States Expand Childcare Coverage as Federal Funding Vanishes

Vermont, New Mexico, and Kentucky have enacted new laws to expand access to childcare, moving to fill the gap left by the end of major federal funding streams. These state-level initiatives aim to support working families who faced rising costs and reduced availability after pandemic-era subsidies expired in September 2023.

Vermont became the first state to establish a universal childcare entitlement in 2023. The law, supported by bipartisan advocacy, funds a near-universal public system through a 0.44% payroll tax split between employers and employees. Between July 2022 and May 2025, the number of families receiving subsidies increased by 55%. Approximately 12,000 children are currently covered under this program, which also uses flexible grants to improve provider quality.

New Mexico expanded its approach in November 2025 by becoming the first state to offer universal childcare to all working parents, regardless of income. This move built on an existing program that previously served only low-income families. Before the expansion, 32,000 children received support. The state aims to double that number by 2028. Officials estimate the program will save families an average of $12,000 annually.

The Kentucky legislature passed a bipartisan measure in April 2026 to invest in childcare infrastructure. The law provides free care for the children of center employees and increases state-subsidized reimbursement rates. It also mandates training for providers caring for young children with special needs. Governor Andy Beshear launched a separate Pre-K for All pilot in several counties to complement these efforts.

New York City is also expanding access. Mayor Zohran Mamdani announced a plan to build a universal early childcare system, including free slots for toddlers as young as two in all five boroughs. This expansion follows existing programs for three-year-olds and pre-kindergarten students. A September rollout for the toddler slots faced operational delays, though initial capacity has increased.

These state actions occur against a backdrop of rising national costs. Out-of-pocket expenses for center-based care more than doubled since 2019. The national average price reached $13,128 in 2024. A 2023 government survey found that over 70% of families seeking care found it difficult to locate available spots. Another 11% failed to find any childcare at all.

Supply constraints remain severe. Three-quarters of providers report turning away families or maintaining waiting lists. In 32 states, infant care costs exceed in-state tuition at public universities. Childcare workers, who are predominantly women of color, earn wages comparable to parking lot attendants and dog walkers. Roughly half of U.S. families live in areas classified as childcare deserts, where three children under five compete for every licensed slot.

Vice President JD Vance announced a proposal in September 2026 to repurpose existing subsidy funds as cash transfers for married parents where one spouse stays home. The proposal cites a subsidy program that currently reaches only 16% of eligible children. State-level expansions in the Northeast and Midwest offer alternative models that focus on direct access to care rather than household income thresholds.