July 30, 2026
The 2026-27 California State Budget included multiple investments in child care, particularly in regards to subsidized child care slots, rate reform progress, and the cost-of-living adjustment.
In 2021, Governor Gavin Newsom made a promise to fund an additional 206,800 subsidized child care slots, and the Legislature approved a multi-year plan in law to do so. Other long-standing efforts in California’s Early Learning and Care system include rate reform to reimburse providers for the true cost of care by adopting an alternative methodology to inform a Single Rate Structure for subsidized child care and preschool, shifting away from the Regional Market Rate and Standard Reimbursement Rate, and protecting and increasing cost-of-living adjustments (COLA) for providers.
The 2026 enacted state budget funds a total of 22,770 additional child care slots, with a priority on serving children birth-to-three years of age. Specifically, the slots are funded as follows:
In a state with a large unmet need for child care that serves young children, any additional slots means more low-income families have the ability to work or pursue secondary education, and provide their children an affordable, quality early learning experience.
Although the amount of promised slots was not achieved, an increase of 22,700 slots in the final budget is a huge win for low-income families who are experiencing long waitlists to obtain child care in California, where only 16% of eligible children are enrolled in child care programs.
This year’s budget requires that when the California Department of Social Services uses a regional market survey to establish child care provider payment rates, it must conduct that survey every three years instead of every two years, aligning with the federal Child Care and Development Fund State Plan’s own triennial cycle. The new requirement also allows for the use of an alternative methodology instead of a market rate survey, which is intended to provide reimbursements that more accurately reflect the true cost of care, as opposed to a market rate.
The way California currently reimburses providers, through the Regional Market Rate and Standard Reimbursement Rate, fall short in reimbursing providers for the true cost of providing care. In order to achieve a more accurate and equitable reimbursement system, the state must adopt an alternative methodology which would inform a single rate structure for reimbursements. Any steps towards adopting and implementing an alternative methodology is a milestone towards our ultimate goal of achieving equitable rate reform.
Last year’s state budget suspended the statutory cost-of-living adjustment (COLA) of 2.43 percent for child care programs, instead redirecting $70 million in COLA funds to support rate increases through Cost of Care Plus rate supplements. This year’s final state budget also suspends the statutory COLA for child care, and applies a reduced COLA of 2.099 percent, which will also be reflected as a percentage increase to Cost of Care Plus rate supplements.
COLAs matter because they help providers keep pace with rising costs of doing business, including rent, personnel, and supplies. But whenever a COLA is suspended or reduced, providers absorb those increased costs out of pocket, threatening their ability to remain open and serve families. While the 2.009 percent COLA delivered through Cost of Care Plus is better than a full suspension of COLA, it is not enough to account for the true cost increases providers are facing, and falls short of the 4.31 percent COLA provided to public education teachers.
Early Edge California is a proud partner of the ECE Budget Coalition, and through our dedicated and relentless advocacy alongside coalition partners during this budget cycle, we were able to secure a final state budget that funds 22,700 child care slots, a COLA for early learning providers, and steps towards rate reform. Although the state fell short of its original promise of 44,000 for this budget year, the codified-in-law multi-year plan for child care slots has another planned 33,000 additional slots for the 2027-28 budget year, which we will continue to advocate for, in addition to an increase in provider payments and progress on rate reform.
Click here to read Early Edge California’s final budget statement. You can read changes to the law on child care and development programs here.