With Guv’s Signature, Childcare $$ To Flow

State-funded childcare providers are poised to become far more affordable, higher-capacity, and better paying — thanks to landmark investments in early education signed into law this week.

While the biggest impacts of those state laws will likely take years to unfold, New Haven-based childcare providers are already sketching out visions for expansion.

The laws in question — S.B. 1 and H.B. 5003, which Gov. Ned Lamont signed into law on Monday — mark ​“the most comprehensive state childcare financing package in the country right now,” according to Friends Center for Children founder Allyx Schiavone.

They include a childcare endowment that could be seeded with up to $300 million in state funding, the consolidation of multiple state programs into a streamlined system, and a healthcare benefits program for childcare workers.

The legislation is ​“laying the foundation to build towards universal preschool,” said Georgia Goldburn, founder of the early education center Hope For New Haven and childcare advocacy group CERCLE.

But with affordability measures tied to a finite number of state-funded childcare slots, she cautioned, ​“it doesn’t actually achieve that immediately.”

The Current State Of Childcare

This overhaul comes in the midst of a local and national crisis for the childcare industry. 

Childcare businesses as a whole tend to operate on razor-thin margins; Friends Center for Children relies on grants and donations in order to operate, Schiavone said. 

Meanwhile, childcare providers across the state remain unaffordable for a substantial number of Connecticut residents, while childcare workers earn only just above the state minimum wage on average. 

As a result, there’s a shortage of both childcare workers and childcare options across the state.

The stakes are high for a system that cares for children at the most rapid stages of brain development while enabling parents to re-enter the workforce.

According to the Economic Policy Institute, the average cost of infant care in Connecticut (estimated at $1,688 per month) is over 26 percent more expensive than in-state college tuition and 11.5 percent more expensive than the average rent in Connecticut.

Infant and toddler care is in particularly low supply compared to the need, and it is particularly expensive. The state currently requires that infant and toddler childcare groups be capped at eight children and have an adult-to-child ratio of one-to-four, while preschoolers can be in a classroom of up to 20 children with a staff ratio of one-to-ten. 

The Bipartisan Policy Center estimated that as of 2019, New Haven County needed 11,590 more childcare slots — a 30.9 percent supply gap — to meet the potential need. 

According to Schiavone, the city of New Haven itself reportedly has 854 full-time infant and toddler slots as well as 2,715 full-time preschool slots, though she noted that these can vary in affordability and quality. She estimated that the city has a shortage of about 320 preschool slots and about 2,194 infant and toddler slots. 

Meanwhile, childcare workers in the New Haven metropolitan area earn a median wage of $34,530 — just above minimum wage, according to the Bureau of Labor Statistics.

The fact that the childcare workforce primarily comprises women, and disproportionately women of color, plays a role in why ​“we’ve always been marginalized, undervalued, underfunded” as a profession, Schiavone said. 

A childcare worker earning the state’s median wage would have to spend 57.5 percent of their income to pay non-subsidized childcare tuition, according to the Economic Policy Institute. 

New State Endowment Created

The laws signed on Monday amount to an effort to address every prong of this crisis.

They would overhaul the very structure of the state’s childcare funding system, consolidating multiple programs into a single initiative known as Early Start. 

As of Fiscal Year 2024, the state’s programs served 18,317 children, according to the Office of Early Childhood​’s annual digest. Goldburn estimated that about 20 percent of childcare programs in Connecticut currently receive state funding.

One key provision would create the Early Childhood Education Endowment, which would receive up to $300 million of the state’s surplus each fiscal year (an amount ultimately determined by the governor). The Commissioner of Early Childhood would receive a portion of the endowment annually to fund initiatives including childcare affordability, expansion, and employee health insurance increases. The rest of the money will remain in the fund to accumulate.

According to Schiavone, ​“the goal is to have 16,000 new infant, toddler, and pre‑k Early Start slots” eventually funded by the endowment.

Even that increase wouldn’t be enough to meet demand amidst a shortage of childcare openings, especially for infants and toddlers, Schiavone said. ​“But it is a much larger investment than we’ve ever seen in our state.”

Once the governor transfers an initial amount of up to $300 million toward the fund, 12 percent of that endowment would go toward the commissioner in the upcoming fiscal year. After two consecutive years of distributing 12 percent of the funds, the endowment’s annual allocation would drop to 10 percent starting in July 2027. 

The governor can decide to add to the endowment if the state continues to see annual surpluses — as the commissioner allocates funding toward multiple new initiatives.

Free & Capped Tuition

That investment is slated to dramatically reduce the cost of childcare for many Connecticut families. It would make all state-funded childcare slots tuition-free for families making under $100,000 in income, and ensure that no family making more than $100,000 pays more than 7 percent of their income toward state-funded childcare, starting in July 2027.

Many childcare classrooms — including those at Friends Center and Hope for New Haven — comprise a mix of slots funded through government programs and slots funded entirely by families. As Early Start seats increase, childcare providers can apply for a state contract to offer a certain number of state-funded slots. 

The new income caps would apply specifically to families with children enrolled in state-funded Early Start childcare slots. (There’s no income requirement for a given family to qualify for an Early Start slot, but childcare providers have to allot at least 60 percent of Early Start slots to families making under 76 percent of the state median income.)

Goldburn said that Hope for New Haven currently serves about 75 children who will be impacted by the Early Start program, out of a maximum of 97 children at any given time. For about 70 percent of those kids’ families, she estimated, childcare will eventually be free under Early Start.

This provision will particularly help ​“families who get lost in that gap, where they make too much to qualify for Care4Kids or Head Start, but not enough to really afford childcare,” Goldburn said.

Provider Reimbursement Raises

Meanwhile, according to Goldburn and Schiavone, the Early Start program is simultaneously slated to eventually increase the state-determined ​“cost of care” — the amount that each childcare provider receives per Early Start child based on state estimates of what that cost should be.

The state currently reimburses childcare providers up to $10,500 for every preschooler and up to $13,500 for every infant and toddler (depending on the number of hours of care per week).

A state report, however, determined in 2024 that those reimbursement rates are substantially lower than the actual cost of providing care for each child — estimating that those costs actually range from about $15,000 to $30,000 per preschooler and $24,000 to $35,000 per infant and toddler.

Now, according to Schiavone, the state has to figure out how to implement tuition caps while ensuring that childcare providers are compensated with the true cost of care.

Capacity, Benefits, & Pay

The endowment will additionally fund a health insurance subsidy for employees of state-funded childcare providers, the details of which will need to be hammered out by the Connecticut Health Insurance Exchange and the Office of Early Childhood by Fiscal Year 2027.

Finally, the endowment can be used to expand the number of early childhood education slots, increase early educators’ pay, and recruit and train new employees, among other possible initiatives. 

Both Goldburn and Schiavone said they are planning to expand their respective businesses should the state provide them with funding for additional slots.

As a whole, the endowment could provide a groundbreaking level of stability to state childcare funding. 

“Connecticut theoretically has a fund that doesn’t fall under the spending cap” imposed on state appropriations, a fund that can’t be ​“reduced if the state gets into any kind of financial jeopardy,” said Goldburn.

She stressed, however, that the governor must continue adding surplus funds year after year in order for the fund to truly be able to accomplish its lofty goals. 

“I say ​‘theoretically,’ because if there isn’t a surplus, there is no mechanism to fund this,” she said. 

Easing Logistical Burdens

The new Early Start program would also reform the logistical process through which childcare centers receive payment from the state. Childcare providers will no longer need to go through a fiduciary in order to receive the funds, according to Schiavone, and programs under contract with the state will receive compensation in the form of quarterly advance payments.

Previously, according to Schiavone, ​“we would sometimes be at least 11 months behind in our payments.” The new system ​“allows us to pay our employees on time.”

Goldburn echoed the sentiment that the new payment system will have a ​“stabilizing impact on programs.” With the contract system, ​“I can predict and I can plan and I can make investments in my business,” she said, adding that this sense of predictability translates to predictability for the parents and children she works with. ​“That’s huge for Hope, because we’ve never been able to do that.” 

Another logistical change, as passed in H.B. 5003, would streamline families’ application process for childcare through a centralized online portal, which would also provide information about available subsidies all in one place.

The reforms additionally include a pilot program enabling home-based childcare programs to serve 12 children at a time, according to the family childcare advocacy organization All Our Kin. ​“This is a major step toward building a more equitable child care system,” the organization wrote in a social media post.

“We’re hoping to see an explosion of growth in family childcare,” said Goldburn.

Finally, in a separate measure, the state legislature has voted to allocate $80 million in bonds specifically designated toward a new Child Care Facilities Grant Program.

According to Schiavone, a significant challenge, and cost, for childcare providers is finding a physical space to operate. 

As childcare centers anticipate expansion, Schiavone argued that the city should play a role in helping providers find such locations — perhaps even by requiring developments ​“over a certain size to put infrastructure into their projects for childcare.”

The potential ramifications of these various investments in childcare will have impacts on children beyond the realm of childcare itself, Schiavone said. ​“If we can lower cost for families and put more money into their home budget, that will allow their child to thrive in a different way.”