Three years since the promise of universal pre-K became a key plank of many Democrats’ political platforms, Congress appears close to passing groundbreaking legislation that would help states make universal pre-K a reality. President Biden’s Build Back Better Act has gone through multiple iterations in the past few months – and may still go through more as it passes through the Senate.[1] However, at its core, it promises to massively increase  funding for early childhood education. As currently drafted, the bill would promise roughly $380 billion in funding through 2028 – an amount that is more than twice the combined funding for Head Start and the Childcare Development Fund, both of which are nearly universally regarded as successful federal education programs. This significant influx of money will result in increased spending on a whole host of services in early childhood: from evidence-based curriculum to center management and enrollment solutions to new enrichment activities and materials; simply stated, it will significantly change the face of early childhood education in the United States.

In order to understand the impact, it’s important to first understand where those dollars are headed. We have highlighted below what we expect to be in the final legislation.

Free Universal Pre-K for 3- and 4- year olds

In 2019, before the pandemic, just under half (49%) of 3- and 4-year-olds were enrolled in some form of nursery, preschool, kindergarten, or elementary school.[2] Enrollment numbers fluctuate when reviewed by race, income, and parent employment status, though even for two-parent households where both parents were employed, only 57% of children were in some form of childcare.

Under the Build Back Better Act, states will be able to create and submit plans for implementing, or in some cases expanding, universal pre-K for 3- and 4- year-olds. States will then receive funding on a sliding scale to implement those plans – 100% of expenditures will be covered from 2022-2024, at which time funding will scale down incrementally until it reaches 60% in 2028 before expiring. As such, 2028 will therefore be a pivotal year for determining whether states will make up for the loss of federal funding if the program has not been extended. Obviously, the way universal pre-K is implemented will vary state-to-state, but the bottom line is a near-certain influx of both children, and new dollars, into the U.S. early childhood system.

Capping the amount families have to pay for childcare

In addition to universal pre-K, Congress is also likely to establish a cap on the amount that families would have to pay for childcare for children under 6. Under the Build Back Better Act, families making up to 250% of their state’s median income would only have to pay 7% of their annual income on childcare. Families that are spending above that threshold would receive a childcare certificate that serves as a voucher for any licensed childcare provider.

As of now, the bill does not specify whether the cap would apply to a single provider or to multiple providers in instances where parents are utilizing more than one source of care. While this detail will need to be fleshed out by the states, one potentially positive aspect of the bill is that any registered childcare provider will be able to accept these vouchers, meaning funding will not be concentrated just in public pre-K.

Raising wages for childcare workers

The bill also sets aside funding for childcare wage grants for small businesses. These grants will be determined based on a state-developed cost model as well as a tiered model for determining quality. The hope is that offering living wages, as well as pay parity with similarly credentialed elementary school teachers, will help attract new childcare workers to the industry, which was already facing worker shortages before the pandemic. This also helps solve the issue of increased demand.

Creating childcare information networks at the state level

In an effort to create more transparency and options for families, the bill provides additional funding for states to establish childcare information networks. These websites must provide data on accredited childcare providers such as location, fees, application process, and average length of wait time, among others. Not only will this create greater transparency for parents and guardians to enhance their decision-making, it will also allow them to apply to multiple childcare facilities with a single application. On the industry side, it is likely to drive up the demand for enrollment management and center management software as facilities get more inquiries and applications and have to navigate potentially more “customer service” issues and longer waitlists.

Summary of the potential impact of the Build Back Better Act

With the largest influx of dollars ever into the U.S. early childcare education system, there is no doubt the effects of the legislation will be far reaching. While some of its effects may be hard to anticipate, a number of outcomes seem fairly clear:

  • A substantial increase in children enrolled in early childhood education, manifested not only through new participation in public pre-K programs, but also expanded enrollment of private childcare programs through both childcare vouchers and potential state implementation of universal public pre-K through vouchers for private pre-K programs
  • Increased nationwide spending on curriculum, assessment and services related to classroom experience driven by the entry of new children and new programs to the market
  • Increased need for, and therefore spending on, enrollment management, center management and other software solutions designed to make childcare and pre-K programs run more efficiently and effectively
  • Increased need for professional development to train and support new teachers and childcare providers

[1] Changes are likely to be made to the paid leave program and tax policy before passing in the Senate. Universal pre-K and child-care subsidies are expected to stay intact. https://www.cnbc.com/2021/11/19/house-passes-build-back-better-act-what-happens-next-in-the-senate.html

[2] NCES, https://nces.ed.gov/programs/coe/pdf/2021/cfa_508c.pdf

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