Child Care Bill Guarantees Subsidized Care for Families Under $150k, Mandates K-12 Teacher Wages for Staff

The Child Care for Working Families Act is a massive overhaul of how early childhood care is funded and delivered in the U.S., setting up a federal entitlement program for child care and a new universal preschool system. Starting in fiscal year 2026, this bill guarantees subsidized child care for children under age six, provided their parents are working, in school, or actively seeking employment. For families earning up to 85% of their State Median Income (SMI)—which could easily be over $100,000 in many states—care will be free, with costs capped at 7% of income for families earning up to 150% of SMI (potentially up to $150,000 or more).

The Real Cost of Care: No More Sticker Shock

Title I of the bill is the game-changer for working families and child care providers alike. It requires states to conduct cost studies and set provider payment rates high enough to cover the actual cost of high-quality care. This is huge because historically, subsidies have barely covered half of a provider's operating costs, forcing them to rely on high parent fees or cut corners. Now, the state must pay rates that include a living wage for staff, with the ultimate goal of matching the wages of elementary school teachers who have similar credentials. For the early childhood workforce—who currently earn poverty-level wages—this is an immediate and massive professional upgrade, aimed at stabilizing a field notorious for high turnover.

Universal Preschool: Free for All 3- and 4-Year-Olds

Title III establishes a new Universal Preschool program, offering free, high-quality, and inclusive preschool for all 3- and 4-year-olds whose families choose to participate. To get the federal cash, states must submit plans guaranteeing universal access and ensuring that local programs meet standards at least as tough as those for Head Start, including mandates for smaller class sizes and better ratios. Just like the child care section, this title requires that all preschool staff—including those working with infants and toddlers at the same facility—must be paid wages equivalent to K-12 elementary school teachers with similar credentials. While the federal government covers 90% of the cost in the first two years (FY 2026 and 2027), this share drops to 60% by FY 2031, meaning states must eventually shoulder a larger financial burden.

A New Deal for Head Start Staff

Title IV focuses specifically on the Head Start program, throwing significant money at two key issues. First, it provides grants to help Head Start agencies extend their services to a full day and a full year, which is essential for working parents whose hours don't magically align with a half-day, school-year schedule. Second, it appropriates $2.7 billion annually specifically to raise the wages of Head Start teachers and staff, ensuring they also meet that K-12 teacher pay standard or, at minimum, a living wage. This ensures parity across the entire early childhood sector funded by the federal government.

The Catch: Maintenance of Effort and State Hurdles

This bill is a massive investment, but it comes with strings attached for state and local governments. The most significant is the “maintenance of effort” rule: states cannot use this new federal money to replace what they are already spending on child care and preschool. They must keep spending at least the average amount they spent between fiscal years 2023 and 2025. If a state cuts its own funding, the federal government is required to cut its support by the exact same amount. This is designed to prevent states from defunding their own programs, but it places a significant fiscal constraint on state budgets, especially if a recession hits. States that don’t participate in the main programs will see federal funds flow directly to local governments or Head Start agencies, bypassing state control entirely.