When a compromise was reached in late June on early child care funding in the 2025-27 biennial state budget, there was a lot for child care advocates to like, but there also was the sense that one nagging deficiency eventually would have to be addressed.
In the four months since the new state budget went into effect, that deficiency — whether there would be enough state funding for child care operators in year two of the biennium — has become more apparent.
But according to Ruth Schmidt, executive director of the Wisconsin Early Childhood Association, the need for additional funding won’t be met without an extraordinary step.
“Of course (child care centers) need more (funding),” Schmidt said in an email. “Next July will be a disaster, but there is no mechanism to do this unless there is a budget repair bill.”
Senate Bill 322, a measure introduced during the recent budget cycle, is getting renewed attention from advocacy organizations such as 9to5 Wisconsin, which staunchly endorses the changes contained within.
SB 322 would boost funding closer to the level advocated during budget deliberations by Gov. Tony Evers — $480 million over the two-year budget — to help child care facilities pay a competitive wage to teachers and offer tuition assistance to the parents of children who attend the centers.
The bill also authorizes the state Department of Children and Families to establish a program for making direct, monthly per-child payments to certified child care providers, licensed child care centers, and child care programs established or contracted for by a school board.
Panhia Thao, a campaign organizer with 9to5 Wisconsin, said the bill represents a real, sustainable investment in Wisconsin’s child care system and the people who make it work — the employees of child care centers.
“We had fought very hard to get that $480 million investment in child care passed,” Thao said. “However, only one-fourth of that passed and that is not enough to sustain the child care investments within Wisconsin.
“So Senate Bill 322 is a measure that would allow the Department of Children and Families to give funds to our child care providers so that they can allocate that toward their expenses and be able to make sure child care is affordable and still accessible,” Thao said.
More robust investment needed
The new state budget contains $110 million in the first year of the biennium to ensure the continuation of direct payments to child care programs.
In year two of the biennium, there is $66 million in general purpose revenue investment allocated to DCF to fund a School Readiness Program. It will allow child care programs that serve 4-year-old children to apply for state dollars, which according to Schmidt is enough money to serve about 10,000 4 year olds who are not served by kindergarten programs in the public schools.
More than $123 million is in the new budget to increase reimbursement rates under the Wisconsin Shares child care subsidy program to help lower out-of-pocket child care costs. The investment raises rates for the Wisconsin Shares program to ensure the state meets its statutory obligation, meaning families can access 75% of child care slots within a given geographical area, up from 41% before the budget was passed.
The budget also increases the reimbursement rate to providers caring for infants and toddlers through Wisconsin Shares. Providers receive payments of $200 per month for every infant under 18 months and $100 per month for every toddler between 18 months and 30 months. Child care facilities can use those funds to maintain wages and support families.
Combined with a new state tax credit for child care that went into effect this year, and a higher Child and Dependent Care Credit ($2,200 per qualifying child for the 2025 tax year, up from $2,000) in the so-called “Big Beautiful Bill,” parents with children enrolled in early child care could see relief on several fronts.
In addition, the state budget contains $28.6 million for a pilot program to expand capacity across the state’s child care industry and $2 million to bolster Wisconsin’s child care resource and referral agencies, which help parents find child care locally and provides training and technical assistance to child care providers.
The tax provisions should help parents of young children, but not until the 2026 tax filing season, and the lower second year state budget allocation remains a sticking point.
Child care operators say the ability to pay their teachers competitive wages and offer competitive benefits, while offering tuition assistance to parents, is the primary reason a more robust state investment is needed.
When the budget was passed in July, Lisa Fiala, executive director of Red Caboose Child Care Center in Madison, said there was still work to be done to create a more sustainable model. She said Red Caboose, which raised tuition by 8% just prior to passage of the state budget, had a starting wage of $18 an hour for teachers during their probationary period, and then wages rise based on education level and experience.
“What I want everybody to remember is that high-quality care is expensive,” Fiala said at the time. “If we’re going to take a look at providing an academic opportunity for children’s play-based learning, helping kids be ready for kindergarten, and having high-quality teachers in those classroom spaces who are educated and understand child development, that comes at a cost.”
Being direct
According to an analysis by the Legislative Reference Bureau, the bill eliminates the current method by which DCF may modify maximum payment rates for child care providers under Wisconsin Shares based on a child care provider’s rating under the quality rating system YoungStar.
The bureau’s analysis said the bill would give DCF the authority to administer the payments based on its own standards, which are accountable to the tax-paying public. It also requires DCF to promulgate rules to implement the program, including establishing eligibility requirements and payment amounts and setting requirements for how recipients may use the payments.
The Legislative Reference Bureau also said SB 322 funds the program through a new general purpose fund appropriation and by allocating federal monies, including child care development funds and monies received under the Temporary Assistance for Needy Families block grant program.
State Sen. Kelda Roys, D-Madison, a co-sponsor of SB 322 and a 2026 gubernatorial candidate, said the bill would remodel the existing Wisconsin Shares tuition reimbursement program into a program that more closely resembles the Child Care Counts program that existed during the COVID-19 pandemic and ran out of money July 1 — when the new state budget went into effect.
Roys said SB 322 is an attempt to establish a sustainable child care industry in a manner that the current configuration of the government — a Democratic governor and a Republican-controlled Legislature — could potentially support.
She said Child Care Counts was started with federal pandemic funds, it proved extremely effective at keeping child care centers open through the pandemic, and it helped slow the child center closures the state experienced over the previous 20 years.
“The child care crisis is not new, and it’s not a COVID problem,” said Roys, who said she will make greater state investment in early child care a centerpiece of her campaign for governor. “We’ve lost over half of our providers over the last 20 years, even prior to COVID, so Child Care Counts really stemmed the bleeding and helped provide some stability in that very critical industry.”
