Child Care Law Center

Advocating for Children Since 1980

Letter to Governor Newsom Regarding His May Revision to the FY 2024-25 Budget Proposal

May 26, 2025

Re: Response to the Governor’s May Revision to the FY 2024-25 Budget Proposal

Dear Governor Newsom,

California’s state budget is the key to strengthening California’s child care, increasing enriching care options for families, and creating an equitable society. 

We urge you to work with the Legislature and the Legislative Women’s Caucus to raise revenues and enact equitable policies that will have lasting positive impacts on all those involved in child care – children, families, and child care providers.

Ensuring that child care providers are paid fairly and families have the affordable child care they need will not only protect our communities from harmful federal actions but also have an immediate positive impact on all Californians.

Executive Summary

All Californians have something to gain from supporting and strengthening affordable child care. California loses an estimated $17 billion annually because child care remains scarce and unaffordable.1 As the 4th largest economy in the world2, we can and must do better so all communities can share in our state’s wealth and resources.

We urge you to meet the immediate needs of child care providers, families, and children in the FY 25-26 State Budget by:

  • Increasing child care providers’ subsidy rate payments starting July 1, 2025;
  • Keeping the child care cost-of-living adjustment (COLA); 
  • Putting key aspects of the alternative methodology into state statute, such as paying based on enrollment and ending the state’s current payment methods as outlined below; 
  • Funding and releasing the 77,000 remaining promised affordable child care spaces and adding additional spaces;
  • Evaluating the Emergency Child Care Bridge Program before making cuts to ensure children and families are not negatively impacted; and,
  • Ending inequitable tax breaks and closing tax loopholes to raise revenues for life-giving programs, like affordable child care.3

When we prioritize the well-being of our children and those who nurture them, California will be a better state now and always.

Budget Priorities to Support Children, Families, and Child Care Providers

Fund Fair Pay for Child Care Providers

This year’s state budget must deliver on California’s commitment to pay the workforce based on the cost of providing enriching care to California’s diverse children. This is also a major goal in your Master Plan for Early Learning and Care, which recognized that the current way of paying providers is inequitable.4 The state has worked hard and taken big steps towards this transformative change; it’s now time to fund it. 

Walking back on your promises harms California’s children, families, and child care providers. The state’s current poverty-level payments are forcing child care providers to make difficult sacrifices that harm their well-being or close their programs entirely. Families can work and communities will be stronger when child care providers are paid enough to support themselves and sustainably operate their businesses. This is why increasing their pay is an urgent need for our entire state.

Moreover, most of the state’s child care providers are Black, Latine, or immigrant women who honor our vibrant communities by nurturing children’s home languages and cultures. By not paying providers fairly, California policymakers uphold a racist policy rooted in the historical legacy of enslaved Black women who cared for white children without pay.

Right now, California has the historic opportunity to move away from the current payment method that suppresses the pay of women of color and shift to implementing fair pay swiftly and justly. This is a moment for policymakers to see this through and once again make California a national leader; other states across the country are looking to California as a model for progressive child care policy and resistance to federal attacks on children, families, and child care providers.

We strongly oppose the proposal to keep providers’ pay the same and remove the child care COLA. It is imperative that you increase child care providers’ pay on July 1, 2025, as we wait for the state to fully transition to paying at least 100% of the true cost of care. Refusing to increase providers’ pay, removing the COLA, and paying providers based on attendance lowers child care providers’ pay, while inflation and costs are rising. The layering of these proposals pushes an already fragile child care workforce to the brink of collapse.

In the midst of destructive federal actions and threats, your proposals compound the harm done to the child care workforce, rather than protect providers and mitigate this harm. An estimated 42% of California child care providers were born outside the United States5 and 47% of child care provider households rely on at least one public safety net program6 (including over a third currently enrolled in MediCal7).

We also urge you to put key aspects of the alternative methodology into state statute, including:

  • Paying based on enrollment rather than attendance;
  • Paying in advance of or at the beginning of the delivery of child care services (effective August 1, 2026);
  • Delinking payments from the private market – paying providers for the actual cost of care, even if that amount is greater than what providers charge families without subsidies; and,
  • Removing the use of the regional market rate and standard reimbursement rate to adopt the cost-based estimation model.

We support your proposals to fund start-up activities for fair pay and state preparation to implement prospective pay. We urge California to continue prioritizing and fast-tracking paying providers based on the true cost of care and all of the above key aspects of the alternative methodology. The state’s expeditious implementation of fair pay is imperative to the health and prosperity of all Californians. 

Finally, we urge you to work with Child Care Providers United to create and follow a timeline to fully fund and implement the alternative methodology as soon as possible. Covering child care providers’ true and full costs is essential. This would right a major historical injustice, and it is a critical step towards respecting the profession. The true cost of care must cover all the costs needed to provide enriching care, meet state regulations, operate a thriving business, and allow providers to raise their families with dignity.

Currently, there is only enough licensed child care for 25% of working families in California.8 When providers are paid fairly, families will have more enriching, affordable options for their children, and our state will be stronger.

Commit to More Affordable Child Care for Families

Affordable, enriching child care is essential for thriving families and prosperous communities. 

However, over 1.8 million children eligible for publicly funded child care are NOT enrolled.9 Thousands of families languish on what they call “no hope” child care waiting lists, asking state leaders to prioritize the learning and growth of their young children. Underfunding affordable child care spaces also disproportionately impacts families and children of color10, making this a pressing racial justice issue.

Last year’s state budget put in statute a timeline for funding the total promised 206,800 additional spaces, but delayed completion by three years to 2028-2029 and included a pause on any new spaces from being issued in 2025-2026.11 While the May Revise follows through on this pause in this budget, instead, we urge you to recognize the dire need of California families and fulfill your commitment to increase spaces this year.

Ensure No Harm to Children Before Making Cuts

Nurturing, loving care tremendously impacts young children’s development and future.

We oppose the $42.7 million reduction for the Emergency Child Care Bridge program for children in foster care. The Department of Finance (DOF) has noted that this augmentation aligns funding with current expenditures based on the program’s caseload and utilization rates.12 However, in the Senate Budget & Fiscal Review Subcommittee 3 on Health and Human Services, DOF noted that their numbers have not yet been audited and they made this decision based on “point-in-time information.”13

Advocates note that this is an almost 46% cut to the program and have raised serious concerns that the underutilization may be due to complex contracting delays. We urge you to analyze and evaluate the underutilization of program funding before making any cuts to ensure no unnecessary harm is done to children and families involved in the foster care system.

Provide Ongoing Support for Affordable Child Care Programs

Increased and ongoing support for child care and other life-giving programs is more critical than ever as federal actions have already harmed children and their families.14 Current federal proposals cut funding for child care15 as well as other critical programs that children, families, and child care providers rely on.16

State leaders cannot balance the budget by pitting populations struggling to meet their basic needs against one another. Policymakers must see all Californians as humans and recognize the meaningful, unique contributions we all make to our state and local communities. 

We implore you to meet the urgent needs of families and the women of color who care for and educate our youngest children by raising revenues.

Taxes are how Californians care for and protect each other. Raising tax revenue is a collective opportunity that requires meaningful solutions. We urge you to close tax loopholes, ensure corporations with high revenues engage in community responsibility, and end inequitable tax breaks for those who will most benefit from federal tax cuts.17 

Other states have taken bold action to increase revenues and make the tax code fairer18, and California can — and must — do the same to protect and strengthen our vital programs like affordable child care, Medi-Cal, CalFresh, and CalWORKs. When California prioritizes these life-changing programs, we confirm and strengthen Californians’ right to collective well-being.

Conclusion

California’s economic growth and prosperity rely on child care providers and families having what they need– fair pay based on the true cost of care and affordable, enriching child care. We urge you to strengthen and protect child care by relying more on state reserves and swiftly implementing revenue-generating solutions like those highlighted above.

California must not take its cue from the federal government. Instead, we must pass a budget that raises revenues, funds vital child care commitments, and protects targeted communities from harmful federal actions.

We appreciate you working with the Legislature and Legislative Women’s Caucus to support and maintain the child care field, and we look forward to an equitable final state budget that reflects California’s values and the above priorities.

Sincerely,

Julia Forte Frudden, Senior Policy Analyst

  1.  See How a Lack of Affordable Child Care Impacts the Economy, First Five Years Fund (Mar. 13, 2025), https://www.ffyf.org/resources/2025/03/how-a-lack-of-affordable-child-care-impacts-the-economy/.  ↩︎
  2.  Press Release, Governor Newsom, California is now the 4th largest economy in the world (Apr. 23, 2025), https://www.gov.ca.gov/2025/04/23/california-is-now-the-4th-largest-economy-in-the-world/.  ↩︎
  3. Kayla Kitson, Three Ways State Policymakers Can Raise Revenues to Advance California’s Priorities (March 2023), Cal. Budget & Pol’y Ctr., https://calbudgetcenter.org/resources/three-ways-state-policymakers-can-raise-revenues-to-advance-californias-priorities/. ↩︎
  4.  Cal. Health & Hum. Servs. Agency, Master Plan for Early Learning and Care: Making California For All Kids 27 (Dec. 2020), https://californiaforallkids.chhs.ca.gov/assets/pdfs/Master%20Plan%20for%20Early%20Learning%20and%20Care%20-%20Making%20California%20For%20All%20Kids%20(English).pdf. ↩︎
  5.  See U.C. Berkeley Ctr. Study Child Care Emp., Profiles of the California Early Care and Education Workforce, 2020
    (Oct. 11, 2022), https://cscce.berkeley.edu/publications/fact-sheet/profiles-of-the-california-early-care-and-education-workforce-2020/. ↩︎
  6. See U.C. Berkeley Ctr. Study Child Care Emp., State Profiles California, https://cscce.berkeley.edu/workforce-index-2024/states/california/ (last visited May 22, 2025). ↩︎
  7.  Elisabeth Wright Burak & Nancy Kaneb, The U.S. Already Has a Child Care Crisis: Medicaid Cuts Would Make it Much Worse (Apr. 25, 2025), Georgetown Univ. McCourt Sch. of Pub. Pol’y Center for Children & Families, https://ccf.georgetown.edu/2025/04/25/the-u-s-already-has-a-child-care-crisis-medicaid-cuts-would-make-it-much-worse/. ↩︎
  8.  KidsData, Availability of Child Care For Working Families, https://www.kidsdata.org/topic/99/child-care-availability/pie#fmt=262&loc=2&tf=141&ch=1247,1248&pdist=171 (last visited May 22, 2025) (citing 2021 data from the California Child Care Resource and Referral Network). ↩︎
  9.  Laura Pryor & Erin Schumacher, The Unmet Need for Child Care Remains Staggeringly High,  Cal. Budget & Pol’y Ctr., (Feb. 2025), https://calbudgetcenter.org/resources/the-unmet-need-for-child-care-remains-staggeringly-high/.  ↩︎
  10.  Laura Pryor, California’s Child Care System Serves Only a Fraction of Eligible Children, Cal. Budget & Pol’y Ctr., (Feb. 2024), https://calbudgetcenter.org/resources/californias-child-care-system-serves-only-a-fraction-of-eligible-children/. ↩︎
  11.  See Child Care Law Center, Analysis of Child Care Provisions in the California State Budget for Fiscal Year 2024-25 (Sept. 6, 2024), https://www.childcarelaw.org/policy-advocacy/state-budget/analysis-of-child-care-provisions-in-the-california-state-budget-for-fiscal-year-2024-25/. ↩︎
  12.  Letter from Erika Li, Chief Deputy Dir. Dep’t of Fin. to Sen. Scott Wiener, Chair Sen. Bud & Fiscal Review Comm. & Assemb. Jesse Gabriel, Chair Assemb. Bud. Comm. (May 14, 2025), https://dof.ca.gov/wp-content/uploads/sites/352/2025/05/HHS.pdf. ↩︎
  13.  Cal. Sen., Senate Budget and Fiscal Review Subcommittee No. 3 on Health and Human Services (May 19, 2025), https://www.senate.ca.gov/media/senate-budget-and-fiscal-review-subcommittee-no-3-health-and-human-services-20250519. ↩︎
  14. Press Release, First Focus on Children,100 Days of War on Children (Apr. 23, 2025),  https://firstfocus.org/news/100-days-of-war-on-children/.  
    ↩︎
  15.  Stephanie Schmit & Rachel Wilensky, Ctr. for Law & Soc. Pol’y, Cuts to SSBG, TANF Would Eliminate Child Care for 40K Children, Disrupt Care for Millions More (Mar. 6, 2025), https://www.clasp.org/publications/fact-sheet/cuts-to-ssbg-tanf-would-eliminate-child-care-for-40k-children-disrupt-care-for-millions-more/. ↩︎
  16.  First Focus on Children, What proposed federal budget cuts and policy changes will cost children (Feb. 10, 2025), https://firstfocus.org/resource/what-proposed-federal-budget-cuts-andpolicy-changes-will-cost-children/.  ↩︎
  17.  See Letter from Terry Brennand, Service Employees International Union, Shimica Gaskins, End Child Poverty CA, Dani Kando-Kaiser, Cal. Tax Reform Assoc., et. al. to Gavin Newsom, Governor, Sen. Mike McGuire, Sen. Pres. Pro Tempore, Assemb. Robert Rivas, Assemb. Speaker, Sen. Scott Wiener, Chair Sen. Bud & Fiscal Review Comm. & Assemb. Jesse Gabriel, Chair Assemb. Bud. Comm (May 20, 2025) (on file with author). ↩︎
  18.  Chris Hoene, Cal. Bud. & Pol’y Ctr., Other states are showing California how to protect its budget without cutting needed services, CalMatters (May 9, 2025), https://calmatters.org/commentary/2025/05/california-state-budget-fairer-taxes/. ↩︎