Child Care Bill Pumps $20 Billion into States, Mandates Living Wages for Care Workers Starting 2025

The “Building Child Care for a Better Future Act” is a massive federal investment aimed squarely at fixing the nation’s child care crisis. Starting in Fiscal Year 2026, the bill immediately pours $20 billion into the existing Child Care Entitlement Program, which is the main source of federal child care funding for states, tribes, and territories. Critically, this funding is designed to grow every year, indexed to inflation, meaning it’s not just a one-time cash infusion but a permanent, growing commitment. This section is essentially a massive, permanent raise for the existing system, ensuring more low-income families can access subsidies.

The $5 Billion Fix-It Fund: Targeting the Gaps

Beyond the base funding increase, the bill creates a brand new, targeted grant program worth $5 billion annually. This money is reserved for states, tribes, and territories to improve the child care workforce, increase supply, and boost quality in areas that need it most. Think of this as the surgical strike fund. To get the cash, agencies must submit a detailed plan showing how they identified areas of “particular need”—maybe places lacking infant care, offering no care outside of 9-to-5, or rural zones with zero options. They must prove they talked to the community to figure out what’s missing.

Putting Cash in Caregivers’ Pockets

This new $5 billion program comes with some serious strings attached, especially concerning the people who actually do the work. Agencies must use the money to attract and keep staff by increasing total compensation. The bill explicitly mandates that staff wages must meet a living wage standard and be adjusted annually for cost of living. For the millions of child care workers currently earning near poverty wages, this provision is a game-changer. For parents, this means the centers they rely on should see less staff turnover and higher quality care, directly tied to the stability that comes with better pay.

Building and Expanding the Infrastructure

If you’re a provider struggling with ancient facilities or an entrepreneur wanting to open a new center, this bill has provisions for you. The $5 billion fund can be used for start-up costs, business advice, and even major facility renovations, including the purchase of land or buildings. This addresses the huge capital hurdle that often prevents new child care options from opening, especially in high-cost areas. The bill allows up to five years to spend money earmarked for these major facility projects, recognizing that construction takes time.

Protecting the Money and Ensuring Accountability

Recognizing that states might be tempted to use this new federal money to replace their own spending, the bill includes two key safeguards. First, the “Supplement, Don’t Supplant” rule means this new federal money must add to existing spending on low-income families—it can’t replace it. Second, the “Maintenance of Effort” rule requires states to certify they will continue spending at least as much of their own general revenue on child care as they did previously. These rules are designed to prevent states from pulling a fast one and diverting their own funds elsewhere.

Finally, the bill mandates serious evaluation. Recipients must report back on how the grant money impacted supply, quality, and access in targeted areas after one year and three years. The Secretary must then conduct independent evaluations every five years, looking closely at things like care availability during non-traditional hours and services for children with disabilities. The goal here is to ensure that this massive investment, which takes effect on October 1, 2025, actually delivers on its promise to fix the child care system.