Child Care Overhaul: $25 Billion Boost Mandates Living Wages for Providers, Targets High-Need Areas

Starting October 1, 2025, the Building Child Care for a Better Future Act dramatically increases federal funding for child care, setting aside a massive $20 billion for state grants in the first year alone, with automatic annual adjustments tied to inflation. On top of that, it creates a brand new, dedicated $5 billion annual grant program specifically designed to fix supply, quality, and workforce problems in communities where child care is hardest to find. This isn’t just about more money; it’s about making sure that money goes toward concrete improvements, especially by requiring that child care workers are paid a living wage.

The $25 Billion Question: Where Does the Money Go?

Think of this bill as a two-part funding surge. The first part is the $20 billion (starting in FY 2026) that flows into the existing Child Care Entitlement to States. This is the core funding states use for subsidies and quality programs, and the bill ensures this pot grows every year with the cost of living. The second part, detailed in Section 3, is the new $5 billion annual grant focused on “areas of particular need.” States must submit detailed plans showing how they will use this money to increase the number of child care slots, improve quality, and, most critically, boost the workforce in specific high-need zones.

Ending the Child Care Wage Crisis

The biggest game-changer for anyone working in or relying on child care is the focus on the workforce. For states to tap into that $5 billion grant, they must commit to increasing provider compensation. Specifically, the funds must be used to ensure that staff wages—including for sole proprietors in family child care—meet a living wage standard and are adjusted yearly for cost of living. If you’re a child care teacher currently struggling to pay rent, this provision is designed to provide financial stability and attract new talent to a severely underpaid sector. The money can also be used for things like bonuses, apprenticeships, and scholarships.

Fixing Supply and Facilities in Your Neighborhood

For parents, especially those working non-traditional hours or living in rural areas, the bill targets supply shortages. States must use the $5 billion grant to identify and fix these gaps. This includes supporting family child care networks, providing start-up funds for new businesses, and even helping providers navigate real estate deals to build new facilities or renovate existing ones. For example, a community in a "child care desert" could see funds used to build a new center or expand a Head Start program. If facility construction or repair is involved, the bill requires that all laborers and mechanics on the job are paid the prevailing wage rates for that area, adding a layer of protection for construction workers.

The Catch: What States Have to Promise

While the federal government is putting up the cash—and notably, states don't have to match it—there are strict rules designed to prevent states from simply pocketing the federal money and cutting their own checks. This is called the “supplement, not supplant” rule. States must promise that the federal grant money adds to their current spending on child care for low-income families, rather than replacing it. Furthermore, they must maintain their own state spending at a minimum level. This “maintenance of effort” rule means state and local budgets will need to keep their current child care funding steady or even increase it, ensuring the federal investment translates into a long-term, sustained commitment to families.