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.

July 2025 Updates

Federal Highlights in a Nutshell

The One Big Beautiful Bill Act was signed into law on July 4. We’ve covered it extensively the past few months; no need to beat a dead horse, but suffice to say the positive impact of the modest child care-related tax credit expansions added by the senate will pale in comparison to the damage done to the ECE sector by the Medicaid and SNAP cuts. While work requirements for both will go into effect over the next two years, the cuts aren’t happening until 2028, giving states at least a little time to brace for impact.

Health and Human Services Secretary Robert F. Kennedy Jr. announced on July 10 that Head Start will be considered a “federal public benefit” going forward, which means undocumented immigrants will no longer be eligible to participate in the vital early education lifeline that makes up such a big part of ECE systems throughout the country. The fight against the directive is now being added to court battles that have been underway since April. No enforcement guidance has been provided by HHS to date. See the statement from the National Head Start Association here.

The bipartisan Expanding Child Care for Military Families Act was reintroduced at the end of June by Sens. Jeanne Shaheen (D-NH) and Joni Ernst (R-IA), both of whom are senior members of the U.S. Senate Armed Services Committee. The bill would open the door for a “first-of-its-kind Department of Defense-led pilot program to support workforce development opportunities for child care providers and to add capacity to the child care sector by increasing recruitment, retention, and training of child care staff.”

In mid-July, Sens. Tim Kaine, Bobby Scott, and Patty Murray reintroduced the Child Care for Working Families Act, which has been introduced in every Congress since 2017. The bill would address affordability issues by capping child care costs at 7% of family income, increasing wages for early childhood educators, and expanding access to child care options.

The National Governors Association Publishes Roundtable Takeaways

In October 2024, the National Governors Association Center for Best Practices partnered with the First Five Years Fund to host a roundtable discussion featuring state and territorial child care leaders. The group, composed of 12 advisors from 11 states, looked ahead to post-pandemic relief funding challenges and opportunities and discussed the next priorities for states and Governors.

Participants called out challenges related to governance, data, workforce recruitment and retention, and the CCDF final rule updates. They also shared the innovations they’re pursuing to address these challenges, including some of our favorite topics like public-private partnerships, Tri-Share, subsidies and scholarships for the ECE workforce, and others. It’s interesting to compare the ideas discussed among the 11 states represented at the roundtable with the bills that came out of the current legislative session in the months since it took place.

Read: Governors’ Perspectives on Addressing Child Care Needs: Supply and Demand Trends to Watch (National Governors Association)

Wisconsin Gets its Budget and Child Care Funding Done in a Photo Finish

In an unusually thrilling race between a state and national legislature, Wisconsin lawmakers were able to save the state more than $1 billion in federal health care funding by getting the state budget—signed by Governor Tony Evers at 1:30 am on July 3—across the finish line just one day before the national one became law.

Of the $111 billion spoken for in the bi-annual budget, $361 million of it is earmarked for child care, including $110 million in stabilization funding for providers, an expansion of the Wisconsin Shares child care subsidy program, and a new Early School Readiness program for four-year-olds that will provide more options for families looking to enroll in 4K. Critics of the budget have said that it doesn’t do enough to address rising costs, and will simply allow the status quo to continue for two more years.

Read: In wee hours, Legislature passes and Evers signs 2-year, $111-billion state budget (Wisconsin Public Radio)

Seattle Set for $1.3 Billion Levy Renewal Vote this November

Voters in the Washington city of Seattle will have a chance to vote on a sweeping, 6 year, $1.3 billion investment in childcare, preschool, mental health, student safety, college tuition, and career pathways. The Families, Education, Preschool, and Promise (FEPP) levy was first approved in 2018, but can trace its roots back to 1990, when 56% of voters supported the seven-year, $69.2 million Families and Education Levy. FEPP now finds itself up for renewal after unanimous passage by the City Council.

The updated funding would support:

• A 130%+ increase in affordable child care slots, from 600-1400
• 600 more slots for the Seattle Preschool Program
• Five additional School Based Health Centers for K-12
• Universal access to a free two-year degree from local colleges
• Expanded trade pathways through Seattle Promise

The levy’s renewal comes on the heels of voters approving more than $2.5 billion in Seattle Public Schools levies earlier this year.

Read: 2026 Families, Education, Preschool, and Promise Levy Renewal (Seattle City Council)

Other Developments Throughout the Country

The 74 published an article highlighting the successful efforts of child care advocates in Idaho, Maryland, and Minnesota to halt potentially harmful increases in child-to-staff ratios this year. As the need for increased supply continues to grow, the short-term appeal of deregulation remains a key topic of conversation.

Last month, Ohio’s proposed Child Care Cred Program looked like it wouldn’t survive the budget process. This month, it was signed into law with $10 million in seed funding. This Tri-Share-adjacent model features a 40/40/20 split between employees, employers, and the state. Now, the Ohio Department of Children and Youth must take on the challenge of recruiting employers into the program.

Neighborhood Villages released a comprehensive Massachusetts Budget Debrief with the funding breakdown for key early care and education programs, which were allocated $1.7 billion of the $61 billion budget. This includes a record-high $1.06 billion for the commonwealth’s Child Care Financial Assistance program, but disappointingly level funding for many other programs.

New Jersey continues to take steps toward universal preschool and free, full-day kindergarten, with Governor Phil Murphy signing three more early childhood education bills into law this month. Together, the bills codify preschool funding formulas, reduce red tape, align appropriations language, and establish reporting and consumer education requirements for state agencies.

ICYMI: June 2025 Updates

Expansion of Three Child-Care Related Tax Credits Added to Senate Version of Budget Bill

Senator Katie Britt (R-AL) led the effort to include updates to three vital child care tax credits in the Senate Finance Committee’s draft legislative text for their version of the budget reconciliation legislation. The House version previously passed on May 22 without these updates. The expansion would increase the maximum contribution to the Dependent Care Assistance Plan (D-CAP) to $7,500 from $5,000; increase the maximum credit for the Employer Provided Tax Credit (45F) to $500,000 and $600,000 for large and small businesses, respectively, and increase the Child and Dependent Care Tax Credit for working families.

The bill still has to work its way through additional hurdles and negotiations, but there is optimism that the final package will include these provisions.

Read: FFYF’s Sarah Rittling on proposed expansion of child care tax credits (First Five Years Fund)

Connecticut Governor Signs Milestone ECE Package into Law

Connecticut ended its legislative session with a bang, passing a series of early care and education-focused bills in its last month that have since been signed into law by Governor Ned Lamont. In tandem, House Bill 5003, Senate Bill 1, and House Bill 7288 address everything from child care funding assistance to pay parity, facilities grants, and consolidation of family-facing resources. Highlights include:

• A $300 million Early Childhood Education Endowment funded annually by the state's unappropriated budget surplus
• A centralized, online family portal for resource and referral, payments, openings and enrollment, and assistance programs
• An $80 million Child Care Facilities Grants Program for facility improvement
• Fully subsidized child care and preschool for parents making under $100,000 and a 7% cost cap for those in higher income ranges

Per CT News Junkie, Office of Early Childhood Commissioner Beth Bye said “[This legislation] will make childcare free or affordable for tens of thousands of families and provide a portal where parents can find affordable childcare in their community…As the endowment grows, it will reach more communities and more families.”

The bills combine to represent the most significant state action on ECE we’ve seen this year. SB 1, which started as a universal pre-K endowment (highlighted here in February), but evolved through negotiation to include all ages birth-five, faced criticism from Republican lawmakers for its reliance on potentially unsustainable surplus funds.

Read: Lamont, Educators, Lawmakers Celebrate ‘Transformational’ Childcare Legislation (CT News Junkie)

Crucial Stabilization Funding Set to Expire in Wisconsin

Wisconsin’s Child Care Counts program has been through a whirlwind few months in the state legislature. The supply-centered stabilization fund, which began in March 2020, helped increase access to high-quality care for Wisconsin families while providing workforce recruitment and retention benefits to providers. Per the Wisconsin Department of Children and Families, 83% of the state’s providers use the funds for operating expenses, nearly half used it to offer financial assistance to families, and over 80% paid out staff bonuses or stipends with it.

Unfortunately, Child Care Counts has relied heavily on American Rescue Plan Act of 2021 funds that have since expired. Round 5 of the Stabilization Payment Program ran through the end of June 2025. Governor Tony Evers initially asked for nearly $500 million in his budget proposal to keep the program alive, but that was slashed by the Joint Finance Committee in May. Now, Democratic lawmakers are hoping to find a new path forward by introducing the legislation separately outside of the budget proposal.

As many as 25% of providers have indicated that they are “somewhat” or “more likely” to close if the stabilization funding stops, and more than a third have said they are somewhat likely to close classrooms or reduce capacity or hours. That’s a supply hit that the state, which already ranks near the bottom of the country in early care and education funding and has an estimated 48,000 children waitlisted for care, simply can’t afford.

Read: Wisconsin Democrats unveil $480M child care plan after budget cuts (The Center Square)

Big Tri-Share Updates in Three States

Ohio’s efforts to stand up their version of Tri-Share, called the Child Care Cred Program, did not survive Senate cuts. Per the Ohio Capital Journal, Policy Matters Ohio supported the removal of the model, “citing ‘lackluster results’ from comparable programs in other states.

Read: Child care programs take hits in Ohio Senate budget, even a Republican-supported one (Ohio Capital Journal)

Michigan, Ohio's neighbor to the north, continues to lean into their flagship Tri-Share program, with the Michigan Department of Lifelong Education, Advancement, and Potential (MiLEAP) announcing income eligibility expansion up to 400% of the federal poverty level, up from 325%. The move will make Tri-Share accessible for employees who previously made too much to qualify, but still struggled with the high cost of child care. It’s also likely to draw additional interest from higher paying employers who may not have seen as much value in the program with the lower caps.

Read: MiLEAP Expands MI Tri-Share Child Care Program to Support More Working Families (michigan.gov)

In Indiana, the recently rebranded Northeast Indiana Early Childhood Coalition launched Tri-Share Plus, funded by grants from the Northeast Indiana Strategic Development Commission. Perhaps not coincidentally, the program will be available in the region of the state that shares a border with Michigan. Tri-Share Plus is launching with eight participating employers.

Read: Local early childhood coalition unveils new branding, cost-sharing program (21 Alive News)

Two New Reports to Know About

RAND published a report in May titled Pre-K Teacher Well-Being, Pay, and Intentions to Leave in 2024. The report features findings from “the first American Pre-K Teacher Survey” issued in March and April 2024. It’s an eye-opening, often grim overview of the overworked, underpaid, and tenuous nature of the pre-K profession. Importantly, the survey did not include pre-K teachers in non-public settings, the vast majority of whom are facing those same issues on an even larger, more exasperating scale.

Child Care Aware of America released the results of national polling conducted by the bipartisan research team of New Bridge Strategy and Hart Research showing that parents are struggling to make child care work. The report, Families Demand Child Care Investment: What Parents Need Policymakers to Know highlights three key findings:

1. The child care landscape is a complex patchwork, with many families using multiple arrangements to meet their needs.
2. Finding quality, affordable child care is a problem for most parents, a fact that was especially true for mothers, stay-at-home parents, rural families, and those with lower incomes.
3. There is broad, bipartisan support for child care investment; 81% of parents say that expanding access to affordable, quality child care should be a top or high priority for both federal and state policymakers.

We urge our readers to familiarize themselves with both reports and use the updated data in support of any ongoing advocacy efforts.

Other Developments Throughout the Country

In California, San Diego’s first-in-the-nation child care facility with extended hours for the children of law enforcement officers could serve as a blueprint for the rest of the country. The Providing Child Care for Police Officers Act would allocate $24 million annually in grants to build similar facilities throughout the state and/or subsidize the cost of care for law enforcement professionals as part of a pilot program.

Colorado’s HB25-1328 was signed into law, boosting incomes and working conditions for home care workers and increasing access to care. Highlights include stronger enforcement of workforce regulations, “Know Your Rights” training, a new consumer education website, and a minimum wage increase to $17/hour starting July 1.

Although Iowa failed to get much of its child care legislation across the line in this legislative session, Governor Kim Reynolds is trying to fill some of those gaps with the announcement of a new grant program for preschools and child care centers to partner for full-day care for 4-year-olds.

The National Conference of State Legislatures published a snapshot of paid family leave programs throughout the country, including specific examples of how states are addressing the issue.

Oklahoma is investing an estimated $10 million per year to make child care free for early childhood educators, with the legislature voting to override a previous veto on May 29. The law will go into effect on November 1.