Addressing the Cost of Care: Child Care Access and Affordability

Across the country, Governors are working to bring down the cost of living for everyday Americans, and improving child care access and affordability remains a key priority in those efforts. Governors are supporting families who face a limited supply of providers or struggle to afford care, while helping providers navigate rising operating costs, workforce shortages, and complex regulatory and administrative requirements.

On September 23, the NGA Children & Families team convened Human Services Policy Advisors to discuss how states and territories are strategically investing in child care. The conversation focused on how Governors can support provider reimbursement, expand access for families, and invest in the child care workforce, with state spotlights from North Carolina, Indiana, and Massachusetts.

A recording is available here for members of NGA's network. Please contact the NGA Children & Families team for the password.

Key Takeaways

• Unique environments yield unique solutions. Each state built its approach around its own pressures: rural provider losses in North Carolina, a voucher waitlist in Indiana, and a broad agenda spanning access, capacity, and workforce in Massachusetts.
• State and territory systems are feeling the weight of waitlists. When temporary funding expires, states can be forced to pause enrollment, narrow eligibility, and start waitlists, as Indiana did before its new investment.
• States and territories are coming up with creative solutions. The Child Care and Development Fund (CCDF) alone does not cover the full cost of child care. States and territories are supplementing it with other funding sources to serve more families, raise provider subsidy rates, or both.
• Provider reimbursement rates often do not match costs. Rates vary by county, setting, quality rating, and child age. Cost estimation models can show what care actually costs to deliver and which providers face the biggest gaps.
• Sustained, multi-year funding provides greater stability for providers and families. Fiscal cliffs can deepen child care shortages, grow waitlists, and blunt the impact of large-scale initiatives.
• Governors' leadership drives energy and investment. Establishing child care as a statewide priority builds momentum for new solutions, larger investments, and cross-agency engagement.

State Spotlights

North Carolina: Statewide Subsidy Floor

Presented by Jenna Nelson, Child Care and Early Education Fellow, Office of Governor Josh Stein

North Carolina lost more than 6,000 licensed child care slots over the past decade, mostly in family child care homes and small centers common in rural counties. Subsidy rates based on market rate surveys can disadvantage rural providers, whose operating costs are similar to those of urban providers but whose families cannot afford the same prices. After studying the data, Governor Josh Stein's Child Care and Early Education Task Force recommended a statewide subsidy floor, which the Governor included as one-time funding in his FY 2026-27 budget request. Starting October 1, 2026, providers receive whichever rate is higher for their county: the 2023 market rate or the 75th percentile of the 2021 statewide market rate average. The image below shows monthly rates for 5-star infant care centers under the new statewide floor.

Source: Jenna Nelson, Office of Governor Josh Stein

Key takeaways:

• Modeling geographic rate disparities can help states identify the providers most in need. Evaluating a subsidy floor across age groups, facility types, and quality ratings can help formulate policies that best support providers and families.
• A subsidy floor does not cover the full cost of care. The investment shores up providers in small, rural communities, but it does not guarantee additional subsidy slots and still leaves gaps for providers and families.
• A Governor's task force can drive momentum and align stakeholders. After years of awareness-building by advocates, the bipartisan task force of high-ranking legislators and agency staff elevated the solution to the Governor's desk.

Indiana: Governor Braun's $200 Million Investment in CCDF Vouchers

Presented by Adam Alson, Director, Indiana Office of Early Childhood and Out-of-School Learning

Governor Mike Braun prioritizes child care as a key component of economic mobility and workforce participation. Facing the end of ARPA funding, Indiana halted new voucher enrollment, rolled eligibility back from 150% to 135% of the federal poverty level, and instituted a waitlist in early 2025. During the 2026 legislative session, Governor Braun worked with legislators to secure a $200 million investment to restart enrollment and move eligible families off the waitlist. The effort is projected to increase CCDF participation from 43,000 to roughly 57,000 children, with a focus on children from birth to age 5.

Key takeaways:

• Multi-year fiscal modeling can prevent fiscal cliffs. Modeling the cost of vouchers across multiple fiscal years helps states fund ongoing obligations rather than short-term stopgaps.
• Child care can be a shared investment. Indiana is looking to drive private investment in child care and spread costs across the state, employers, local governments, and communities.
• A Governor's priority can propel large state investment. Governor Braun's focus on child care as a driver of economic mobility encouraged the legislature to support significant funding.

Massachusetts: Healey-Driscoll Administration's Child Care Agenda

Presented by Amy Kershaw, Commissioner, Massachusetts Department of Early Education and Care

Massachusetts serves about 70,000 child care families through a 50-50 split of state and CCDF funding. Governor Healey frames child care as both an economic development and an educational equity priority, and has organized her strategy around three levers:

• Access and affordability: a cost-based reimbursement system in place of a market rate survey, a digital family portal for financial assistance applications, state-funded operational grants that largely support workforce salaries, and an Employer Child Care Innovation Fund offering matching grants to employers.
• Capacity: Family Child Care Capital Grants of up to $25,000 for space improvements, and a capacity pilot testing an increase in the family child care cap from 10 to 12 children.
• Workforce: student loan repayment of up to $7,500 per year, child care financial assistance for child care staff, apprenticeship programs, and a Professional Portal for tracking career progress.

Governance underpins the strategy. Massachusetts places early education and care under the Education Secretariat rather than Human Services, and Governor Healey signed an Executive Order creating the cross-agency Early Education and Child Care Task Force.

Key takeaways:

• Regulatory and licensing flexibility can be a low-cost complement to grant programs. Raising the family child care cap and allowing family child care programs to operate in vacant classrooms, paired with capital grants, can increase provider capacity.
• Successful workforce investments address the specific needs of the child care workforce. Pairing salary increases with loan repayment, apprenticeships, child care assistance, and supports for working-adult learners improves educator recruitment and retention.
• A cross-agency task force can cement a whole-of-government approach. Co-chaired by the Secretaries of Economic Development, Labor and Workforce Development, and Education, the task force brings every executive branch agency to the table.

This summary was developed by Grace Burns, Policy Analyst for the Children & Families team.