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America has for the provision of early care and education. The expiration of pandemic-era funds combined with widespread state and federal budget cuts have led to sweeping cutbacks in many regions, causing program closures and reductions in the aid offered to families. But amid these difficulties, there鈥檚 a notable trend that may hold promise. 

Some states and localities have created a source of dedicated funding, meaning a revenue stream that鈥檚 designated specifically to be used for child care, creating more stability for providers and families. And according to a recent published by the Children鈥檚 Funding Project (CFP), a national nonprofit that helps states and localities secure money for children鈥檚 issues, these funds have helped states navigate the turbulence.

Dedicated funding tackles a simple, yet bedeviling problem: year after year, advocates must fight for state general funds, but it’s frequently a losing battle since too many factors are outside of their control. The health of a state鈥檚 economy, the priorities of constantly rotating elected officials, and the actions taken by Congress and the president all shape how much available funding a state has during a given budget cycle 鈥� and how it will be divvied up. Since states are legally required to maintain a balanced budget, the squeeze is real. And unfortunately, even states that are very friendly toward early care and education issues will cut them when faced with tough math. 

Dedicated funding sidesteps the general fund scrum. The CFP report explained that 鈥渟tate dedicated funds are distinct streams of public revenue that are set aside for specific purposes, typically dedicated through action by a legislative body, approved by voters via ballot measure, or a combination of these approaches.鈥� Because they have their own built-in power source, they are relatively insulated from the vagaries of state governance.

There’s no singular model for advancing a dedicated fund. The funding source and path to enactment vary by state and locality, depending on what taxes can be levied, how existing revenues may be used, and the political feasibility of potential legislative or ballot measures.

According to the CFP report, 22 states have some version of a dedicated fund to support children and youth 鈥� and the rate of adoption has increased in recent years, including at the local level. The report notes that jurisdictions have tapped a range of funding sources including taxes on nicotine, marijuana, gambling, payroll, sales, and capital gains, and, in the case of New Mexico, oil and gas revenues. The mechanism for establishing funds is also diverse, as some states have a fairly low bar for citizen-initiated ballot initiatives, while others don鈥檛 allow propositions at all and instead require legislative action. Increasingly, states are that hold the revenues , allocating an annual percentage for early childhood services.

The value and viability of dedicated funding sources was borne out in last month鈥檚 elections. In Colorado, for instance, 鈥� including a consortium of three ski-heavy mountain counties, and one politically mixed county in northern Colorado 鈥� voted for dedicated funding measures via lodging or sales taxes. Those revenues will be especially important as Colorado wrestles with statewide funding challenges that are leading to in many counties.

Other states established their dedicated funding practices years ago. California, for example, has one of the longest-standing dedicated funding sources due to the 1998 a campaign famously spearheaded by filmmaker Rob Reiner. Proposition 10 levied a 50-cent tax on tobacco and the revenues built a network of early childhood programs operating under hub organizations known as the First 5 Initiative.聽聽聽

Of course, simply establishing a dedicated fund is no panacea. To create a successful solution, the funds have to be adequate. Kentucky, for example, established a fund sourced from its Tobacco Master Settlement agreement, which draws down around $26 million a year. This amount isn’t insignificant, but it’s not enough funding to majorly transform its early care and education system. Where and how the funding flows, and who has a say in deciding that, is also key. 

Additionally, precedent shows there can be a risk of uneven results if the funding source itself is variable, such as tapping so-called 鈥渟in taxes.鈥� This has been proven most dramatically in states like California that rely on tobacco taxes. As fewer individuals smoke (which, most would agree is broadly a positive development), the revenues from tobacco taxes have steadily declined, provided through First 5 programs across the state.

As a majority of states face down what is likely to be years of budget pain, dedicated funding sources for early care and education should be a top-tier strategy. State experiences to date suggest that champions would do well to identify funding sources that are both relatively stable and can generate substantial revenues, such as payroll taxes or income taxes for high-earning households. Whatever specific tactics are chosen, the more that child care funding can be taken out of the Hunger Games arena that is state budgeting, the better.

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