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.

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. 

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)

ICYMI: December 2025 Updates

The Shutdown Ends. Now What?

Much to the relief of millions of Americans, Congress reached an agreement to bring an end to the longest government shutdown in U.S. history on November 12. None of the initial reasons for the impasse saw any material momentum, and no concessions were given aside from a handshake agreement to hold a vote on Affordable Care Act tax credits in the Senate. In short, the American people suffered for nothing. 

The most immediate impacts to the early care and education space are the resumption of SNAP payments, the reversal of layoffs in ACF and the Department of Education (along with some protections against future layoffs), and the gradual reopening of the Head Start programs that had been forced to close, along with a return to business as usual for those who found alternative ways to keep their doors open.

The long-term pains of the shutdown will be even more acute. As BridgeCare CEO Jamee Herbert put it, “When funding becomes inconsistent, the first things to go are the new ideas and pilot programs—like those being funded by [PDG B-5]—that represent real progress.” 

We can’t keep playing politics with ECE funding streams. As we say every month in the opening to this article, the field of ECE needs innovation and modernization right now. Every funding freeze or delay in disbursement just adds to the backlog of initiatives and mountain of opportunity cost faced at every level of the system. Here’s hoping Congress can step up and pass some meaningful child care investments now that they’re finally back to work. 

Read: The longest government shutdown in U.S. history comes to a close (NPR)

A Growing Number of States are Severely Underwater on Child Care

It feels like every month we’re calling attention to yet another freeze or reinstitution of waitlists for state child care assistance programs. What started as a quiet trickle of states in the wake of last year’s CCDF Final Rule updates has become an alarming trend. The (very predictable) end of Covid-era relief funding, the need for states to fill new gaps in social safety nets due to sharp decreases in federal investment, and omnipresent rising costs and stagnant incomes have all come together to form a perfect storm for child care funding that has left many states scrambling and desperate.

Indiana has been perhaps the most visible example of these challenges this year. They opened a waitlist for their child care and Pre-K vouchers last December, and have seen enrollment drop from 69,000 to 55,000 with 31,000 children now on the waitlist, 80% of whom are under the federal poverty line. They also recently reduced reimbursement rates, putting even more strain on providers. The state will not issue any new vouchers until at least 2027. The state’s administration has continued to message their decisions as prioritizing children and families at the cost of “short-term strain” on child care businesses, which is an almost laughable decoupling of affordability and supply. 

Would that they were the only one. Arizona’s waitlist sits at just under 10,000 children, Arkansas just made significant cuts to their reimbursement rates. Wisconsin providers are receiving 80% of what they were last year under the Covid-era Child Care Counts program, forcing some to close their doors for good. Nebraska is facing a significant shortfall next year if not addressed in the 2026 legislative session. Colorado has estimated that they will have to scale back the number of children served by their assistance program by as much as 64%, and their 10 largest counties all have enrollment freezes in place. Maryland just realized last year that they were overenrolled for their funding levels, and they’ve been frozen since May. Texas has been teetering on the edge of 100,000 waitlisted children for at least a year, only recently approving enough funding to reduce that number by about 10%.  

This situation isn’t getting better any time soon. What we really need is increased federal investment, but in its absence, states are going to need to step up and find ways to fund the economic and workforce pillar that is child care. Because while the price tag might look high now, the long-term impact on the state’s economy is orders of magnitude higher. 

• Read: No Time to Wait: How Child Care Funding Uncertainty and the Reemergence of Waitlists are Shaping Families’ Futures (Child Care Aware of America)

   

• Read: Child care crisis deepens as funding slashed for poor families (The Hechinger Report)

   

• Read: States are quietly cutting child care funding — and families are out of options (Fulcrum)

ECE Shows Out in November Elections

Colorado’s Garfield, Pitkin, and SW Eagle Counties passed Measure 7A, creating the state’s first Early Childhood Education Special District, which will provide early care and education tuition credits, expand capacity, and support educators and providers in numerous ways. The measure, a true community effort spearheaded by business, family, and ECE leaders, is expected to cost approximately $12 million per year, funded by a .25% sales tax. On the eastern side of the state, Larimer County passed a similar Measure (1B) that will use the same .25% sales tax to generate about $28 million annually to address their own supply shortages. 

Seattle, Washington voters passed Proposition 1, which increased the city’s investment in ECE to $1.3 billion, half of which will be used to double access to affordable child care slots and provide payments to child care providers. This marked a significant increase to the previous levy, funded by an average increase of approximately $27/month in property taxes. The levy passed in a landslide, with 80% voting in favor. 

Cincinnati, Ohio experienced a similar overwhelming victory, with 73% of voters saying yes to Cincinnati Public Schools Issue 28, which, along with supporting several K-12 learning programs, also renewed funding for the city’s successful Preschool Promise program, which provides $15 million in tuition assistance and preschool quality improvement while serving more than 5,250 students annually. 

A Proposed New Resource for Small Child Care Businesses

Few things are more exciting these days than a little bipartisan legislation. The COACH Act, introduced by Senators Amy Klobuchar (D-MN) and John Curtis (R-UT) and Representatives Nikema Wiliams (D-GA), Pete Stauber (R-MN), and Judy Chu (D-CA) in the Senate and House respectively, would direct the Small Business Administration to create and maintain an up-to-date resource guide for small child care businesses. 

The Act would ostensibly help small businesses on multiple fronts. First, it would be immediately beneficial to the child care businesses themselves, who would benefit from tools to help them succeed in an increasingly challenging market with low margins and significant administrative hurdles. Second, it would be an indirect boon to other small businesses, which are struggling daily with a lack of accessible, affordable child care for their employees. The more small, high-quality child care businesses we can stand up, the better the health of the entire business community. 

It does seem strange that such a small thing would even require congressional intervention (why hasn’t the SBA already tackled this low-lift, high-impact project?), but one would think that this should be relatively easy to pass. 

Read: H.R. 6045 - COACH Act (congress.gov)  

Trending Original Research and Reports

ECE Supports are an Investment in Colorado’s Future - The Bell Policy Center analyzed three years of ECE workforce investment via a survey of Metropolitan State University of Denver students. The numbers were clear: increased financial support leads directly to retention and career growth, improves quality, and makes educators feel more professionally validated. The report includes policy recommendations for future investment in the aftermath of ARPA funding. 

What exactly is “universal” child care? - Elliot Haspel lays the groundwork for conversations about universal child care by examining the foundational question of what the concept of “universality” even means. He concludes the discussion with some examples of what New York City is doing right, and why it’s important for a universal child care rollout to be done “gradually,” with very clear communication and transparency throughout the process. We’ll be coming back to this topic early and often in 2026.