care holds families, employers, and our economy back. Read our new report to see how your state measures up.
Child Care Aware® of America’s (CCAoA) new study, An Uneven Start: 2025 State Funding for Child Care & Early Learning, examined Fiscal Year (FY) 2025 state child care and preschool funding. Respondents were experts at state finance and budget divisions and at state policy and budget organizations from 42 states and Washington, DC.
Here’s what we learned:
- States are coming up short for young children. State funding for child care and/ or preschool in FY 2025 averages about $1,300 per child aged birth to age 5 across states that responded. The highest per child state child care and/ or preschool investment in FY 2025 (Massachusetts, $4,600) is about the same as the lowest per child state K-12 investment in FY 2023 (Nebraska, $4,200). This underspending on children ages birth to 5 is problematic, as research shows that investments in early childhood, a period of rapid brain development, have the highest rate of return.
- Children, families, and communities across America are not on an even playing field when it comes to state child care funding. Looking at total state investments in child care and preschool in FY 2025 (including federally required matching and maintenance of effort funds) states are investing less than $500 per child under age 5 to more than $4,600 per child. The District of Columbia is an outlier, investing over $8,000 per child. Six states (Idaho, Indiana, Nevada, Ohio, Wisconsin, and Wyoming) fail to invest in child care beyond what is required to draw down federal dollars.
- Fragmented governance and funding streams make tracking and reporting state child care and preschool funding challenging—reducing transparency and accountability. States can spread funding for child care and preschool across multiple state agencies or departments. Further, states often blend and layer funding from state and federal sources to piece together their child care systems. This complexity makes it difficult to describe funding and programs simply and advocate for increased investment.
- States are creatively investing in demand-side (direct support for families needing help in offsetting the high cost of child care) and supply-side (improving child care supply, stability, and quality) strategies, but more progress is needed. With pandemic relief funding over, more states have stepped up and increased funding for investments in strategies to increase teacher wages, stabilize child care businesses, support more families with help offsetting the high cost of child care, and more.
Here’s what we recommend:
- Increase investments in child care. Our study found that state investment in child care and preschool is highly variable. Research has shown that spending on children under age 5 is low relative to K-12 per child spending. With federal pandemic relief funding for child care over, more states have increased support for early learning. Now every state needs to continue or begin to make progress in investing in child care.
- Increase transparency of investments in child care and preschool. Streamline tracking investments across agencies and funding streams so stakeholders can easily understand the current funding environment and work toward improvements.
- Consider restructuring or, at a minimum, increase coordination across agencies/ departments administering child care and preschool programs and funding. Streamlining child care and preschool governance structures can improve clarity and increase efficiency to better serve children and families.
This study shows that states must do more—alongside families, businesses, communities, and the federal government—to solve our nation’s child care crisis so that families, children, our communities, and our economy can flourish. The detailed profiles of each state’s funding landscape in the report provide a foundation for advocacy and future policy development.
Together we can make America child care strong—and that makes everyone stronger.