Child care is one of the hottest topics in public discourse today, and for good reason. The sector is finally (if a bit slowly) getting the attention it deserves, and several universal truths have emerged:

1. The ROI for early childhood investment is staggering. From a purely economic standpoint, few investments pay off as strongly or as consistently as early childhood. The National Forum on Early Childhood Policy and Programs estimates returns between $4 and $9 per every $1 invested in high-quality early childhood programs.
2. Child care is a bipartisan issue. Although specific strategies and priorities may differ from right to left, all of society benefits from well-funded and well-functioning early care and education systems.
3. Child care is ripe for modernization. We’re not going to see sustainable gains by pouring more money into the old way of doing things. Better data and technology infrastructure can reduce barriers to entry, improve efficiencies, and give policymakers the data they need to make informed decisions.

February 2026 Updates

FY26 Early Care and Education Federal Funding Levels Set

Amid another (albeit much briefer) government shutdown, the House passed—and the President later signed into law—a series of spending packages for FY26. The bills included: 

• $8.831 billion for CCDBG (+1%)
• $12.357 billion for Head Start (+.7%)
• $315 million for PDG B-5 (flat)

In the face of a year full of threats and cuts to adjacent programs, there’s a silver lining to be found in the fact that it could have been far worse. That said, the gap between funding and affordability only widens every year that funding fails to keep pace with inflation (+2.7% in 2025). That’s not even factoring in the many other variables that will negatively impact the families and providers who benefit most from these funds in the year to come. While it’s great that we got something passed, we have to do more in the year to come. 

Read: Labor, Health and Human Services, Education, and Related Agencies Fiscal Year 2026 Appropriations Bill (U.S. Senate Committee on Appropriations)

Spotlight on State Accountability for Publicly Funded Programs

No matter what happens over the next ten months, program integrity is shaping up to one of the defining ECE themes of 2026. We covered the “fraud” story in detail last month, and watched the early fallout closely in February. Here’s what happened: 

• The Senate HELP Committee held a full hearing on Restoring Integrity: Preventing Fraud in Child Care Assistance Programs. The committee heard from three witnesses representing different parts of the system and Senators on both sides of the aisle voiced support for oversight and concerns about funding limitations. 
• Senators Ted Cruz (R-Texas), Mike Lee (R-Utah), and Rick Scott (R-Fla.) introduced the Payment Integrity Act, which would codify the pay-by-attendance model after HHS proposed rolling back the 2024 Final Rule changes that required states to pay providers up front based on enrollment. 
• Ohio became one of the first states to advance legislation stemming from the controversy, with proposed bills to require pay-by-attendance, bypass county prosecutors in favor of the Attorney General’s Office for fraud prosecution, and even require cameras at all “entrances, exits, and ‘general non-private’ areas in child care centers. 
• Indiana Governor Mike Braun created the Council on Fraud Detection and Prevention via executive order. The group has been tasked with meeting regularly to review the state’s handling of federal programs, institute fraud prevention strategies, and recover improper payments, with a report due to the governor by November 1.

However you feel about how we got here, most everyone agrees that we don't want to see a single dollar of these already underfunded programs go to anyone besides the families and providers they were meant to support. We expect every state to take a long, hard look at their existing processes and controls this year, knowing that many are working with one hand tied behind their backs due to fragmented systems and legacy technology. We are well past time for states to get serious about modernization. 

Bipartisan Bills of Note

Senators Tim Kaine (D-Virginia), Todd Young (R-Indiana), and Maggie Hassan (D-New Hampshire) reintroduced the After Hours Child Care Act. Companion legislation was also introduced in the House by Reps. Suzanne Bonamici (D-Oregon) and Ashley Hinson (R-Iowa). The Act would expand capacity for licensed programs serving those who work nontraditional hours, support on-site child care in the workplace, require a 25% match of federal funds, and mandate regular reporting on the program’s effectiveness.

Senators Roger Marshall, M.D. (R-Kansas), Kirsten Gillibrand (D-New York), and Tammy Baldwin (D-Wisconsin) proposed reauthorization of the Healthy Start program, which “supports community-based efforts to improve maternal and child health outcomes before, during, and after pregnancy.” The program specifically provides funding for communities with “disproportionately high rates of adverse maternal and infant health outcomes.” Healthy Start currently supports 115 projects throughout the country via $145 million in annual funding. 

Early Care and Education Dominates State of the State Addresses

Of the governors who delivered State of the State addresses prior to February 17, a whopping 72% addressed “child care, early learning, or policies supporting new parents and infants.” Those governors represented both the Republican and Democratic parties—another reminder that this is and will continue to be one of the most important bipartisan issues of our time. 

Read: Child Care Takes Center Stage in 2026 State of the State Addresses as Governors Focus on Affordability and Economic Stability (First Five Years Fund)

Several states have already taken action in the opening weeks of their legislative sessions, including:

Iowa passed House File 2514 with near unanimous support (86-3) at the end of February. This bill makes the state’s pilot program for providing free child care to child care workers permanent. The move essentially lifts Iowa’s Child Care Assistance program income restrictions for those who work at least 32 hours a week in the field. The cost will come in at around $12 million per year and would support recruitment and retention of qualified staff throughout the state.

Kentucky, where the massive House Bill 6 just passed with overwhelming support to now be taken up by the Senate. The bill addresses licensing regulations, quality, affordability, governance, data, and much more in what would be a sweeping review and modernization of the state’s ECE system. House Joint Resolution 50 would mandate an independent review of administrative regulations and agency processes related to opening and operating licensed and certified child care services. Senate Bill 191 would launch a pilot program for $2,000 cash payments to child care providers when students entering kindergarten pass a readiness assessment. 

Missouri legislators are hoping the fourth time’s the charm for a set of three child care tax credits designed to support philanthropic investors, providers, and employers. The bill has bipartisan support, but has failed to reach a vote in any previous session. 

New Hampshire is looking to reduce barriers to entry for child care providers caused by local zoning issues. House Bill 1195 would exempt small child care centers from local regulations and require local government bodies to allow home-based care in all dwellings that meet the state’s child care licensing standards. This would be a positive step for Family Child Care providers in the state, who make up a crucial and growing piece of the child care puzzle. 

New Mexico overcame some early hiccups and a significant amount of debate to pass Senate Bill 241 in an almost-party-line vote (25-15). This legislation would codify the eligibility and application requirements of their universal child care program. It also allows up to $1 billion to be diverted from the state’s early childhood trust fund and adds triggers for co-pays from higher-income families and wait lists if necessitated by changes to the economic climate.  

South Carolina’s S 47 bill would “dramatically expand tax credits for employers who provide childcare benefits,” raising caps from $3,000 per employee to $12,000 per child and adding incentives for on-site centers and direct benefits for the child care workforce tied to qualifications. This comes in response to the state’s labor challenges, with the Department of Social Services pointing to data showing only 43 available adults for every 100 open jobs due in part to child care constraints. 

Trending Original Research and Reports

Elliot Regenstein’s new book, Readiness: Preparing State Early Childhood Systems for a Brighter Future “examines how states govern their early childhood systems, highlighting the progress made in the last 25 years and identifying some key issues that need to be dealt with in the years ahead. The book does a thorough job of highlighting a variety of strategies and programs, then parlaying those insights into evidence-based recommendations for action. It gets a solid two thumbs up from Child Care Matters. Read: How States are Strengthening Their Early Childhood Systems (Elliot Regenstein, New America)

The Brookings Institution partnered with the Virginia Department of Education to conduct research on the consequences of insufficient access to subsidized child care. The result was “one of the largest surveys to date examining the experiences of families who are eligible for, but unable to access, child care subsidies.” An astounding 76% of those who found themselves on a waitlist reported working less than desired, with nearly half leaving their job to provide care. Read: What happens when families cannot access child care subsidies? (Brookings)

Zero2Eight and The 19th published a timely piece on the unique challenges faced Olympic athlete mothers. The article offers a behind-the-scenes look at how hard (and costly) it is for athletes to compete at the highest levels with young children by their sides, to say nothing of the adversity faced while training and preparing for Olympic participation. Read: Olympic Mom Athletes Lack Child Care and Other Support During the Games (zero2eight)

The Wisconsin Early Childhood Association (WECA) highlighted the state’s growing early childhood workforce staffing crisis with an eye-catching report showing the widening gap between licensed capacity and available educators. In group child care programs alone, nearly 30,000 potential slots are sitting vacant due to staff shortages. With 25% of the workforce existing the field in 2024 and recent trends only exacerbating the issue, the state needs to take action now to make the profession more attractive. Read: Filling the Gap: The Implications of the Wisconsin Early Childhood Workforce Staffing Crisis (WECA)

ICYMI: January 2026 Updates

Happy New Year...Or Not?

2026 couldn’t have started much worse for the child care sector, even as much of the country teeters on the brink of a full-blown affordability crisis. In case you missed it, right-wing “influencer”/YouTuber Nick Shirley posted a viral video on December 26 in which he accused multiple Minneapolis day cares run by Somali Americans of widespread fraud related to their receipt of federal funding. 

The Trump administration wasted zero time using these allegations as a pretext to freeze CCDF disbursements (later expanding that action to include TANF and the Social Services Block Grant in five blue states—California, Colorado, Illinois, Minnesota, and New York), turning the industry’s primary source of funding into a political bludgeon. The Department of Health and Human Services followed suit with a proposed rollback of several 2024 CCDF Final Rule changes, including the move to a pay-by-enrollment approach that promised improved financial stability for providers throughout the country. 

The administration has failed to acknowledge that follow-up investigations from the Minnesota Department of Children, Youth, and Families (DCYF) indicated that every center in the video was operating as expected, or that one of those centers has been closed since 2022, or that David Hoch—the “main source” in the Shirley videos—has previously referred to the Somali community as “demon Muslims,” all of which calls into question the entire premise upon which these actions were taken.  

The child care community has largely responded with a carefully measured approach to correcting misinformation and raising awareness of the very real impact of funding freezes on providers, families, and children. Nearly everyone has acknowledged that fraud is a problem we need to continue to address, just as it is whenever public funding comes into play. It's true that Minnesota is a state that has historically not been great at preventing it, but they're not alone. 

There is a strong case to be made for many states to modernize their infrastructure and oversight controls with an aim toward mitigating payment errors and preventing bad actors from stealing funds. Every dollar counts. But it should go without saying that withholding funds from millions of families that rely on them and targeting states due to their political leanings is not a productive path forward.

Read: BridgeCare’s Public Comments on CCDF Final Rule Rollbacks 

Federal Updates (Including Some Good News!)

On January 20, the House of Representatives released its Labor, Health and Human Services, and Education appropriations package. The bill incrementally increased funding for CCDBG ($85 million, just under 1%) and Head Start ($85 million, ~.7%), while also including $315 million for PDG B-5. This is not the significantly increased investment the system needs, but it is undoubtedly better than most alternatives. 

Four more bipartisan proposals were also introduced in the past month to address various aspects of the child care crisis, including: 

The Child Care Supply Tax Credit Act of 2025 (S.3534; Sens. Jim Justice, R-WV and Mark Warner, D-VA) - This bill would create a new business tax credit for eligible child care providers to offset the cost of employee wages for those who provide care to children. It would cover 5% of the employee’s base wage (7% for those in rural areas). Family Child Care providers would be eligible, along with most center-based provider types.   

The Tri-Share Child Care Pilot Act of 2025 (H.R.6312; Reps. Hillary Scholten, D-MI and John James, R-MI) - This bill would build on the success of Michigan’s Tri-Share program, which splits the cost of child care between the state, families, and participating employers, by setting aside $250 million/yr for three years for a federal pilot of the cost-sharing model. Learn more: What is Tri-Share? An Emerging Model for Child Care Funding

The Stronger Start for Working Families Act (S.2596; Sens. Maggie Hassan, D-NH and Todd Young, R-IN) - This straightforward bill would remove the $2,500 minimum income threshold for the refundable portion of the Child Tax Credit, making families eligible “beginning with the first dollar of income that they earn.” The Tax Policy Center has estimated that this change would result in a modest tax cut for nearly 3.5 million families in 2026. 

The Child Care Access & Affordability Act of 2025 (H.R.6656; Reps. Kristen McDonald Rivet, D-MI and Jen Kiggans, R-VA) - This bill “would require the Government Accountability Office to produce a report on issues families encounter when searching for child care,” including CCDBG eligibility, waitlists, and the impact of inflation. 

Alabama Looks to Limit Screen Time in Early Learning

A proposed Alabama law (House Bill 78, pre-filed by Rep. Jeana Ross) would establish evidence-based screen-time standards for children under five in publicly funded early learning programs. Licensed child care facilities, certain Pre-K classrooms, and public kindergarten classrooms would all be required to comply. 

While research in this area is admittedly still limited and existing studies have been hampered by challenges excluding other family variables that lead to increased use of screens, the general consensus is that heavy media use in early childhood is associated with obesity, shorter sleep duration, cognitive, language, and social/emotional delays, and poor executive function. The American Academy of Pediatrics recommends that screen time be limited to one hour per day of high-quality programming with parental support for children 2-5 years of age.  

The bill has received support from VOICES for Alabama’s Children, Alabama Department of Early Childhood Education secretary Ami Brooks, Department of Human Resources Commissioner Nancy Buckner, and State Superintendent of Education Dr. Eric Mackey. 

Read: Alabama bill seeks to set first-in-nation screen-time standards for young children (Gulf Coast Media)

Other Developments Throughout the Country

New York is looking primed to be the country’s next early care and education success story after Governor Kathy Hochul and New York City Mayor Zohram Mamdani kicked off the year by laying out an ambitious plan that includes making Pre-K universal statewide, achieving universal 3K access in New York City, expanding child care subsidies, and launching a new Office of Child Care and Early Education. 

Michigan passed a series of laws to enable child care facilities to install temporary locking systems for use in a lockdown or other emergency. This safety measure aligns with a similar 2020 law for schools that didn’t originally include child care centers as eligible facilities.

A new Colorado law went into effect on January 1 that “requires application, deposit, or waitlist fees to be refundable after six months if a family is not given the chance to enroll their child” in a program. Private child care centers in the state must now also “provide a transparent fee schedule and refund process explanation upon registration, when joining a waitlist, or at the request of the family.” The requirements apply to private programs that do not participate in Universal Preschool, the Colorado Child Care Assistance Program, or Head Start. 

Trending Original Research and Reports

Searchlight New Mexico published a compelling deep-dive into some of the “growing pains” associated with the state’s rollout of universal child care. This excellent piece of long-form journalism features a range of perspectives, including families, providers, and legislators on a variety of topics spanning supply issues, a perceived misalignment between reimbursement rate and mandated pay increases, and whether or not the investment can be sustainable given state budget challenges. We expect universal child care to be a very hot topic in 2026, and many eyes will be focused on whether New Mexico can make it work for the long haul. Read: Growing pains: Challenges emerge as New Mexico rolls out no-cost child care for all (Searchlight New Mexico) 

First Five Years Fund put together a primer on cost estimation models, a better way of aligning provider payment rates with the true cost of care. In it, they compare and contrast cost estimation modeling with traditional market rate surveys, which are based on what families are paying for care rather than the cost to provide that care. With eight states already using or transitioning to the cost estimation approach, we expect this trend to continue gaining momentum. Read: Cost Estimation Models: Increasing Child Care Stability Through More Accurate Provider Payment Rates (First Five Years Fund)