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Cato Institute Policy Forum: From Red Tape to Real Choice — Reforming Childcare Policy
Chelsea Follett, research fellow at the Cato Institute’s Center for Global Liberty and Prosperity (HumanProgress.org), moderates a discussion with Alex J. Adams, Assistant Secretary for Family Support at the US Department of Health and Human Services, and Dr. Anna Claire Flowers, assistant professor of economics at Berry College and family policy fellow at the Archbridge Institute, on regulatory reform as a path to more affordable, abundant childcare.
Chelsea Follett: Hello, and welcome to today’s policy forum, coming to you live from the Cato Institute in Washington, DC. My name is Chelsea Follett, and I am a research fellow here at Cato in the Center for Global Liberty and Prosperity, working with HumanProgress.org, a project of the Cato Institute that shows many of the ways that free markets and individual liberty, including economic freedom, have helped to raise living standards. But there are some exceptions to that story of progress. Some areas of life have become more expensive — areas like housing, health care, and the topic of today’s event, childcare. My husband and I have four children, the youngest of whom is just five months old, and as my family has grown, I have become increasingly interested in family policy and authored the chapter on childcare and child-raising in Cato’s Handbook on Affordability.
Here in DC, we have some of the highest childcare costs in the country. It’s also among the country’s most heavily regulated childcare markets, even in many cases requiring that childcare providers possess a college degree. A DC city councilman recently wrote in The Washington Post about trying and ultimately failing to open a childcare center because he kept running into more and more red tape. If you do manage to survive the months-long, or even years-long, bureaucratic fight to open a childcare center, other regulations can make operating the center extremely difficult. The result is fewer childcare options for families and higher costs. Across the country, childcare often represents the biggest household expense after housing, and some families pay more for childcare than for their mortgage.
But today, more and more people are talking about this issue — whether it’s those mostly on the political right, although not exclusively, who say they are worried about falling birth rates and the flourishing of America’s families, or those especially, although not exclusively, on the political left, who voice concerns about the affordability of everyday life for the working class and ordinary people. Abundant, safe, reliable childcare options to fit different families’ needs is something we all want. Today we have two experts to walk us through both the practical, real-world process of childcare reform and the scholarly evidence on which policies work best — theory and practice, if you will.
First, to share with us his firsthand experience in the policy arena, we are honored to be joined by Alex J. Adams, Assistant Secretary for Family Support at the US Department of Health and Human Services — the top childcare official in the administration — who will discuss the current state of childcare policy and his efforts to expand childcare choices for families. Previously, as a leader in Idaho, he led a comprehensive regulatory review that helped make Idaho a national model for childcare freedom. Today, Idaho has the least regulated childcare in the country, and also among the lowest rates of infant and child mortality in the country — showing that deregulation and abundant childcare need not come at the cost of safety. At the federal level, he has continued taking actions aimed at giving parents and caretakers more choices. After our conversation, we will be taking questions from you, our audience — you can submit them online, you do not have to wait until the Q&A. Mr. Assistant Secretary.
Alex J. Adams: Thank you, Chelsea, and thanks to the Cato Institute for the opportunity to be with you here today. On behalf of the Administration for Children and Families, I’ll talk a little bit about what we are doing to increase affordability in childcare. And since I’ve been on both sides of this line — both as a state official and now as a federal official — I’ll talk a little bit about both capacities. If we could get my slides up.
First, I’ll talk a little bit about how I approach this from my vantage point at the Administration for Children and Families, and I’ll start off by talking about opportunities to improve federal grant administration. The reason I’m going to start there is the federal role with childcare is through our grants — through CCDF, the Child Care and Development Fund, Head Start, as well as Head Start collaboration grants. Globally, across all of our programs, the opportunities I see to improve federal grant administration are: to improve consistency and clarity across administrations — apologies, we’re having a little trouble up here — to empower states and local communities to develop responsive, locally driven solutions; I want to reduce ambiguity in federal guidance that can slow innovation and implementation at the local level; I want to eliminate unnecessary administrative burden — the more red tape we have on these programs, the more that’s gobbled up in administrative overhead, the less resources reach actual children and families; and I want to focus our oversight on outcomes and accountability, rather than processes and inputs.
So, to start off with the Child Care Development Fund, the largest grant we have for direct childcare, I asked our team to quantify what percentage of the market is funded by CCDF, because oftentimes people would come to me as a state official and treat CCDF as if it was the childcare market itself. What we found is 1.6 million people use the childcare subsidy on average each month. That represents 12 percent of the paid childcare market, or, if you look at both the paid and unpaid childcare market, 8 percent of the market. That means, even if you take the higher end of that — the 12 percent — 88 percent of the childcare market is paid for by somebody other than federal childcare subsidies: primarily parents, and to a lesser degree employers and, in some cases, state governments. In general, parents are driving this market. CCDF is not the market — CCDF is a subsidy for a tiny fraction of the market. That was eye-opening to me; maybe that surprised some people listening online today, maybe other people knew that. But I think there’s a tendency in policy circles to equate that small subsidy with the market. The market is driven, in this case, primarily by parents.
So when I think about the priorities this administration has laid out, I filter it through that lens. This is an administration that’s trying to expand parental choice and flexible care options that meet the needs of working families. Most surveys that I see submitted to my agency demonstrate that what parents are looking for is family-based care or home-based care, not necessarily center-based care. And because we’re working with 8 to 12 percent of the market, I want to be very careful about using our levers to try to influence parents to make different decisions — I want to strengthen the supply in the settings that reflect actual family preferences and community needs.
ACF’s role is unique. We are a financier and an overseer — it’s states that are actually enrolling children in that small subsidy, it’s states that are licensing childcare facilities. I see my role as empowering states, providers, and communities to design locally responsive solutions, not putting our thumb on the scale of what that must look like. And I want to direct resources toward children and families with the greatest needs, maintain strong accountability but reduce unnecessary administrative burden, and support innovation that improves access, affordability, and provider sustainability.
So we spend a lot of time at ACF talking about how we execute on those priorities, and the question I keep coming back to is: there are trade-offs in childcare policy. Reasonable people can disagree on the right approach to balancing affordability, access, supply, and quality. Sometimes a decision you make in one of those areas can impact the others. For example, the previous administration put their thumb on the scale and attempted to cap the co-pay at seven percent of a family’s income. On the surface, that might seem reasonable — you could ask, why seven percent, why not six, why not eight, why not five, why not zero? But CCDF, as I said, is a subsidy for a small share of the market — eight to twelve percent — and it comes to states as a fixed block grant. If we put our thumb on the scale and say, “you must cap co-pays at a certain amount,” the natural response is going to be that states will have to increase the subsidy value per voucher, which means they’re going to have to shrink the number of kids eligible for that voucher. You are now trading a larger subsidy for fewer kids having access. So what we’ve had to wrestle with a lot is: even things that sound good, there is a high cost to good intentions, and the natural response to some of these things has been reduced access.
States and communities face different workforce conditions, different economic realities, and different family preferences. So as we wrestle with how to balance affordability, access, supply, and quality, the question I keep coming back to is: who should decide? Should it be us at ACF, putting our thumb on the scale for all fifty states, thousands of communities, millions of families? Or should the federal government defer some of these decisions to states, to providers, and to families? Generally, our approach at ACF has been: the further down that chain, the better. A federal regulator will never have a more vested interest in a child’s outcome and development than the family — the family knows these children best. The closer we bring these decisions to the family, the better. So I look forward to a robust discussion about what that looks like in practice with our programs. I’ll turn it back to Chelsea.
Chelsea Follett: Thank you so much to the Assistant Secretary for those remarks. We will now hear from Dr. Anna Claire Flowers, assistant professor of economics and data analytics at Berry College’s Campbell School of Business. She flew into DC from Rome, Georgia, to join us today in the F.A. Hayek Auditorium here at the Cato Institute, which is appropriate, because she was previously a Hayek PhD Fellow at the Mercatus Center at George Mason University, where she worked with renowned economists such as Tyler Cowen. Currently, Professor Flowers is also a family policy fellow at the Archbridge Institute and co-author of the State Child Care Regulations Index. And like me, she is a mother with an infant — hers is eight months old — so she has a personal stake in family policy as well. She will catch us up on the latest evidence regarding childcare policy economics, and give an overview of the research on how reducing regulatory burdens can expand childcare options and lower costs for families. Again, please feel free to submit your questions online during her talk — you do not need to wait until the Q&A, which will commence afterward. Dr. Flowers.
Anna Claire Flowers: Well, thank you so much, Chelsea and Assistant Secretary Adams, for those remarks, and just for providing a space to talk about this important issue that is so pressing for families figuring out what the right fit is for their unique needs. I’m going to share a little bit today about the 2026 edition of the State Child Care Regulations Index. This is a tool we’ve developed at the Archbridge Institute, and our mission at the Archbridge Institute, which I’m affiliated with, is to lift barriers to social mobility and see flourishing on the other side of that. So I’ll talk a little bit about this tool and then some of the recent research we’re seeing come out of it.
Our motivation for building out this index is to learn from what’s happening at the state level. As Assistant Secretary Adams pointed out, there’s a lot of variation in how states approach childcare regulation, and we see two paths to improving childcare access for families like ours: one is increased funding — of course, Assistant Secretary Adams just mentioned that funding only reaches a small percentage of families, and that’s a unique set — and so for the rest of that majority, we want to look at the other barriers shaping this market that most families are engaging in. So we want to revisit the regulations shaping that market. We know, and I’ll share what I share with my students, that competition is an egalitarian force — it doesn’t only help a few, it’s a tide that lifts all boats by expanding options for those unique family needs. So we want to look at the state-level variation, because it’s clear there’s no single model for childcare regulation, and even more so for those who do want to expand and divert more resources to childcare, which is happening in many states — an efficient regulatory approach, right-sizing those regulations, will help that funding go further.
In the index we’ve developed this year — and this will be an ongoing project to track changes over time — we have seventeen variables. Seven of those are child-to-staff ratios; this is what you might think about when it comes to childcare regulation — there are seven different age groups we’re tracking, all the way from six months up to five years. Group size is another variable that’s important; it’s different from child-to-staff ratios because it governs how many children can be in a shared space even while those ratios are upheld. So if you think about a staff-to-child ratio of one to six for, say, eighteen-month-olds, how many eighteen-month-olds can be together in a larger space if a center has the ability to facilitate that? Next we have staff credentials — we look at two different levels, one at the director level and one at the lead teacher level — and finally, annual training hours, which is something similar to continuing education you’d find in other professions, but required to be offered by the center itself. It’s important to note, as the Assistant Secretary mentioned, that the formal center-based part of the childcare industry is only one small part, but it’s the sector we have the most data for right now, because of the way licensing works on these businesses. So this index develops a ranking for each state among other states in how strictly they regulate those center-based childcare options. A higher score means more childcare freedom, similar to a higher score on something like an economic freedom index, and a lower score means more regulation and less childcare freedom.
This is just a map of our findings for this year. Green and blue represent more childcare freedom, less regulation; orange and red represent the states with the least childcare freedom. You’ll notice some regional patterns that are familiar — red and orange are clustered in the Northeast and some of the Midwest, while the green and blue, more-childcare-freedom states, are more dispersed among the South and Western regions. On the report, you can look at each state and see how it ranks across all fifty states, but also how it ranks in each of the four categories, to find out what might be some low-hanging fruit for your state to focus on.
I want to give you a couple of state profiles. Chelsea mentioned Idaho, but I’ll let the Assistant Secretary talk about his work there if it comes up in the Q&A. So we’ve got Pennsylvania and Arizona here. Pennsylvania is at the lower end of our spectrum on childcare freedom — they require a bachelor’s degree in early childhood education or a related field to be a center director, and for a lead teacher they require an associate’s degree in early childhood education or a related field. There are certain ways you can combine those college credits with years of experience to also reach that benchmark, and they require twelve hours of annual training at the center level. Contrast that with Arizona, which ranks third in childcare freedom — they require a Child Development Associate credential, which can actually be offered at the high school level in some technical programs, combined with about 480 hours of experience, which can be obtained in about six months if working part-time. So it’s not the lowest end of the spectrum when it comes to credentials, but it’s accessible at a community-college level or even a high-school technical program, rather than a bachelor’s degree. And for lead teacher, they’ve got a high school diploma as the credential, with eighteen hours of annual training.
Looking at the other two categories of the index, staff-to-child ratio and maximum group size also vary between these two examples. One thing to point out is that whenever we talk about deregulation, there’s not a lot of variation at the infant level — we go from a child-to-staff ratio of about three to maybe six across the full spectrum of states. But the real variation comes at the older age groups. Once you get into eighteen months, three years, four years, you can see Pennsylvania holding that ratio down at ten to one, even while five-year-olds may be going to kindergarten and having twenty to twenty-five students in a class. Their maximum group size is a multiple of two, which I actually like to see — sometimes those two figures aren’t even multiples of each other, which is another area of low-hanging fruit. Arizona doesn’t even govern their max group size in a blanket way — they look at it in terms of licensing based on infrastructure ability to handle a group: how big is the playground, how big is the shared play area — and that’s what determines the max group size, which moves Arizona up in the rankings because of the flexibility that provides.
I’ll go over a few research findings coming out of this version of the index, plus some of the general literature. First, what does regulation have to do with accessibility? One way to look at this — and these authors, Starr and Shakya, are working on this — is to take the Annual Social and Economic Supplement of the Current Population Survey, which asks: “Did anyone in this household have problems obtaining childcare that prevented them from working more hours in 2024?” A household in a state with a childcare-regulation score of six, for example, Nebraska, is 1.4 to 1.8 percentage points less likely to report access problems than an otherwise identical household in a state with a score of four. Compared to a baseline of five percent of families with children under five answering yes to that question, that’s up to a 26 percent reduction, if you control for other reasonable factors that might make those families’ experiences differ.
Another piece of literature I’ve had the privilege of working on is: what’s the effect of regulation on fertility? Chelsea mentioned there are people very interested in this question as we pursue different family policy options. We use a measure called the “fertility gap” — taking survey responses of women of childbearing age, averaging together the ideal family size they indicate when presented with different options, and then subtracting from that average the total fertility rate for each state over the past few years. That lets us estimate a fertility gap occurring at the state level. Now, life happens — everyone has some fertility gap, it’s positive everywhere in the US — but there’s a lot of variation we can use to see what policies might be shaping that experience. To put it in perspective with two example states: an otherwise identical state with a childcare-regulation score of six has a fertility gap smaller by 0.05 than a state with a score of four. Putting that in perspective, Virginia’s average fertility gap is 0.81 children per woman, so a 0.05 reduction in that gap is up to a 16 percent change. We’ll have to see what happens as, hopefully, more states get on board with reforming childcare and we can see the causal results down the road, but this estimate is certainly competitive with other ideas for family policy — and much more affordable.
Next, what’s the impact of regulation on affordability? This is work in progress with the 2026 index, but existing research shows a negative relationship between regulatory stringency and affordability. Competition, inviting more providers into the industry, is an egalitarian force, and this relationship goes beyond higher overhead costs — having to pay providers more based on credentials, having more providers per group of children — it also captures the effect on entrepreneurship: new childcare businesses discouraged from opening due to regulations, as Chelsea mentioned. DC is actually off the charts in our index — we don’t even include it, because it’s a unique case where childcare facilities have been closing at a very fast rate due to the regulatory stringency they’re under, discouraging a lot of people from continuing to offer this service to families they already have relationships with, and certainly discouraging new entrants who’d like to work in this space. When we look at the index, the raw data suggests a one-point increase in childcare freedom is associated with an $800 decrease in annual infant childcare prices. Of course, there’s a lot else at play with affordability, so if you control for other factors and reduce it down to just one regulatory piece, a one-child change in child-to-staff ratios for infants decreases cost by up to eight to nine percent — say, going from four-to-one to five-to-one. For older kids, the coefficient is smaller, but you have the opportunity to change a ratio from maybe ten to fifteen for three- and four-year-olds, so you may see even more impact for those higher age groups, and hopefully more innovation, making it more feasible to provide care for preschool-aged children.
Next — and it’s probably the question we get the most, and might be on your mind — what about regulation and quality? That’s a hard thing to measure, because input quality is something like what we’re seeing in these four categories — staff-to-child ratios or credentials — and outputs are more abstract: things like educational achievement, if you want to track that, but also the warmth of the caregiver relationship, the experience the family has sending their child to that care setting each day. A landmark study in the American Economic Review shows mixed effects of regulation on childcare — they tried to measure quality by looking at accreditation rates, and in states with tighter child-to-staff ratios, a higher number of centers are accredited at the top “gold star” level by the NAEYC, which benefits higher-income families looking for that accreditation signal. But the downside is that these increased regulations lowered the supply of childcare in lower-income areas. So there are winners and losers, as that paper describes, from childcare regulation, in ways that are predictable, by discouraging competition and that range of options. There’s also a recent meta-analysis looking at 31 studies on the relationship between child-to-staff ratios and process measures like child experience and literacy, and there are no statistically significant results between tighter child-to-staff ratios and those quality measures — they threw everything at it to try to find results, but the results are inconclusive at best. So more research is certainly needed, especially in areas even more popular than centers — in-home care environments, relative care — how do children thrive, that’s something we want to answer. But that knowledge is dispersed, like the Assistant Secretary said, among families. So I definitely wouldn’t shy away from more research on quality, because I do believe competition is going to get us even better levels of quality and more opportunities for families to meet their unique needs, whatever that is. So thank you so much for having me, and I look forward to the Q&A.
[Brief pause as the panel transitions to the moderated discussion.]
Chelsea Follett: Thank you both so much for your presentations. Now, before we go to the wonderful questions we’ve been receiving from our online audience — and please keep those coming — I did have some questions of my own, just to kick off the discussion for each of you. Mr. Assistant Secretary — your talk focused on your recent work, but I would also love to hear about your experience as a state leader in Idaho. You implemented a comprehensive regulatory review based on zero-based budgeting — a sort of budgeting where you create your budget anew, without any assumption that the previous items were necessary — and there was a zero-based regulation initiative in Idaho that you were very involved with. That led to Idaho becoming not only the country’s leader in childcare freedom, but one of the least regulated states overall. I was wondering if you could talk to us about your experience with zero-based regulation and what you learned.
Alex J. Adams: For sure. Yeah, so zero-based regulation was a unique regulatory model we developed and implemented in Idaho. You see this in pretty much any mature administrative state, where regulations get added over time — forms get added on top of forms, reporting requirements get added on top of reporting requirements, and something that started off with a specific purpose gets a lot of good intentions piled on top of it over time. Not all of them work, and the cumulative burden of all of those might be heavier than any of the individual parts. So across all fields in Idaho, we asked: if we were going to start from scratch, is this the system we would design today? That applied to everything from pharmacy regulation to charter school regulation to childcare regulation.
On childcare, there were a number of things we could do in Idaho through regulation, but it was also an area where there was a lot of statutory language — outside of my agency, some legislators had run a bill to modernize many of the things talked about here. Your two biggest cost drivers are education and group size and ratio. In Idaho, they took each of our age bands and basically added one to the ratio for non-infants — so if it was seven to one, they added one and it became eight to one, for example. Another thing Idaho did was preempt local regulation. This is one of the few areas of licensure where you have federal direction, state licensing law, and in some jurisdictions local licensing law on top of that. I don’t know that I can point to any field where multiple overlapping regulatory requirements has improved cost, affordability, and access — so Idaho ended up preempting local law too. Again, much of that was done through the legislature rather than through what we could do through regulation, because a lot of those parameters were set statutorily.
I’d say generally, the way these debates unfold across any field is the belief that regulation and quality are synonymous — and they’re often not. They might give a sense of security, but when you set these parameters, you’re balancing all of the things we talked about. You might perceive that they’re improving quality; that might not actually be the case, based on some of the studies. But you’re shrinking the number of options families have — you’re narrowing what they can opt into, which can increase cost, as the studies mentioned, without impacting quality. So what we’ve had to have the humility to say is: parents know best. We shouldn’t shrink the options available to them — they can best judge quality, they can best judge ROI for cost. We should have some baseline standards, but ultimately, the pieces of variation that lead to trade-offs should be decided by parents, or at least those most proximate to parents — not necessarily set at the federal level.
Chelsea Follett: And as a follow-up, that leads nicely into my next question. Wanting more abundant childcare has become increasingly bipartisan. On the one hand, we’ve seen developments such as, earlier this year, Democratic Congresswoman Marie Gluesenkamp Perez championing reform to make clear that peeling bananas — and other fruit — in daycare should not count as “food preparation.” So increasingly, across the political spectrum, people recognize this is an area of life that’s over-regulated and where reform is needed. But not everyone is enthusiastic about these reforms. Mr. Assistant Secretary, you were the subject of a New York Times piece earlier this year titled “Trump’s Top Childcare Official Wants a Bonfire of Regulation” — and as a Catoite dedicated to small government, that sounds like a compliment to me, but they meant it critically. How would you respond to those who believe deregulation is in some way radical?
Alex J. Adams: Well, as I talked about in my opening remarks, reasonable people can disagree on where you set these parameters — your research demonstrated that. Pennsylvania’s taken a different approach than Ohio; Ohio’s taken a different approach than Indiana. I think treating any of these decisions as settled science, saying there’s one optimal decision, risks creating a national school board that supplants a lot of parents’ decisions with our own personal preferences, when there are trade-offs involved.
Head Start, frankly, is a good example — I know we didn’t talk much about Head Start, but it’s early childhood education plus: there are comprehensive wraparound services, and so on. Interestingly, Archbridge looked at state licensing and did a separate analysis saying that if Head Start — a federally directed program, where the federal regulations apply regardless of what state you’re in — were scored as if it were a state, Head Start would be the most stringent. I think we beat Vermont on one of the parameters, but Head Start was the most regulated. Over time, Head Start followed the same pattern we talked about with any state administrative regulatory regime, where regulations were added over time, often with good intentions. In 2016, the Obama administration did a comprehensive rewrite of the Head Start regulations, and, by design, it increased costs — their own estimate was that implementing those new regulations across the US would cost over a billion dollars. They said the natural consequence would be that fewer people would access the program — cost would go up, access would go down — but that quality would go up so much that, even with fewer kids accessing it, the quality gains would exceed the lost access for those no longer able to access it.
New data just came out from an independent research arm within HHS. They were right on a couple of those predictions: costs went up more than inflation — we now pay $20,000 per kid in Early Head Start, $14,500 to $15,000 per kid in Head Start preschool. Access went down even more than they projected — ten years ago, before that regulation, we had a million kids in Head Start; today we have 666,000, and dropping each year. So costs went up, access went down. Did the quality gains make up for it? Unfortunately, quality stayed flat. You can debate how you measure quality in Head Start, but the measure the Obama administration cited for their parameters — a measure called CLASS — is stagnant from before the regulation to after. Maybe if you get out the millimeter ruler it moved a millimeter here or there. But costs went up, access went down, quality stayed the same. And since Head Start isn’t just early childhood education but also comprehensive wraparound services, surely those services went up? Unfortunately, that’s not the case either — research from HHS that just came out shows the number of services provided to children and families went down. Fewer foster youth are now accessing Head Start, fewer pregnant women are accessing Head Start, fewer children with disabilities are accessing Head Start — and it’s not just the numbers going down, it’s the rate of service going down.
So the trade-off the Obama administration made was: yes, we’re going to increase costs and decrease access, but quality and service intensity will go up. That’s just not what the record shows. I think we have to be very careful in these debates about equating regulation and the rigidity of regulation with quality itself. Certainly some of these inputs can drive quality, but ultimately quality is a function of local providers and engaged parents. Wrestling with that trade-off — where you set those parameters, and who decides — is one of the biggest challenges, and research can inform our decisions on that.
Chelsea Follett: So a question for Dr. Flowers, about the alternative to the approach we’ve been discussing. We’ve seen a lot of momentum recently to try to address childcare with more government spending. New York City Mayor Zohran Mamdani and New York Governor Kathy Hochul have announced that some communities in New York City will receive free, taxpayer-funded daycare starting this fall. Meanwhile, others, such as Congresswoman Alexandria Ocasio-Cortez and Senator Elizabeth Warren, are advocating for taxpayer-funded universal childcare nationwide. And a few months ago, a New Mexico judge upheld that state’s universal childcare program, in a victory for those who see greater public spending as the key to making childcare more abundant and affordable. Based on your research and the best data available, what’s the likely outcome of this approach — subsidizing demand without removing the underlying constraints?
Anna Claire Flowers: Yeah, absolutely, great question — and fortunately, we aren’t the first to try this. Canada has famously tried to roll out different universal childcare programs in its provinces, and one of the most insightful studies on this showed that when Quebec rolled out its universal childcare program, the infrastructure wasn’t immediately there to meet demand, and the families who did access those zero-price resources were the higher-educated families who knew about the program — who were comfortable navigating government websites about when and where to sign up for zero-price, universal childcare. That gives you some insight into what we can expect in a state like New Mexico or New York. New Mexico has said they’re rolling out universal childcare with no income limits on enrollment, but they’ve also said they need 12,000 new centers to just pop up — and they’re not making it easy on those centers to do so. So one thing we see is that anytime more funding is devoted at the state level, it’s an opportunity for regulations to usually increase, not the opposite. Some of the states you saw on the map I shared that are devoting more resources to childcare — those conversations have also led to tighter regulations. So again, just like Head Start, the dollar-per-child-served figure really goes up over time. And going back to that Canada example — the portion of families benefiting are usually not the ones intended to be helped. It’s those who know how to navigate the system and get there first when it comes to accessing resources that aren’t naturally abundant — there’s still a finite number of childcare spots, so there are some at the back of the line who don’t get to benefit.
Chelsea Follett: All right, we’ll now move to questions from you, our online audience — again, please keep submitting your questions online. This question either of you might be interested in answering, maybe more Dr. Flowers: assuming Congress is unable to enact any serious childcare reforms, are there any policies or low-hanging-fruit legislation state legislatures could pass that improve childcare accessibility and affordability?
Anna Claire Flowers: Yeah, so this is going to differ — again, I don’t have it all memorized, it’s a whole matrix of regulations at the state level — but a couple of categories come to mind for low-hanging fruit. I mentioned this in the talk, but group size and child-to-staff regulations: I talked to some legislators in Vermont, and I believe their maximum group size wasn’t matching up with their child-to-staff ratio — so say, for four-year-olds, they have a child-to-staff ratio of six to one, but their maximum group size for four-year-olds is only ten. Then you can’t take advantage of what the regulations are actually allowing — even having two of those small groups in the same space. So that’s one area — just going back through, using common sense, to see what might be adjusted in a very low-cost fashion.
Another is providing flexibility for faith-based providers, in-home providers, and unconventional childcare settings. I love hearing about people’s experiences with informal and non-traditional childcare spaces, because that’s really where the innovation is happening — I’ve seen, since COVID, people saying, “we’re just going to swap with another family” or “share a nanny.” My mom actually works at a nature preschool that’s mostly outside, so I get some insight from her on how they’re able to run that safely and legally. And I’ve been looking into parent cooperative preschools, because they have a long history — a friend of mine tried to start one in Tennessee and it failed because of the regulations. So beyond just the center-based settings — adjusting numbers here and there to give centers a little more breathing room, and a little more oversight in other ways — I think there are plenty of opportunities for states to say: what are ways we can provide, say, an on-ramp period for becoming a childcare provider? There’s a period of time before you have to meet all these regulations, giving a couple of years, or a certain number of months, to see if the business is viable before going through all the trouble of obtaining a full license. Because such a large part of the industry is these informal settings, I think paying attention to them is my next area of research, and something parents would really benefit from, because they often prefer these unconventional arrangements — maybe it fits their schedule better, or they want a part-time option, and a lot of times centers are very cookie-cutter about what they can provide, partly because of the regulations, but sometimes it’s just not the preferred setting for childcare either. So, focusing on those.
Alex J. Adams: Yeah, I mean, I get the sense the question came from a state legislator, and my general advice is always: never wait on Washington. As I talked about in my remarks, generally Washington’s role with these programs is financing and oversight. CCDF is eight to twelve percent of the market and is a subsidy for that; states are really in the driver’s seat determining who’s eligible for that subsidy. And for that broader market, states are in the driver’s seat determining licensure and inspection of facilities. When I was in the state seat, with zero-based regulation, what we would often do in answering “is this how we’d design it today?” is cross-state comparisons — take any of the measures mentioned in the Archbridge Institute’s work: how does my state compare on that measure relative to my contiguous states? If I’m in Ohio, how do I compare to Michigan, Kentucky, Indiana, and Pennsylvania? And if I have a tighter regulation than any of those states, the default presumption should be that it’s not necessary, unless I can demonstrate my tighter regulation is driving quality at a higher rate than those other states can demonstrate. So those cross-state comparisons, using resources like the ones you identified in your remarks, are where I’d start as a state official.
Anna Claire Flowers: If I could add to that — we have those rankings available by region as well. So when I was working with Pennsylvania legislators on this issue, it’s a little more compelling to say, “what is West Virginia doing?” — or, “what are your direct neighbors doing, who you typically share some priors with, and how’s it working out for them?” So you can see regional rankings as well as US rankings, and down to the subcomponent level — that low-hanging fruit is all there in the report: what’s the tightest area, and what’s the most childcare freedom each state has in each category.
Chelsea Follett: Our next question also relates to state regulations, but from a less positive perspective: “How does ACF imagine states will or will not take responsibility for ensuring quality controls? Usually state mandates are limited to basic health and safety, but investment in early care and education is more than an economic lever — it’s the most important human developmental period. So how will states maintain quality in the absence of stricter federal standards?”
Alex J. Adams: So I’m not sure I agree with the underlying assumption of this question, but that’s the question’s wording, verbatim. I’m struggling a little with the underlying premise, because the way the federal subsidy has generally been structured is: we require states to have a ratio, but we don’t put our thumb on the scale and dictate what that ratio is. We require states to have a group size, but we don’t dictate what that group size is. We’ve left those decisions to state governments, state legislatures, and state agencies. States have taken different approaches — just because they made different decisions doesn’t mean they were wrong decisions; those were decisions shaped by the panoply of interests in those states, wrestling with all of those trade-offs, and that’s what they set. When we send that subsidy to a state, a portion of it does have to be used for quality-improvement activities, and states generally have transparent websites showing inspection reports of facilities and things like that.
But it also discounts the role that parents play. We all have kids — I can tell you I jealously micromanaged where we sent our daughter, not just for early childhood but for where she goes to school. It was one of the most important decisions we made as a family, and I know that’s something many families take very seriously. So if the question assumes that putting the federal thumb on the scale will improve outcomes, I don’t know that I share that premise. As I said in my opening remarks, we recently rescinded some rules from the previous administration — one example I gave was they tried to set a co-pay minimum. Good intention, great idea, lower co-pays — but if that lower co-pay shrinks your eight-to-twelve percent of subsidized kids down to four to seven percent, all that means is fewer kids get that subsidy. Maybe that’s intended to induce a waitlist, maybe it’s intended to create pressure that unlocks more funding — I don’t know what the intention was. But if the intention was that it would benefit more kids by design, that’s not what it would have meant; it would have meant fewer kids getting the subsidy. That might still be a great idea — many states have adopted seven-percent co-pay caps — but those are decisions that should be made locally, not federally.
Chelsea Follett: We have another question about possible trade-offs with quality and deregulation, that I’m going to direct to Dr. Flowers: “Do you believe there is a quality and classroom-management difference between a preschool teacher caring for five to six kids versus ten or more, particularly a teacher who may not be required to have education around co-regulatory skills and understanding of early childhood development?”
Anna Claire Flowers: Sure. I’d say trade-offs are inevitable — there are going to be ways that providers caring for a larger group of kids manage their classroom differently, I certainly can’t deny that. But it’s more about the trade-offs facing families. Think about it as the margin between having the option of a daycare open in your community, and not having one at all — no one’s going to force anyone to send their kid into a childcare environment they’re uncomfortable with. But if it’s between having that option in a situation where it’s really needed, and not having one at all, that’s really the trade-off we’re talking about. I’m not an expert on child development, but I know some innovations have made this a little easier — at centers I’ve visited, there are usually cameras and someone in charge of supervising from a distance, a level of technology developed in the past few decades that wasn’t available before, to try to have extra eyes on those children. There are also other ideas, like having aides in the classroom — maybe someone with a high school degree or less, there to help with crowd control. But in general, the trade-off we’re talking about is at the family level: having access to childcare or not, and then it’s up to them whether that’s something they’re comfortable with, and whether they trust the provider.
Chelsea Follett: We have a question related to that point, about availability: “New Mexico recently enacted ‘free, universal childcare.’ Can you explain why states should not follow this model?”
Anna Claire Flowers: Sure. I mentioned this earlier, but in the US we have a pretty robust childcare market compared to some of the larger welfare-state models you find in Europe. Chelsea actually just had a great piece that talked about how Sweden, even though it’s sort of the model for childcare, doesn’t actually regulate child-to-staff ratios — which is really interesting. In general, what we’re seeing across the US childcare market is that business owners and providers are going to be responsive to the consumer — the parent and family — because if they’re under competitive pressure to stay open and keep payroll paid, they’ve got to be attentive to what parents are looking for. So one thing that’s going to happen — since it’s not easy to expand supply overnight — is there will be waiting lists and other forms of competition to get those universal childcare spots in New Mexico. But also, if we take the approach of universal childcare, the interested party becomes a bureaucrat — someone working for the government, overseeing all the childcare centers, determining whether they get their funding — rather than the parent and family. So it changes who that provider is really working for. Under a guaranteed subsidy, before this year it didn’t even matter whether a child was actually attending — if you had kids on the list, you got the money as a provider. Thankfully, that’s been changed this year, so enrollment and attendance are now tied together, to prevent fraud. But if that income is guaranteed, there’s not much accountability to the person actually providing the care. So we’d expect quality to decrease over time, because there’s not the motive of “I really want to keep this family enrolled, I want to continue this relationship so I don’t lose their business to another center in town.” If it’s guaranteed and you’re going to have a full roll regardless, there’s not a lot of incentive to deliver excellent care and constantly improve — which is the kind of incentive and motivation we want to see, if there are alternatives.
Alex J. Adams: The only thing I’d add is — I keep going back to the same point — we are eight to twelve percent of the market from the federal government’s standpoint. I don’t know how much I want to drive the majority shareholder, parents, based on our minority share. What New Mexico is doing might work for New Mexico; what Idaho is doing might work for Idaho. Ultimately, these decisions should be made closest to the primary payer — which is parents, then secondarily employers, then tertiarily states. If New Mexico’s approach is a good model, and that’s what they’ve decided, that’s their decision; if Idaho’s is a good model, and that’s what they’ve decided, that’s theirs. I want to be very careful about putting our thumb on the scale with our eight-to-twelve-percent market share.
Chelsea Follett: Thank you both so much for joining me today. I think we are just about at time, and this has been a fascinating discussion. Thank you.
Alex J. Adams / Anna Claire Flowers: Thank you.
