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If 2025 featured a mix of highs and lows in early care and education, 2026 is poised to bring a series of deeper challenges to the field, as states prepare to make difficult budget decisions in anticipation of the looming federal funding cuts.

鈥淚t鈥檚 pretty grim,鈥� said Natalie Renew, executive director of Home Grown, a national initiative committed to improving the quality of and access to home-based child care, about the outlook for the sector.

鈥淚 don鈥檛 think anyone is particularly optimistic about child care鈥� in the new year, added Daniel Hains, chief policy and professional advancement officer at the National Association for the Education of Young Children (NAEYC). 

A handful of early care and education experts noted that 2025 did herald in a number of key victories in the field. 

Some states in policies shaping child care and early childhood education. In 2025, , and were among those that made new investments in the field. New Mexico took its gains in recent years a step further by free universal child care for all families, regardless of income, beginning last November. 

Alongside those wins for early learners and their caregivers came some challenges. Head Start was caught in political crosshairs more than once throughout the year 鈥� first when it was for elimination, then when many of its regional offices across the country were , and later when programs serving thousands of children nearly lost access to services during the prolonged government shutdown. And some states, such as Indiana, by the end of federal pandemic relief dollars, began to for families and programs, slashing provider reimbursement rates, instituting co-pays for families who use subsidies, and changing subsidy eligibility, among other actions. 

Now, those experts say, the that many states have experienced as historic pandemic-era investments expired is going to run headlong into another kind of budget shortfall in 2026. That鈥檚 one of four main issues they said they鈥檒l be watching in early care and education in the new year. 

1. Child Care Spending: States Begin Tightening the Belt

The One Big Beautiful Bill Act that was signed into law in July 2025 includes significant cuts to Medicaid and SNAP. The cuts effectively shift the costs of those programs from the federal government to states. If states decide to pick up the tab, they鈥檒l likely have to pull back on other services.

Most of the cuts won鈥檛 go into effect until after the 2026 midterm elections, but states will start planning ahead.聽

鈥淚t鈥檚 less painful to do it slowly than all at once,鈥� explained Melissa Boteach, chief policy officer at ZERO TO THREE.聽

Unlike the federal government, states can鈥檛 spend more than they earn; they have to balance their budgets. So they鈥檒l be looking for ways to increase revenue, such as through new taxes, or cut costs by eliminating or scaling back programs and services. 

鈥淯ncertainty is the word,鈥� said Aaron Loewenberg, senior policy analyst at New America. 鈥淭here鈥檚 a lot of anxiety and uncertainty at this point about what the next year or two could look like.鈥�

As states look to reduce costs, they will have fewer dollars to invest in early care and education. Certainly the prospect of bold new projects and initiatives seems less likely, experts said, but it鈥檚 also possible that existing programs could be scaled back. 

What will emerge, said Hains of NAEYC, is a divide between states that have the will and resources to fund ECE, and states that don鈥檛. 

鈥淲e鈥檙e going to be looking at two very different countries: States that have revenue to invest in child care and early learning 鈥� [like] Vermont, New Mexico, Connecticut, Montana 鈥� while other states are going to be in more constrained and challenging situations.鈥�

Ultimately, funding cuts will be felt by children, families and early educators. 

鈥淭here鈥檚 no way to nickel and dime investing in children,鈥� Boteach said. 鈥淎t the end of the day, if we鈥檙e going to really transform outcomes for children and families, it requires resources. 鈥� Children in this country are going to suffer because we are disinvesting rather than investing in their future.鈥�

2. Expanding Access: Can Promises of Universal Child Care Be Fulfilled? 

New Mexico鈥檚 pledge of free, universal child care has buoyed the spirits of many early childhood educators and advocates. 

鈥淚t鈥檚 an enormous bright spot in an otherwise very difficult year,鈥� Boteach said.

The initiative is in its early days 鈥� the income limitation was lifted on Nov. 1, 2025 鈥� so this year will offer state leaders a chance to make good on their promise. Early childhood policy experts will be watching closely. 

Loewenberg of New America said he鈥檒l be looking at how leaders navigate in the system, whether families feel it鈥檚 successful, and how such a policy could be replicated in states that don鈥檛 have the oil and gas revenues that New Mexico uses to fund universal child care. 

Meanwhile, all eyes will be on New York City as Mayor Zohran Mamdani settles into his new role and pursues his own for universal child care. 

鈥淚鈥檓 holding out excitement or negativity to wait and see what happens,鈥� said Loewenberg. 鈥淚 think we鈥檙e past the point of saying, 鈥楾his is great because people are talking about it.鈥� The difficult work is being able to make it work. That remains to be seen.鈥�

One critical step is working out the funding mechanism for universal child care, which will likely require from the state government. 

Hains does find the policy pledge in itself encouraging. 

鈥淩eflecting back on the last decade or two in this work, how amazing is it that we are at a place where mayors and governors are putting forward real, meaningful proposals of child care as a public good that鈥檚 available to everybody?鈥� Hains said. 鈥淎s a whole, looking at the big picture, it鈥檚 exciting that child care feels like something that elected officials can deliver on.鈥�

3. Workforce Instability: Immigration Enforcement Creates Chilling Effect

In 2025, the Trump administration intensified immigration enforcement, which has had deleterious consequences for early childhood educators and, in turn, the families who rely on them.

An estimated early childhood educators are immigrants. In large urban areas, such as New York, Los Angeles and Chicago, immigrants make up of the child care workforce, Boteach pointed out. 

New America, a left-leaning think tank, released a in December that found a strong association between the increase in ICE activity and the number of foreign-born child care workers: Between February and July 2025, as ICE arrests increased after President Trump took office, there were 39,000 fewer foreign-born child care workers than the same period in 2024. 

With more funding for immigration enforcement, detention and deportation included in the One Big Beautiful Bill Act, the trend is expected to continue in 2026. 

鈥淚mmigration enforcement, to me, right now, is the number one disruptor both to parent behavior and provider behavior,鈥� said Renew of Home Grown. 鈥淚t is hugely disruptive.鈥� 

Because arrests have been , they have created a culture of fear among immigrants, even those with legal status in the country, New America found. And now that are fair game for ICE activity 鈥� prior to Trump鈥檚 second term, they were protected under a 鈥渟ensitive locations鈥� exception 鈥� many educators and parents worry about what may unfold before children鈥檚 eyes. 

鈥淭he amount of stress, the amount of worry about targeting in your community, can affect providers鈥� mental health and then the health of those kids in their care,鈥� Boteach said. 

In effect, the escalation in immigration enforcement may impact both the availability and the quality of early care and education, she added.

4. Bright Spots: Solutions Emerge Amid Challenges

Even in a challenging political and budgetary environment, there are bright spots to keep an eye on in 2026. 

For one, Loewenberg pointed out, Head Start is still a viable, funded federal program. A year ago, that was not a sure thing.

A second is that a number of states with protected revenue streams for early care and education, including New Mexico and Vermont, will continue to invest in the field. Others are jumping in to commit more dollars to the sector 鈥� , and among them.  

Finally, early care and education is proving to be a viable campaign issue. In addition to Mamdani鈥檚 victory in New York, Mikie Sherrill of New Jersey and Abigail Spanberger of Virginia both won their gubernatorial races by talking about child care. 

鈥淵ou鈥檙e seeing in the elections that candidates that ran on child care, ran on helping families and children, won,鈥� Boteach said. 鈥淭hese are winning political issues, which means both parties should be vying to talk about these issues and govern on these issues.鈥�

Indeed, Hains feels that the country is moving from a place of 鈥渨hether鈥� child care is a government responsibility to 鈥渉ow鈥� and how much the government should be involved.

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