Access to high-quality early care and education (ECE) matters for both parents’ employment and their children’s later life success. In recent years, California’s child care landscape has experienced significant changes—from the pandemic to the ongoing implementation of the state’s 2020 Master Plan for Early Care and Education.

We examine the shifting landscape with an eye toward understanding whether care is affordable for families and sustainable for child care providers. This assessment is timely, as the state continues to expand transitional kindergarten (TK), add subsidized child care slots, and reform how reimbursement rates are set for subsidized care. Our analysis relies on administrative program data, focus groups with families and providers involved in the subsidy system, and a survey of the professionals (whom we term “navigators”) who help connect families with providers offering subsidized care.

Public investments have grown

Child care is expensive. Without subsidies, full-time preschool care in a family home or center ranges from 6% to 18% of median household incomes across California counties. Costs are even higher (from 8% to 28%) for infant care.

State and federal support to help families afford child care has nearly tripled over the past decade. Big increases occurred during the COVID-19 crisis, and more recently, state funds have made up for the expiration of pandemic-era federal funds. Despite this growth in funding, many publicly supported child care programs serve far fewer children than are eligible.

State and federal funds supporting early care and education have nearly tripled over the past decade

Billions of dollars

SOURCES: Legislative Analyst’s Office, California Spending Plans: Child Care and State Preschool (various fiscal years).

NOTES: Amounts are inflation-adjusted to July 2024. With the exception of the most recent year, revised estimates are shown. Includes TK, California state preschool (CSPP), CalWORKs child care, and Child Care and Development Fund (CCDF)-funded programs; excludes federally funded Head Start. Local funds for ECE are not included. Proposition 98 funds are mainly devoted to TK and state preschool.

Many see gains in family affordability

Over half of navigators (54%) in our survey say the affordability of subsidized care has improved recently. Greater affordability overall could be due to the state’s reduction of the fees some families owe for their children’s care and the expansion of free TK for all four-year-olds. But access to affordable care varies. Over 75 percent of navigators say families can find affordable care for preschoolers but that it is harder to find for infants. In focus groups, providers indicate that families needing care for non-traditional hours and children with special needs face difficulties.

Capacity has increased, but challenges remain

The overall number of spaces for early education and care now exceeds pre-pandemic levels by 6% due to modest growth in the supply of licensed, home-based child care (starting in 2023) and greater growth in TK enrollment (starting in 2022). Meanwhile, a declining child population has also reduced the overall disparity between child care need and supply. Altogether, this evidence points to progress in supply, although we are not able to determine whether the increase has outpaced family demand.

However, this progress may not be reaching everyone, as a majority of navigators in our survey say that provider supply has decreased. Supply also varies geographically, with the lowest-income regions seeing the lowest licensed child care supply relative to their child populations. Despite an increase in the state’s reimbursement amounts for subsidized care (8% above inflation from 2021 to 2025), providers in our focus groups report that these subsidies have not kept pace with rising costs.

TK is affecting the landscape

TK expansion has created a free preschool option for all four-year-olds, driving the overall increase in the supply of early childhood education and care options. Navigators agree that TK is drawing four-year-olds away from other forms of child care. This has created difficulties for some providers as their enrollment has skewed toward younger children, changing providers’ training and staffing needs. Meanwhile, families express some wariness about TK as an option due to lack of information about the program and other factors, such as its limited number of hours.

Looking forward

Closely monitoring trends in program data and family and provider perceptions can help the child care system expand successfully, reaching more families who desire care and ensuring that all types of providers are incentivized to offer high-quality care. Moving forward, accurate information about the effects of rate reform and TK expansion on child care programs as well as the availability of care for different age groups and family circumstances will help policymakers better understand key dimensions of the shifting system.

To support a successful expansion, we urge the state to continue exploring ways to integrate administrative data systems across the various agencies involved in California’s child care system. In future research, we will examine issues related to continuity of care, support for children’s development and parents’ employment or training, and factors behind why some eligible families do not participate in subsidized care.

Source

About the Authors

Caroline Danielson is vice president of research and senior fellow at the Public Policy Institute of California. Her research focuses on multiple dimensions of the social safety net, including its role in mitigating poverty, program access and enrollment, and the integration and governance of programs. Her work has been published in numerous academic journals, including the Journal of Policy Analysis and the Social Service Review. Before coming to PPIC, she was a principal analyst at the University of California’s Welfare Policy Research Project and a faculty member in the Department of Politics at the State University of New York, Potsdam. She holds a PhD in political science from the University of Michigan and a master’s degree in policy analysis from the Pardee RAND graduate school.

Brett Guinan is a research associate at the Public Policy Institute of California, where she focuses on K–12 education policy. Prior to joining PPIC, she was a research data analyst at the California Department of Social Services. She has conducted independent research at the UC Center Sacramento and worked as a research apprentice for the political science department at the University of California, San Diego. She holds a BS in political science and data analytics from UC San Diego.

Joseph Hayes is a senior research associate at the Public Policy Institute of California, where he studies population change, educational policy, and criminal justice issues. Recent projects have focused on estimates of the undocumented immigration population, English Learner reclassification policies in California public schools, and the changing composition of the state’s prison and parole populations. He holds an MS in agricultural economics from the University of Wisconsin, Madison.

Laura Hill is a policy director and senior fellow at the Public Policy Institute of California. Her areas of expertise are K–12 education and immigration. She is currently researching English Learners in California schools, special education, and ESL students in community colleges. Her recent publications examine student achievement on the state’s K–12 assessments and the link between language reclassification policies and student success. Prior to joining PPIC, she was a research associate at the SPHERE Institute and a National Institute of Aging postdoctoral fellow. She holds a PhD in demography and an MA in economics from the University of California, Berkeley.

Patricia Malagon is a research associate at the Public Policy Institute of California, where she focuses on social safety net programs. Before joining PPIC, she worked as a research assistant at the Institute for Research on Labor and Employment, where she analyzed racial disparities in program access and employment outcomes for CalWORKs participants. She holds a BA in political economy from the University of California, Berkeley.

Anna Allison is a mixed methods researcher at Mission Analytics Group, Inc. where she contributes to site visits, report production, technical assistance, and other analytical support for projects related to child care policy, maternal health, and individuals with disabilities. She holds a master’s degree in public health from the University of San Francisco.

Vicki Hsieh is a senior editor at the Public Policy Institute of California. She works with the research staff to publish clear and compelling reports, briefings, and other documents for a broad audience—including state legislators, policy experts, and the media. Before joining PPIC, she worked at Hanover Research as a project manager and editor in K-12 and higher education research. She holds a PhD in comparative literature from the University of California, Irvine, and BAs in comparative literature and psychology from Cornell University.