Vermont, New Mexico, and Kentucky Expand Childcare Access After Federal Funding Ends

State governments in Vermont, New Mexico, and Kentucky have implemented new programs to expand childcare access and lower costs for working families. These initiatives follow the expiration of substantial federal pandemic-era funding that had previously supported the sector. The states are attempting to stabilize the market through structural policy changes and direct financial support for providers.

Vermont enacted a law in 2023 establishing a near-universal public childcare system. The program is funded in part by a 0.44% payroll tax shared between employers and employees. Since July 2022, the number of families covered by the system increased by 55%, reaching approximately 12,000 children by May 2025. Flexible grants have also been used to increase the number of providers and improve care quality.

New Mexico launched the nation's first universal childcare program in November 2025. The initiative extends free care to all working parents, removing previous income restrictions. The state aims to double coverage from the current 32,000 children to 64,000 by 2028. State estimates indicate the program will save participating families an average of $12,000 annually.

Kentucky passed a bipartisan measure in April 2026 to invest in childcare infrastructure. The legislation provides free care for the children of childcare employees and increases state-subsidized reimbursement rates. It also loosens regulations to allow employers to share costs for facilities and creates a pilot program for one-room microcenters in underserved areas. Governor Andy Beshear separately launched a Pre-K for All pilot in several counties.

New York City is expanding its free toddler slots to include children as young as two in all five boroughs. Mayor Zohran Mamdani announced the expansion as part of a plan to build a universal early childcare system. While the rollout began in September, the city has faced some implementation challenges.

Nationally, out-of-pocket expenses for center-based care have more than doubled since 2019. The average annual cost reached $13,128 in 2024. A 2023 government survey found that more than 70% of families seeking care reported difficulty finding it. Another 11% could not find any available slots. Provider data indicates that three-quarters of centers frequently turn families away or place them on waiting lists.

About half of U.S. families live in areas classified as childcare deserts, where three children under age five exist for every licensed care slot. The consultancy BCG estimates that the U.S. could lose up to $290 billion annually by 2030 in forgone economic activity due to women reducing work hours or exiting the workforce because of childcare pressures.

Vice President JD Vance proposed a plan in September 2026 to repurpose existing childcare subsidy funds as cash transfers to married parents where one spouse stays home. Current data shows that the existing subsidy program cited in the proposal reaches only 16% of eligible children.

Researchers suggest that future policy should include paid family leave, expanded public subsidies, higher wages for childcare workers, and startup grants for providers in underserved areas. These components aim to address affordability gaps and workforce retention issues in the sector.