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.
