Financing High-Quality Infant-Toddler Care

High-quality care for infants and toddlers is essential to the well-being of families. It supports the healthy development and learning of children during their crucial early years and enables parents to work so they can gain financial security for themselves and their families—and in fostering children’s success and parents’ ability to work, high-quality infant/toddler care bolsters our economy. Yet the current financing system for infant/toddler care is not working: it not making infant/toddler care affordable enough for parents, it does not sufficiently support high-quality infant/toddler care, and it does not support adequate compensation for the teachers who care for and educate infants and toddlers.

High-quality care for very young children requires low child-teacher ratios and entails substantial expenses for equipment and supplies. As a result, annual fees for infant care average from nearly $4,200 to $20,900 a year, depending on where in the country the family lives and the type of care the family uses; in New Jersey, the average annual fee for center care for an infant is $15,600. And even these fees are not adequate to support a high-quality program with well-paid teachers, leaving child care programs struggling to keep their doors open and child care teachers—who are mostly women and disproportionately women of color—struggling to support their own families on poverty-level wages.

At the same time, parents already strain to afford child care, and cannot afford any additional costs beyond what they manage to pay now. Families with employed mothers that have children under age five and that pay for child care spend an average of 10 percent of their income for that care; families with incomes below 200 percent of poverty that pay for care spend an average of 35 percent of their income for care.

Given that current fee levels are inadequate to support high-quality care or to pay child care teachers what they deserve, and given that parents are unable to contribute more, it is essential to expand public funding to fill the gap. A number of existing federal and state programs—such as the Child Care and Development Block Grant (CCDBG) and Early Head Start—are available to help families afford infant/toddler care and support initiatives to boost the quality and availability of infant/toddler care. Yet current funding from these sources is far from sufficient to meet the need.

Fewer than one out of six children eligible for child care assistance under federal law received it through CCDBG or related funding sources in 2016 (the most recent year for which data are available)—and eligible children under age three were less likely than eligible children ages three and four to receive assistance. Families able to receive child care assistance are often unable to choose the care they want for their children, and providers that serve these families often lack the resources to support high-quality care or even keep their doors open, because provider payment rates are so low.

Other early childhood programs are similarly underfunded. Early Head Start is only able to serve about 9 percent of eligible infants and toddlers. The Early Intervention Program for Infants and Toddlers with Disabilities, which aims to identify and address developmental delays among children from birth through age two and provide support to the families of young children with developmental delays, serves only 3.2 percent of infants and toddlers.

Several current and proposed programs and initiatives at the federal, state, and local levels offer models for how to advance a well-financed system of high-quality infant/toddler care. The proposed Child Care for Working Families Act would provide a major new investment in child care assistance to ensure that families with incomes under 150 percent of state median income would pay no more than 7 percent of their income for child care, with families earning less than 75 percent of state median income having their child care costs fully covered. Early Head Start-Child Care Partnerships, which support collaborations with center-based and family child care providers that agree to meet the Head Start Program Performance Standards, are allowing children to benefit from the high-quality standards and comprehensive services that Early Head Start offers while providing the full-day, full-year services that their parents need to work or attend an education or training program. Oregon approved a corporate activity tax ($250 plus 0.57 percent of the taxable commercial activity that exceeds $1 million in the calendar year) in 2019, with 20 percent of the revenue allocated to programs serving infants, toddlers, and preschoolers. King County, Washington adopted a property tax ($14 per $100,000 assessed value until 2021) in 2015 that is raising $35 million annually for comprehensive child development services for pregnant women and children up to age five.

Ensuring families with young children have access to affordable, high-quality infant/toddler care will require a substantial infusion of new funding from federal, state, and local sources. It will require a financing mechanism—or multiple financing mechanisms that are coordinated and complementary—to reliably deliver the funds to families and child care providers. And it will require a financing strategy that is multifaceted and flexible enough to support a range of forms of infant/toddler care—including home-based care, care for infants and toddlers with disabilities, and nontraditional-hour care for parents working evenings, nights, and weekends—so that it meets the varied needs and choices of families with young children.