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Q&A

Demystifying California’s Child Care Provider Rate Reform Process

How and why is the state changing the way it pays child care providers?

March 2026 | By Laura Pryor and Kristin Schumacher

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A preschool teacher sits on the floor with a small group of students as they build together with wooden blocks. They are each dressed casually and are focused on the activity.

key takeaway

California is developing a new single rate structure to pay child care providers based on the estimated cost of care rather than what families can afford to pay, but improvements to the state’s alternative methodology will be needed to ensure the process results in fair and equitable provider pay.

Child care is a “broken market,” meaning families cannot afford to pay what child care actually costs, and providers cannot survive getting paid what families can afford. To address this, California has committed to changing the way the state pays child care providers that offer subsidized care to families. While California providers and advocates have been fighting for fair pay for decades, the state’s process to improve provider pay launched in 2023. The steps involved in changing provider pay are complex and technical. This Q&A clarifies the rate reform process and opportunities for the state to ensure that this process results in fair and equitable pay for child care providers.

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How are child care providers currently paid?

Child care providers participating in state subsidy programs receive a reimbursement rate (i.e., payment) from the state, funded with state and federal dollars. The per-child rates vary by a number of factors, including: provider type (e.g., family child care homes, licensed child care centers, or family, friend and neighbor caregivers), size (small or large family child care homes), county, part-time or full-time care, and age of child. There are two types of rates:

Providers that contract directly with the state are paid with a statewide rate called the Standard Reimbursement Rate (SRR).

The SRR is adjusted for various factors such as the age of the child or disability status. Direct-contract providers are mainly child care centers or home-based child care providers that are part of the Family Child Care Home Education Network (FCCHEN). These providers are paid directly by the state.

In addition to the SRR and RMR “base rates,” providers also receive an additional stipend called the “cost of care plus.”

This payment is intended to help address outdated, low RMR/SRR rates resulting from policymakers’ failure to increase the base payment rates.

What are the main problems with how providers are currently paid?

Provider rates are based on how much families can afford to pay (i.e., the RMR survey) or an amount set by 1980s legislation (i.e., the SRR).  In other words, providers are not being paid based on the actual cost of care. This results in several challenges, including:

  • Child Care provider pay is too low. Even with the cost of care plus payments, the state is paying providers far less than what it takes to run a child care program, including providing enriching care for children. This often means that providers have to absorb losses and are often unable to pay staff a living wage. 
  • The current rate structure is unnecessarily complex. Having two different rates and additional stipends layered on top of these rates creates an administrative burden and additional hurdles when trying to increase pay for providers.

How is the state addressing problems with the current rate structure?

To address outdated, complex rates, the state has committed to paying providers based on the cost of care. In April of 2023, the California Department of Social Services (CDSS) launched the “alternative methodology” process to estimate the cost of providing care, including a living wage for providers.

  • The “alternative methodology” refers to a new formula for determining provider pay. This formula results in estimates of how much it costs to provide care. In other words, the alternative methodology will replace the RMR survey and the SRR. The alternative methodology is intended to ensure that providers are paid based on what it actually costs to provide care, as opposed to what families can afford to pay.
  • The new rates based on the alternative methodology will have a “single rate structure.” In other words, the SRR and the RMR rate-setting structures will be replaced with one rate structure (i.e., the single rate structure) intended to help eliminate unnecessary complexity and administrative burden. The state often refers to the process for determining the new rates under the single rate structure as the “rate setting process.”

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Does the alternative methodology accurately reflect the cost of care?

In order for the state to truly solve the issues with the current rates, the alternative methodology must produce accurate cost of care estimates. The current cost of care estimates derived from the state’s alternative methodology claim that the state — for some providers in certain counties — is already paying providers more than the cost of care, which is likely not true. Examples of challenges with the alternative methodology include:

  • The regions that counties have been grouped within are based on a methodology that replicates many of the existing inequities providers currently experience related to low pay. 
  • The alternative methodology estimates school-age cost of care at 60% of full-time care, which does not align with the needs of families requiring full-time care for school-age children (i.e., for families that work during non-school hours, such as hospitality or food service).

Where is the state at in the process of developing a “single rate structure?”

Despite the aforementioned challenges, the state has completed its version of the alternative methodology (as of summer 2025) and is currently developing a new single rate structure based on this new methodology. However, using current cost of care estimates will likely result in inequities within the single rate structure. Since finalizing the alternative methodology, the state has taken the following actions:

  • The state and Child Care Providers United (CCPU) published a set of recommendations in December 2025 regarding how to set this single rate structure, including three categories: 1) a set of these recommendations agreed upon by both parties; 2) a set agreed upon just by the state; and 3) a set agreed upon just by CCPU. The recommendations agreed upon by CCPU (and not the state) directly address the challenges with the current alternative methodology. 
  • The governor released a proposed January budget containing no updates on when or how the single rate structure might be finalized and implemented (in trailer bill language or elsewhere) or funding for implementation. The state has been utilizing the existing bifurcated rate system for decades, even though it means that providers are often not paid enough to fully cover expenses. Any update to a new rate structure that more accurately reflects the cost of care – including living wages for providers – will require a substantial increase in funding if policymakers hope to maintain the number of children enrolled in subsidized care. Given ongoing budget problems, it’s unclear when the state will prioritize paying providers this new rate.

What can state leaders do to support a fair and equitable rate reform process?

State leaders have the opportunity to align with Child Care Providers United’s recommendations to ensure that the alternative methodology is updated to more accurately reflect the true cost of care. Specifically, state leaders can align with the following CCPU recommendations that (so far) have not been agreed upon by the state. Key recommendations include:

  • The alternative methodology is updated regularly to use the most up-to-date information, adjusting regional groupings as needed based on new data. This includes annual updates of model inputs from publicly available data sources.
  • Cost of care estimates reflect established real-world costs of providing care (e.g., MIT living wage, discretionary benefit costs for providers and assistants they employ, accurate group sizes, etc.) and are confirmed by relevant data, including the lived experience of family child care providers that care for families with subsidies.
  • Rates as part of the single rate structure will not decrease from current rates in accordance with current statute (see WIC 10227.6).

Glossary of Terms for Understanding Rate Reform

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California’s 1.8 Million Child Care Gap Leaves Families Facing Unaffordable Costs

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SACRAMENTO, CA — A new publication from the California Budget & Policy Center (Budget Center) outlines the gap between the number of children eligible for publicly funded child care programs and the number actually enrolled — leaving approximately 1.8 million eligible children without access to affordable care. Without access to publicly funded child care, families … Continued

key takeaway

California’s failure to expand publicly funded child care leaves 1.8 million eligible children without access, worsening affordability, racial inequities, and affordability challenges for families statewide.

California’s state leaders acknowledge that child care is a key driver of unaffordability and is critical for children’s healthy development and a strong state economy. Among these state leaders is Governor Gavin Newsom, who made a promise of expanding affordable child care to more than 200,000 children, stating that this expansion “will help reinvigorate our essential care economy and invest in the health and well-being of families across the state.” Despite this promise, the state has indefinitely paused funding for this expansion, which was set to add around 129,800 new subsidized child care spaces for California families. However, the demand for publicly funded child care continues to far exceed the supply, leaving hundreds of thousands of families to continue to face unaffordable costs. The pause on expanding child care spaces only exacerbates this challenge. In light of this policy context, the proceeding narrative explains: a) Why publicly funded child care is critical; b) The gap between the number of children eligible for child care programs and the number enrolled; and c) Implications for underfunding California’s child care programs.

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1. Without access to publicly funded spaces, child care is unaffordable for hundreds of thousands of California families.

Publicly funded child care (i.e., subsidized child care) provides low- or no-cost care for families with low incomes and/or families who meet need-based qualifications. When eligible families cannot access publicly funded child care, they are met with unsustainable costs that negatively impact their economic security. As shown in the chart below, a single mother with a school-age child and an infant will spend 63% of her income on child care without access to a state subsidy. Accessing publicly funded child care likely eliminates all child care costs, thus allowing her to focus her resources on housing, food, and other basic necessities. Specifically, in 2024:

  • A typical single mother in California with children had an annual income of $47,062. After paying for child care for her infant and school-age child, she was only left with $17,609 from her annual income.
  • If she had access to a subsidy for both her children, her child care costs would have been covered, saving her $29,453 annually for basic necessities for her family.
  • Additionally, a typical single father in California would spend 43% of his income on child care for his school-age child and infant, far exceeding federal affordability guidelines of 7%.

2. Underfunding child care programs negatively impacts children of color.

Historic and systemic racism has created racial inequities throughout California, in which families of color face structural barriers in their path toward economic mobility. For example, harmful “welfare” stereotypes in the 1980s and 1990s perpetuated a myth that families of color were not “deserving” of assistance, prompting ineffective policies that prioritize work over well-being. Moreover, persistent income inequality reflects racial disparities in unemployment and access to wealth, impacting economic opportunities for Californians of color. The state’s current child care policies continue to uphold this harmful legacy.

The chart below shows that children of color — particularly Black, American Indian/Alaskan Native, and Latinx children — are disproportionately eligible for publicly funded child care. Therefore, when demand for child care outpaces supply, relatively more children of color are unenrolled, forcing their families to either pay unsustainably high costs for child care, quit their jobs, or find other solutions that inevitably strain family resources. Failing to expand access to publicly funded child care only exacerbates existing racial inequities embedded in our current state policies and landscape.

3. Overall, while the unmet need has improved over the past three years, only 16% of eligible children are enrolled in child care programs.

In other words, only 1 in 6 children eligible for child care actually receive care through programs administered by the California Department of Social Services. While this number has improved from the unmet need percentages of 14% in 2023 and 11% in 2022, programs remain severely underfunded. As a result, approximately 1.8 million children eligible for care are not enrolled, likely leaving tens of thousands of families on long waiting lists, unable to access affordable care and forced to choose between going to work and caring for their child. This challenge has been highlighted by parents and caregivers across the state, as shown in the parent quotation below from the California Assembly Blue Ribbon Commission on Early Childhood Education –- Parent Voices’ Parent Recommendations Report.

“And a lot of parents [quit their job] because I think they’re at their end. And they’re like, ‘I thought I could figure out child care without the subsidy with all this.’ Because I was gonna go back to work. But then they realized it cost so much money. That they would actually go into debt with their job. And that’s where I was at.”

4. Enrollment increases have been slower for infants/toddlers and school-age children.

When looking at the unmet need by age group for 2024 compared with 2022, the strongest growth in enrollment has occurred for preschool-age children (ages 3 to 5). While there have been increases for infants/toddlers (ages 0-2) and school-age children (ages 6-12) over time, they have trailed the rate of preschool-age growth. These trends reflect recent research from the Public Policy Institute of California, showing that infant care is harder to find. In a survey of child care navigators, only 31% of respondents said families were able to find affordable infant care, compared to 77% for preschoolers.

5. Rural and agricultural counties have relatively higher levels of unmet need for publicly funded child care.

Unmet need varies widely across counties in California, with San Francisco having 34% of eligible children enrolled while Madera County has only 10% — one of the lowest in the state. One clear trend is that rural counties have relatively fewer children enrolled as a percentage of eligible children. This is particularly acute for counties in the Far North (as shown in the county map). Moreover, counties with an agricultural focus also have a relatively higher unmet need. Previous research in rural Monterey County identifies specific barriers that families working in the agricultural sector face when accessing child care, underscoring this regional trend. This is further supported by parent testimony from the Assembly Select Committee on Child Care Costs, in which a father from the Central Valley stated:

“To be able to go to work and leave my son in good care, it was hard to find a provider. We looked and we didn’t have many options. In particular, for a night shift. Because for packers we can work night hours, and it’s really hard for us to find a person to watch my son.”

Implications for Programs, Families, and Children

The unmet need for child care remains alarmingly high. With the Newsom administration walking back plans for expanding the number of subsidized child care spaces, families and children will continue to face unnecessary challenges with meeting basic needs. Key implications include:

  • Families will continue to languish on the waiting list. While the state does not have a centralized eligibility list to confirm the exact number of families on local waiting lists, with nearly 1.8 million eligible children in California not enrolled, there are most likely thousands and thousands of families waiting to access a subsidy. With the state suspending progress on expanding publicly funded child care, families on this “no hope list” are not going to see relief.
  • California’s affordability challenges will remain unaddressed, threatening to increase the state’s poverty rate. California has the highest poverty rate in the nation (tied with Louisiana), with the percentage of people in poverty dramatically increasing since the expiration of pandemic-era policies in 2021. In particular, the child poverty rate has experienced an alarming increase from a historic low of 7.5% in 2021 to 18.6% in 2024. Failing to expand publicly funded child care will only contribute to (instead of reversing) this harmful trend.
  • Harmful federal cuts to health care and food assistance will only make child care more unaffordable. The harmful Republican megabill (H.R. 1) that passed during summer 2025 will take health care and food assistance away from millions of Californians. These cuts will tighten families’ budgets thus increasing the urgency for expanding the number of subsidized child care spaces. For families with young children, the negative impacts of H.R. 1 will run even deeper without access to affordable child care.

Given these implications for California families — and the positive effects of child care on the state’s economy —  state leaders should fulfill their promise to expand publicly funded child care. Doing so would help to combat California’s affordability challenges and impending harms from the Republican megabill, H.R. 1. Fully funding the promised child care spaces would move thousands of families off waiting lists, putting California on a stronger path to address affordability challenges and longstanding inequities.

Kristin Schumacher is a former analyst at the California Budget & Policy Center and now serves as a consultant on various research projects for the organization.

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Legislative Briefing Highlights the Urgent Need for Stronger Child Care Programs

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The California Budget & Policy Center was proud to co-host a legislative briefing on child care alongside the Legislative Women’s Caucus and the Child Care Law Center. The briefing brought together legislators, legislative staff, and budget consultants to build a shared understanding of California’s child care programs and the policy choices shaping them. Laura Pryor, … Continued

key takeaway

Most of the growth in preschool-age enrollment comes from expanded TK programs, while access for 3-year-olds remains limited due to eligibility and availability constraints.

Participation in early childhood education programs supports children’s development and contributes to improved outcomes into adulthood, particularly for children from households with low incomes. Early childhood education programs also play a critical role in enabling parents and caregivers to work. In California, a mix of publicly funded programs provide preschool-age children with these foundational opportunities. However, in addition to meeting eligibility requirements, access and participation often depend on whether families can overcome barriers to enrollment and whether available options align with their needs and preferences.

This analysis examines enrollment trends across all publicly funded early childhood education programs in California serving 3- and 4-year-old children from 2021-22 to 2022-23, with a focus on understanding how participation has shifted across these age groups.

Program expansions, policy changes, and family preferences, among other factors, have shaped enrollment in recent years. Overall participation of 3- and 4-year-olds increased from 2021-22 to 2023-24, as shown in the table above. However, behind this growth are important differences by age and program type.

  • 4-year-old enrollment grew more slowly than 3-year-old enrollment in most programs. This is especially notable in child care and development programs, where enrollment for 3-year-olds grew by 56% from 2021-22 to 2023-24, possibly reflecting slot expansion in recent years. By contrast, enrollment for 4-year-olds only grew by 35%, with some programs experiencing declines. This slower growth among 4-year-olds may reflect a shift toward Transitional Kindergarten (TK). While growth for 3-year-olds is promising, it still falls short of meeting the need because only 21% of eligible 3-year-olds were served in 2023-24. 
  • Growth in preschool programs was uneven, with TK driving most of the increase. From 2021-22 to 2023-24, total enrollment in preschool programs — including TK, State Preschool, and Head Start — all grew, but most of the increase was due to TK, where 4-year-old enrollment doubled. State Preschool saw modest gains in 3-year-olds, especially in full-day programs, but 4-year-old enrollment declined in part-day settings by about 9%. Head Start enrollment for 4-year-olds dropped by nearly 5,000 children, reflecting the workforce challenges and low-pay for educators. However, the program still served nearly 48,000 preschool-age children in 2023-24, underscoring its critical role in California’s early learning system and the need to pay early educators a fair wage.

These enrollment shifts illustrate how families are making use of available preschool options, often shaped by eligibility requirements, availability, and trade-offs between different program types. The expansion of TK has possibly contributed to slower growth or even declines in 4-year-old enrollment in other programs. At the same time, while increases in enrollment among 3-year-olds are meaningful, they remain below the need, indicating that many families still lack access to available programs. 

As California continues to expand access, it is essential for policymakers to understand the distinct role that each program plays in the landscape and ensure that investments support a range of options that reflect the needs of families.

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key takeaway

Nearly half of California’s preschoolers are dual language learners, yet inconsistent and short-term funding limits statewide support. Sustained investments in professional development for educators are essential to meet these children’s linguistic and cultural needs while strengthening retention and system-wide collaboration.

Multilingual children are one of California’s greatest assets, their skills enrich communities and make the state’s economy more competitive. Supporting these children effectively is an investment in California’s future. Among this group are dual language learners (DLLs), a term used in early childhood education to refer to young children learning two or more languages.1“Dual language learner” means children whose first language is a language other than English or children who are developing two or more languages, one of which may be English. DLLs make up roughly half of all California children attending preschool. Research shows that DLL children benefit when supported by educators trained in language development and culturally responsive practices across early learning settings.

In the 2017-18 school year, the state adopted the English Learner Roadmap, which outlines the state’s commitment to supporting multilingual learners, including preschool-age children. Yet the state of California lacks a coherent, sustained strategy to support educator skill development across school and non-school-based settings that serve DLLs.2Programs serving preschool-age children include, CalWORKS stages 1, 2, and 3, Alternative Payment Program, General Child Care, State Preschool, Head Start, and Transitional Kindergarten.

California’s Preschool-Age DLLs: A Demographic Overview

Tens of thousands of 3- and 4-year-old children in preschool live in homes where a language other than English is spoken. In 2023, for example, out of the estimated 377,043 children attending preschool, almost 50% lived in a home where a language other than English was spoken.3The American Community Survey defines preschool attendance as enrollment in a preschool or nursery school program. That percentage has stayed largely consistent over time, at around 50% from 2016 to 2023, as shown in the chart below. The exact number of DLLs enrolled in preschool programs is unknown due to inconsistent identification and reporting requirements across programs.4Currently, only the California State Preschool Program (CSPP) systematically identifies DLLs and their educational needs. Within CSPP, 58% of children are DLLs, suggesting that other programs may serve similar proportions. Recent legislation will extend DLL identification practices to some child care and development programs that also serve preschool-age children. Among those identified as DLLs, the majority (56%) are from low-income households, a characteristic that further compounds systemic barriers children and their families face.5A low-income household is defined as a family at or below 100% of the state median income in 2023-24, which is also the income eligibility threshold for state preschool. The large percentage of DLL children, particularly from low-income households, underscores the need to prioritize this population in early learning services, including investing in a workforce prepared to meet their linguistic and cultural needs.

The Case for State Investment in DLL Professional Development

Given the large share of California’s children who live in multilingual homes, state leaders have called for increased investments in professional development in prior efforts. State plans and reports such as California’s Master Plan for Early Learning and Care, the English Learner Roadmap, the Universal PreKindergarten (UPK) Mixed Delivery Quality and Access report, and the California Assembly Blue Ribbon Commission on Early Childhood Education report recommend increasing professional development opportunities for educators across programs to better support DLLs. Across these state policy recommendations, several key themes emerge:

  • Professional development is a key area to build educator capacity to support DLLs. As part of comprehensive support systems, ongoing professional development that targets the needs of specific populations should be part of capacity building strategies for all educators.
  • Professional development can allow educators to center the cultural and linguistic assets of DLLs. Effectively supporting the language development of children requires a specific focus on the language and cultural assets children and their families bring with them, and professional development opportunities can provide the specific tools and skills educators can use to support children.

Investments and Gaps in Support for Educators Serving DLLs

Despite the rationale and recommendations noted above, periodic state investments in professional development for early educators have lacked consistency, scale, and equitable access for all programs across the system. Since 2017-18, when the state began reemphasizing bilingual education in state policy, a series of one-time grants included some state funding to support DLL-responsive practices. The table below shows these investments. For example, the 2021-22 budget included $100 million to increase qualified teachers and provide training in inclusive, culturally responsive, and supportive practices for State Preschool, Transitional Kindergarten, and kindergarten classrooms. While these grants have provided needed resources, no stable dedicated funding source exists to support early educators serving DLLs across all programs.

Lack of ongoing investment in these programs has been a missed opportunity for the state, as these programs have been shown to have a positive impact for DLLs in California, namely:

  • Programs reach a wide range of educators. Most programs have offered professional learning to not only lead teachers, but also paraprofessionals, instructional aides, and administrators. This approach recognizes that effective bilingual and DLL instruction involves entire teams to build systemic change. 
  • Professional learning strengthens educator retention. Professional development not only helps build skills, it also strengthens educators’ commitment to working in bilingual settings. 
  • Programs are actively working toward more coordinated efforts to provide professional learning opportunities. Grants have fostered collaboration across agencies and programs to align resources and supports. These efforts provide examples for a more unified system, though major challenges remain.

Implications for Policymakers to Support DLLs

Given the landscape of DLL-related professional development over the past several years, coupled with the well-researched need to support educators in this area, the state’s current inconsistent investments point to key implications.

  • Current investments have been uneven across early education settings. Early educators outside school systems, such as those working in centers and family child care homes, have largely been excluded from these investments. The grants included in the table above, for example, were only available to school districts, charter schools, and county offices of education. Non-school-based settings are primarily reliant on federal funds.  
  • Most professional development grants are not specific to preschool. While grants may be open to preschool educators, there are often no requirements that preschool educators are prioritized. The closest approach to better targeting a broader group of educators was a 2018 allocation of $5 million to support DLL-specific training, which supported 1,400 early childhood educators. 
  • One-time funding and short-term grants do not create conditions for sustained professional learning supports. One-time grants often last a few years, which may not be enough to fully implement a professional development program and meet major goals. A key element of effective professional development approaches is that it should be of sustained duration, which involves ongoing resources.
  • Professional development opportunities are key to educator retention. In addition to supporting teachers with instructional practices, ongoing professional development opportunities can also create the working conditions that support educators staying in the field longer, helping address retention challenges, especially in bilingual classrooms.  
  • Professional development efforts should be coupled with other systemic-wide efforts to support the workforce. Three key areas include implementing effective recruitment strategies and developing viable pathways, ensuring providers are paid fair wages, and developing the infrastructure to ensure effective implementation of professional development opportunities at the local level (e.g., building professional development into workday or ensuring substitutes are available).

California has committed to a system that ensures every child, regardless of their background, has access to high-quality early education. For DLLs — many of whom are also children from immigrant families — quality includes culturally and linguistically responsive environments. Yet, efforts to support professional development in this area have been fragmented, underfunded, and disproportionately focused on school-based settings. A high-quality, preschool mixed-delivery system must center DLL-responsive teaching and ensure all educators, across all program types, have access to sustained professional development. As federal support continues to destabilize, strong state leadership will be essential to advance a coherent path toward bilingualism for California’s youngest learners.

Laura Pryor contributed to this report.

Support for this report was provided by The Sobrato Family Foundation.

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  • 1
    “Dual language learner” means children whose first language is a language other than English or children who are developing two or more languages, one of which may be English.
  • 2
    Programs serving preschool-age children include, CalWORKS stages 1, 2, and 3, Alternative Payment Program, General Child Care, State Preschool, Head Start, and Transitional Kindergarten.
  • 3
    The American Community Survey defines preschool attendance as enrollment in a preschool or nursery school program.
  • 4
    Currently, only the California State Preschool Program (CSPP) systematically identifies DLLs and their educational needs. Within CSPP, 58% of children are DLLs, suggesting that other programs may serve similar proportions. Recent legislation will extend DLL identification practices to some child care and development programs that also serve preschool-age children.
  • 5
    A low-income household is defined as a family at or below 100% of the state median income in 2023-24, which is also the income eligibility threshold for state preschool.

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key takeaway

Higher wages for early care and education workers in California are essential to expanding affordable child care, supporting families’ economic security, and addressing long-standing workforce inequities rooted in racial and gender disparities.

Access to affordable, nurturing early care and education (ECE) is critical for families’ economic security and positive child development. California’s ECE system helps families with low incomes find and pay for vital programs during a child’s early years. As part of this programming, the state also pays ECE providers who participate in subsidized ECE programs. State investments in ECE are critical for ensuring that families have adequate access to affordable early care options and that ECE providers are reimbursed at a fair rate. While the state has increased funding for subsidized ECE programs since the Great Recession, this funding has not gone far enough. Namely, the demand for subsidized ECE programs far exceeds the number of spaces. As of 2023, only 14% of children eligible for subsidized ECE programs were actually enrolled.1The ECE programs referenced in this statistic include the child care and development programs administered by the California Department of Social Services.

The need to expand access to affordable early learning options also means that California requires a workforce to meet that demand. The ECE profession has experienced high turnover due to low pay, a lack of benefits, and pandemic-related risks that drove many out of the field. In order to effectively address the unmet need for affordable care, the workforce must also expand. This remains a challenge under the current subsidized system’s payment rate structure. The ECE system will remain inequitable and affordable child care will remain scarce without higher wages for the workforce.

How are ECE providers paid and why are these professionals paid such low wages?

Currently, subsidized child care and preschool providers are paid in two ways:

  • Those that accept state vouchers are paid based on the Regional Market Rate (RMR) survey; and
  • ECE professionals that have a direct contract with the state are paid using the Standard Reimbursement Rate (SRR). The current rates are frozen through the 2024-25 fiscal year as the state works to create an alternative methodology reflecting the true cost of care.

However, the 2023-24 budget established “cost of care” stipends to temporarily increase reimbursement rates above the RMR and SRR through the 2024-25 fiscal year.

Early care and education professionals working in these organizations — primarily women and disproportionately women of color — deserve fair and just wages for essential work that helps children learn and grow while parents are working or going to school to support their families. However, families are often unable to afford the true cost of care, including adequate wages for these professionals. The subsidy from the state could fill this gap, but the rate-setting methodologies that have been in place in California for decades assume and perpetuate a low-paid workforce. Paying this essential workforce low wages is a direct result of racist and sexist stereotypes that devalue caregiving work and exacerbate the gender wage gap. State leaders should instead prioritize treating these jobs as high-skill, high-value jobs. The current workforce of talented and dedicated providers who help care for and develop California’s children is misaligned with the low wages they receive.

How much has the reimbursement rate increased for ECE providers?

Over the past decade, ECE providers have experienced an increase in their reimbursement rates. Yet, these increases have been insufficient to keep pace with the rising costs of goods and services and the state’s minimum wage, which has been steadily increasing since 2016. The following chart highlights key points regarding increases to ECE providers’ rates:

  • Despite the cost of care supplement to the RMR, increases in rates remain far below the increase in the minimum wage. In 21 counties, home-based ECE providers participating in a voucher program had rates for infant care increase at less than half the rate of the minimum wage. In almost every county in the state, licensed family child care home providers and center-based providers struggled with low rate increases relative to the minimum wage (see table). 
  • Aside from the cost of care supplement, state leaders have only updated voucher-based payment rates for child care providers three times in the past nine fiscal years. Specifically, rates were increased to the 75th percentile of the updated market surveys as part of the 2016-17, 2017-18, and 2021-22 spending plans. Without the cost of care supplement, rates in 2024 would still be at the 75th percentile of the 2018 market rate survey. 
  • ECE payment rates have not kept pace with the increasing minimum wage. The state law requiring annual increases to the statewide minimum wage went into effect in 2016-17, raising the wage by 65% from 2016-17 to 2024-25. Because ECE  professionals are paid very low wages, increases in the minimum wage increase costs for providers. State leaders have failed to increase payment rates to keep pace with the state minimum wage (see chart). This cuts into providers’ bottom line making it even harder to provide care to children and families.

Policymakers have not consistently updated the Standard Reimbursement Rate (SRR), either.  From 2016-17 to 2024-25 the SRR increased by just 37%, falling far short of the 65% increase in the state minimum wage.

Policymakers’ failure to consistently update the payment rates for subsidized child care and preschool providers undermines their ability to offer care to children and families while covering the rising cost of business in California.

How Do ECE Professionals’ Wages Compare with the Broader Workforce?

The relatively small percent increase in ECE professionals’ wages is further compounded by the low wages they face, as compared with other professions. This is particularly the case when compared to elementary and middle school teachers, an occupation with similar work and professional qualifications. The chart below compares median wages for ECE professionals, all workers, and K-8 teachers.2The methodology to define “Early Care and Education professionals” is based on the Center for the Study of Child Care Employment’s Early Childhood Workforce. These professionals include: 1) child care workers in the child day care services, private households, religious organizations, or elementary and secondary school industries; 2) education and child care administrators in the child day care services industry; 3) preschool and kindergarten teachers in the child day care services industry; and 4) other teachers and teaching assistants in the child day care services industry.

Overall, this chart shows that median ECE professionals’ wages fall behind the median for all workers and even further as compared with K-8 teachers. Other key points from this chart include the following:

  • Between 2008 and 2023, ECE professionals’ wages increased by only a few dollars. After adjusting for inflation, ECE professionals’ wages increased by $2.81 between 2008 and 2023. This small increase has meant that ECE professionals’ wages have remained alarmingly low over time, exacerbating issues such as high turnover and fewer workers willing to enter and stay in the field.
  • If trends continue, it will take nearly 60 years for ECE professionals’ wages to catch up to the median wage of all workers. Specifically, using the 10-year average rate of change for ECE professionals and all workers’ wages, ECE professionals will finally surpass the median wage of all workers in the year 2083.3The rate used to project median wages is the 10-year annual average of the change in median hourly  earnings from 2012-2023. Therefore, the number of years before the wage gap closes reflects an estimate based on projected median hourly earnings. The data include the employed population age 16 and over working more than 10 hours a week and 27 weeks per year. Data for 2020 was unreliable and therefore omitted from the analysis. Source: Budget Center analysis of US Census Bureau, American Community Survey data. 
  • ECE professionals make only 39% of the K-8 median hourly wage. ECE professionals’ hourly wage is less than half the median hourly wage of a middle school or elementary school teacher. ECE professionals often have the same qualifications and work with the same age groups as elementary and middle school teachers; yet, median wages are far from parity.

In addition to K-8 teachers, comparing ECE professionals’ hourly wages with other professions underscores that ECE professionals work in one of the  lowest paid occupations despite the critical value of their work. The table below outlines ECE professionals’ median hourly earnings in the context of other low wage occupations. Thus, ECE professionals’ wages have not only grown at a slow rate, but they also started near the floor. ECE professionals have been stuck in low wage work, despite increases in state funding for ECE.

What is the consequence of low wages for ECE professionals?

Poverty is on the rise for children and families across California. Thus, many of the families ECE professionals serve are struggling more now than in prior years to make ends meet; however, many professionals themselves are also in poverty. Specifically, compared with all workers and elementary and middle school teachers, a disproportionate percentage of ECE professionals are also in poverty. The chart below shows that while poverty rates have decreased for ECE professionals over time, they are still over twice that of all workers and nearly four times that of elementary and middle school teachers. These relatively high poverty rates are a consequence of ECE professionals’ historically low wages.

How can state leaders support ECE professionals?

Overall, California has undoubtedly seen an increased investment in its ECE system. However, the system is still falling short in several ways. While the number of slots has increased, thousands of families still do not have access to affordable ECE options. Increasing access to ECE programs also requires supporting ECE professionals, and wages are still too low to ensure ECE professionals have the resources they need to expand and thrive.

Inequities in the ECE system reflect centuries of historical racism and sexism. The ECE system and its workforce deserve better, and state leaders have the tools to ensure that ECE professionals are paid a living and just wage. Specifically, state leaders can advance the alternative methodology to develop payment rates and implement an improved rate structure. For far too long, ECE professionals have worked low wages and endured a system that undervalues their integral role in California. California has been a leader in many other policy areas, and is well-poised to continue leading by paying ECE professionals the true cost of care.

Kristin Schumacher, a former analyst at the California Budget & Policy Center, now contributes to the organization as a consultant on various research projects.

Child Care & Preschool
  • 1
    The ECE programs referenced in this statistic include the child care and development programs administered by the California Department of Social Services.
  • 2
    The methodology to define “Early Care and Education professionals” is based on the Center for the Study of Child Care Employment’s Early Childhood Workforce. These professionals include: 1) child care workers in the child day care services, private households, religious organizations, or elementary and secondary school industries; 2) education and child care administrators in the child day care services industry; 3) preschool and kindergarten teachers in the child day care services industry; and 4) other teachers and teaching assistants in the child day care services industry.
  • 3
    The rate used to project median wages is the 10-year annual average of the change in median hourly  earnings from 2012-2023. Therefore, the number of years before the wage gap closes reflects an estimate based on projected median hourly earnings. The data include the employed population age 16 and over working more than 10 hours a week and 27 weeks per year. Data for 2020 was unreliable and therefore omitted from the analysis. Source: Budget Center analysis of US Census Bureau, American Community Survey data. 

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Over the last sixteen years, California’s early care and education (ECE) system has gone through numerous milestones that have been reflected in state funding. California’s families and child care and preschool providers depend on this funding for access to affordable care and wages to sustain their businesses. Looking back at funding trends over time reveals both key wins and setbacks for the ECE field as well as opportunities for state leaders to continue investing in ECE programs.

Key policy and historical moments underscore how the child care system in California has expanded, contracted, and evolved amid changes in funding levels, as reflected in the following themes.

  • The Great Recession resulted in severe cuts to the ECE system. California, like the rest of the nation, experienced an economic downturn at the onset of the Great Recession in 2007. In the aftermath of the economic downturn, state leaders cut annual funding by 30%, eliminating 110,000 child care slots, lowering family income eligibility limits, and cutting payment rates for certain providers.
  • Subsidized slots and provider rates were incrementally restored over time. Beginning in 2013, the cuts made during and after the Great Recession were slowly re-established. Over the next decade, subsidized child care slots were funded at pre-Great Recession levels, provider rates increased, income and income eligibility limits increased, and family fees were reduced. These changes addressed many of the tremendous setbacks prompted by the Great Recession. Child Care Providers United (CCPU) formed in 2019 and supported several improvements for ECE providers, including increased rates, a health care fund, and a retirement fund.
  • The COVID-19 pandemic amplified the importance of child care and resulted in an influx of one-time federal funding. The COVID-19 public health crisis put child care in the national spotlight. Additionally, the federal CARES Act, Coronavirus Response and Relief Supplemental Appropriations Act, and American Rescue Plan Act brought over $5 billion in one-time child care funding to California. These one-time funds were used to boost provider rates, expand subsidized child care slots, and generally support the early care and education sector. 
  • As federal relief dollars have sunsetted, the state has had to backfill those resources in order to sustain progress. The majority of federal relief dollars expired on September 30, 2023, prompting what many deemed the “child care funding cliff.” California managed to avoid the detrimental effects of several aspects of this “cliff” through using state dollars to reform family fees, provide temporary increases to reimbursement rates, and commit to funding 200,000 new subsidized child care slots.

California’s ECE system weathered severe cuts as a result of the Great Recession. Over the past sixteen years — in response to tireless advocacy — state leaders have restored funding to this system, providing additional access for families and more support for providers. In the current fiscal year, dollars for subsidized child care and preschool slots are 50% higher than prior to the Great Recession.

This chart highlights additional key points:

  • Increases in funding on subsidized child care were bolstered by one-time federal pandemic relief dollars. The spike in funding in FY 2021-22 was largely due to pandemic-related support provided by the federal government (as highlighted in the timeline). The state received over $5 billion in one-time federal dollars to support child care during the health crisis. 
  • Recent spending on subsidized child care slots reflects the administration’s commitment to 200,000 new slots by 2027. In 2021-22, the governor committed to adding approximately 200,000 new child care slots by 2026-27. As of 2023-24, approximately 146,000 new slots were funded. Expansion was paused in 2023-24 and the state is still in the process of rolling out all intended new slots.
  • Increases in spending were not even across all ECE programs. Spending for the California State Preschool Program (CSPP) experienced a significant increase due to state leaders’ focus on California preschool programs. This resulted in spending levels higher than the Alternative Payment Program, CalWORKs programs, and General Child Care Program.

While the ECE system in California has experienced an increase in funding, more is needed to fulfill the administration’s intention to foster equitable learning for all children. Total funding for the state’s subsidized child care and development system is at $7.2 billion in the 2024-25 fiscal year. Yet, even with increased funding, resources still fall far short of the billions in additional support necessary to provide fair and just wages to providers and to increase access to ECE programs for families with low and moderate incomes in California.

Kristin Schumacher, a former analyst at the California Budget & Policy Center, now contributes to the organization as a consultant on various research projects.

Child Care & Preschool

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