Policy Innovations for a Stable Child Care and Early Learning System

Policy Innovations for a Stable Child Care and Early Learning System

Innovative policy solutions are needed to simultaneously address the affordability, accessibility, and quality of child care—increasing affordability for low-income households, ensuring accessibility for middle-income families, and fostering high-quality programs that strengthen kindergarten readiness.

by Micere Keels | North Carolina Early Childhood Foundation | July 8, 2025

We conclude our Early Care & Learning brief series with a comprehensive but not exhaustive list of policy and practice resources for creating a sustainable system of high-quality, available, affordable early care and learning programs. This collection of resources can be used to advocate for systemic changes that can strengthen our ecosystem.

On July 1st, Governor Stein’s Task Force on Child Care & Early Education released its first report with six recommendations to tackle NC’s child care crisis:

Set a statewide child care subsidy reimbursement rate floor
Develop approaches to offer non-salary benefits for child care professionals
Explore partnerships with the UNC system, community colleges, and K-12 schools to increase access to child care for public employees and students at public institutions
Explore subsidized or free child care for child care teachers
Link existing workforce compensation and support programs for early childhood professionals
Explore the creation of a child care endowment

A summary of each recommendation can be found in the report.

In the current American context, which lacks a comprehensive national child care and learning system, there is an opportunity for North Carolina to be among the states that are becoming policy innovators:

In Texas, Proposition 2 supports child care providers through a break in property taxes
In Oregon, three state agencies created a comprehensive child care subsidy program to support parents in worker apprentice programs
In Vermont, Act 76 is bringing near-universal child care to the state

In Massachusetts, the state Department of Labor supports an apprenticeship program for early childhood educators to boost the number of qualified professionals in the field.

Here is a menu of recommendations and examples of state policies to expand access to affordable, high-quality child care and preschool opportunities. More examples of state-level innovation can be found in this list of state policy actions toward a more equitable and ambitious child care system.

Photo by Humphrey M on Unsplash

Photo by Humphrey M on Unsplash

A broad range of interconnected policies and practices is needed to stabilize and strengthen the early care and learning system that serves children from birth to kindergarten entry. To foster lasting systemic improvement, legislators need to understand how this issue affects many different stakeholders: young children, their parents, parents' employers, as well as program providers and their staff. Policymakers also have to think about the care options that work best for infants and toddlers, the types of care that meet the developmental needs of and are most affordable for two- and three-year-olds, and how to ensure that all parents who want to can enroll their children in high-quality pre-kindergarten programs.

Understanding parents' perspectives is critical because they are the ones whose opportunities are most constrained when child care is unavailable and unaffordable. A recently released national survey can help.

The top-line takeaway from the survey is that the overwhelming majority of parents—across party lines and in all types of communities—say that expanding access to affordable, quality child care should be a high priority for both federal and state policymakers and that funding for child care and early learning should be increased.
Even families who have found high-quality child care say that the system is broken.

In North Carolina, this is truly a bipartisan issue where 77% of voters recognize that access to child care is a serious problem, 86% believe that improving the quality and affordability of child care is a good use of taxpayers’ money, and 87% say that acting to fix the child care crisis should be a priority for North Carolina.

The business perspective can aid policymakers in understanding that the large gap between the supply and demand for licensed child care doesn’t just affect children, their parents, and care providers — it also has a substantial effect on North Carolina’s economic health by shrinking the labor force, particularly women’s ability to enter and stay in the labor force. As NC’s Department of Commerce finds, “affordable, accessible child care could add up to 68,000 jobs in the state, increase annual economic input by up to $13.3 billion, and boost GDP by up to $7.5 billion.”

The U.S. continues to use a market-based system, but the market is broken. Despite the pivotal role that child care, including home-based child care, plays in the U.S. economy, it continues to be primarily a consumer-funded expenditure that is privately provided and privately paid.
The gap between supply and demand is largest in rural communities. Rural communities have distinct density features that make it more challenging to obtain high-quality, affordable child care within a reasonable distance from home or work.

Care for infants is tough to find. Waiting lists can be more than nine months long. This can cause substantial economic harm to parents, particularly mothers, who need or want to return to work.

High-quality child care and early learning programs are most inaccessible to low-income families and children who need them to support their pathway to economic self-sufficiency. Many states have invested in strengthening child care subsidies to ensure that it is a help, not a hurdle, for families working toward financial stability. This report details many of these child care policy innovations:

Arkansas, New Mexico, South Carolina, and Virginia are setting income eligibility thresholds at or above 85% of the state median income, limiting copayments to 7% or less of a family’s income, and establishing equitable reimbursement rates.
In 2024, 12 states increased income eligibility limits, 15 decreased family copayments, and 22 increased provider reimbursement rates.

Middle-income families are also struggling with child care affordability. North Carolina ranks last in affordability of care, which means that middle-income families often have to devote a large proportion of their income to child care. This financial burden is multiplied for those who must meet costs for multiple children. Here are the average prices of care in a range of settings:

$9,160 per year for a 4-year-old in family child care
$9,617 per year for an infant in family child care
$10,216 per year for a 4-year-old in center-based child care
$12,251 per year for an infant in center-based child care

To put these costs in perspective, In-state tuition at UNC-Chapel Hill (the most expensive state university) is approximately $7,000.

Photo by Kadyn Pierce on Unsplash

Photo by Kadyn Pierce on Unsplash

Middle-income families can be supported through tax system innovations like the Child and Dependent Care Tax Credit (CDCTC). This demand-side policy helps offset a portion of families’ child or dependent care expenses by reducing their federal or state income tax liabilities. New research examining the effects of state-level variation in CDCTCs provides recommendations for improving the credit. Recommendations include making the tax credit refundable when a family’s tax credit exceeds their tax liability and increasing the amount of the credit because the maximum reimbursement is far too low given the cost of child care.

We have covered only a few of the many factors that must be considered to create an early care and learning ecosystem that can meet the needs of the broad diversity of families and children. This set of briefs highlights the policy opportunities for two additional sub-groups:

We have covered only a few factors that must be considered to create an early care and learning ecosystem that meets the needs of the broad diversity of families and children. Legislators also need to consider policy opportunities for additional sub-groups, such as access to quality child care for children with disabilities and special needs, and access to quality child care for families with nontraditional work schedules.

ACTION: Taking a Stand for Early Care and Education

Photo by Ryan Fields on Unsplash

We invite you to review all the briefs in our six-part series titled “Taking a Stand for Early Care and Education: North Carolina’s Fight for Access, Equity, and Fairness,” which explores a selected set of complex challenges plaguing North Carolina's early care and learning system.

These briefs detail many interconnected threads that contribute to the persistence of the child care and early learning crisis. Through a detailed examination of data, expert insights, and advocacy perspectives, we will highlight systemic challenges and present actionable policy solutions to drive the transformation needed for a stable and equitable system. Join us as we delve into critical topics, laying the groundwork for a robust dialogue on achieving universal pre-K, enhancing economic health through child care availability, and much more.

JOIN OUR EMAIL LIST to ensure you receive the next installment in this critical series to fix our early care and learning system.