ALBANY, NY | The Fiscal Policy Institute today released a new report by Andrew Perry, Director of Fiscal Research, that analyzes the current shortfall in State childcare funding and makes recommendations for bridging the funding gap. 

Key Findings

• In recent years, New York State has enacted significant expansions to its childcare subsidy program—the Child Care Assistance Program (CCAP)—increasing eligibility from 200 percent of the poverty level ($62,500 for a family of four) to 85 percent of the state median income ($113,568). This increased the share of families eligible from 27 percent to 46 percent.
• CCAP costs rose from $760 million before the pandemic to $2 billion this year, driven primarily by rising per-child costs, which have double since 2019—whereas enrollment has only risen by 10 percent in the same period.
• Costs in New York City – which accounts for 61 percent of all State CCAP spending—are growing especially quickly. The City has already spent nearly half of its funding allocation from the State only one-third of the way through the funding cycle.
• Without an additional appropriation, New York City could be forced to place between 30,000 and 60,000 children on waitlists by the end of the year, with additional waitlists already being implemented elsewhere in the state.
• The City is requesting an additional $1.1 billion in childcare funding. The Executive Budget appropriates no additional funding while the Senate and Assembly would appropriate $50 million and $213 million, respectively.

FPI Recommendation 

• The State can bridge the childcare funding gap with $694 million in additional funding for New York City—and potentially additional funding for other localities—by moving childcare funding forward in the year (as discussed in this brief). Additional funding may be necessary for other localities.
• The risks of undershooting funding exceed those of overshooting. Any excess funds are rolled into next year, while the introduction of waitlists represent a major setback for the movement toward universal childcare.

Introduction

New York State has enacted substantial expansions to its childcare subsidy program in recent years, supporting more families than ever. Yet the State risks undermining these gains by underfunding the program in fiscal year 2026, forcing New York City and other localities across the state to deny service to eligible families beginning as early as April 2025, putting them on a waitlist. As lawmakers and advocates call for further expansions toward the goal of universal childcare, a reversion to waitlists would create immediate hardship for New York families and represent a serious setback for toward this goal.

In the short term, this setback could be avoided with an additional appropriation in the State’s now-overdue fiscal year 2026 budget. The City has expressed a need for $1.1 billion over the next 18 months. Nevertheless, this request rests on projections of rapid, sustained growth into next year. Given high levels of uncertainty, the State could move an additional appropriation forward in the year, making it immediately available and covering the City’s costs for the next 12 months, which may total as much as $694 million. Localities outside the City have also reported looming shortfalls, though the State has not released timely information.

In the longer run, the State should take steps to guarantee adequate funding for childcare, including creating dedicated funding streams and structuring the program as a State-backed entitlement rather than a rationed benefit.

It is understandable that the State is experiencing difficulty calibrating its funding for CCAP. Spending is rising rapidly as a result of the recovery of the program in the wake of Covid and recently enacted expansions driving up enrollment and per-child costs. Nevertheless, the State has substantially underestimated the City’s spending in the last two federal fiscal years. Safeguarding recent victories depends on fully funding the City with an adequate and immediate appropriation. Further, the risks of undershooting appropriations exceed those of overshooting. If a supplemental appropriation from the State exceeds the City’s actual need, those funds will simply rollover into future years, while reverting to a waitlist would represent a significant setback for the movement toward universal childcare.