The City needs a sustainable funding stream. Here’s how other cities and states have done it.
New York City Mayor Zohran Mamdani has made childcare a major part of his administration, launching 2K programs, expanding 3K programs and even declaring that childcare is a “public good” and “essential infrastructure” — all as he works to make good on a campaign promise to deliver universal childcare to all New Yorkers who want it. All of these actions speak to bolstering an industry that has been constantly overlooked and teetering on the brink of crisis, both for the people who work in it and the families who struggle to find workable solutions for their children.
Still, all of the City’s progress on childcare misses the mark on one major piece — the piece on which, in the long run, everything else depends.
The administration has not yet identified a standalone revenue source for childcare. And without it, the positive incremental steps that have already been taken can be easily undone. Just as important, the system will lack the stability needed to grow effectively and meet demand in the years to come.
Mamdani is in good company with other states and localities. The states that have funded childcare programs most ambitiously so far (and arguably, most effectively) are Vermont and New Mexico, both of which have identified an external source of ongoing revenue. In Vermont, it is a 0.44% payroll tax, split between existing workers and employers. The tax exempts retirees or those not in the workforce. In New Mexico, it was cracking open the Land Grant Permanent Fund via a ballot measure in 2022, which now provides dedicated funding to early childhood education.
In New York, Mamdani has so far funded his expansion of childcare programs using one-shot state and local investments from general budget revenue: $1.2 billion from the State of New York, and $40 million from the City. This sort of priority investment is laudable and reflects positively on the working relationship between the mayor’s office and that of the governor. But the money is a shot in the arm, not a reliable or predictable revenue stream. A new cost model by the Center for New York City Affairs, however, projects that a universal childcare system for all children under 5 could cost the City $9 billion a year. childcare, like our elementary and secondary schools, needs steady year-over-year funding if it’s going to be delivered to families in a sustainable fashion. Without that, programs face cuts based on yearly budgets or changes in government, creating uncertainty for families and educators alike, all of which make the industry LESS stable at a time when leaders like Mamdani want it to be strong.
Those worried about what might happen here need only look to Oregon and Washington, both of which are rolling back early childhood education expansions because they lack the state budgets to follow through over the long term.
The need for a stable funding source becomes even more important because of Mamdani’s commitments. He’s said that he wants childcare workers to have pay parity with K-12 educators, which would amount to a major boost, from average salaries of around $32,000 for childcare workers to average salaries of around $62,000 for kindergarten and elementary school teachers. Without the dedicated revenue source, he is likely to face the same challenge that Washington, D.C. has faced. In 2023, the nation’s capital implemented a Pay Equity Fund. Within the first year, it had brought up childcare worker salaries to the tune of $10,000 or more. The D.C. government then spent the next three years nearly killing and then belatedly resuscitating the program, to the chagrin of the childcare workers whose livelihoods were on the line. Currently, the program has been extended through 2027. Advocates are hopeful that with a new mayor elected this fall, Pay Equity will have a secure future. But without a dedicated funding source, each year, Pay Equity is effectively up for debate, demanding intensive advocacy efforts to allow the teachers to keep their higher salaries.
There is another advantage to having a dedicated funding source: cost containment and control. Both Vermont and New Mexico have dedicated funding and this has given both states sufficient leverage to add cost controls, rather than solely rely on the market. Vermont has established a fee-increase cap, which caps the annual tuition increase families would face and requires providers to make their tuition rates available to the public, while New Mexico has established reimbursement rates and wage floors. Year-by-year budget processes dependent on state budgets,won’t give the public sector the same strong influence over the market.
Dedicated funding is also necessary to boost long-term supply of childcare seats, which goes hand in hand with long-term supply of providers. In Vermont, the dedicated revenue stream has allowed childcare programs to reliably count on receiving higher subsidy payments each year, and such certainty is one of the reasons why more programs have opened than closed in the state, reversing a near-decade-long trend. New York City currently has between 33,000 and 40,000 childcare workers, and to meet projected future enrollment under a universal childcare system, that workforce will need to double in size.
Finally, a steady funding stream reduces reliance on constant advocacy campaigns. Vermont passed Act 76, which created that dedicated revenue source, only after an eight-year campaign costing over $76 million. If the funding source were up for debate each year as part of state and local budgets, “we would need an organization to continue advocating every year just to keep what we have,” Erin Roche, the state’s director for First Children’s Finance, told me.
Where might New York find such a funding source? It doesn’t have a land grant fund like New Mexico does. But it does have the option for a childcare trust fund, which was created in 2025 (and generously funded in 2026) in neighboring Connecticut. Another intriguing model is San Antonio. In 2012, backed by Julián Castro — a charismatic mayor with his own national political aspirations — San Antonio voters passed via ballot measure an eighth-cent sales tax increase to fund early education. There was little precedent at the time for a standalone sales tax for early childhood; the measure passed narrowly. Pre-K 4 SA was created to provide preschool for 4-year-olds, and eight years later, when it was up for reauthorization, it passed with over 73% of the vote. Pre-K 4 SA has since expanded to include 3-year-olds and has launched infant and toddler pilot programs. Its leadership anticipates strong support when the sales tax is up again for reauthorization in 2028. This has become the early education classic example of “if you build it, voters may opt to keep it.”
In San Antonio, the funding mechanism of a sales tax may have helped bolster support. Sales taxes are regressive and hit lower-income residents harder than higher-income ones, but they may face less blowback than property or income taxes. “[They are] smaller costs spread across many people in everyday purchases, so they’re less noticeable and less likely to trigger strong pushback,” says Larrisa Wilkinson, deputy CEO of Pre-K 4 SA.
The sales tax revenue source has been steadily growing for over a decade, allowing the Pre-K 4 SA program to flourish and establish public-private partnerships, including the recent opening of a brand-new $33 million center in what had been considered a childcare desert.
And Mayor Julián Castro reaped the rewards. Even after raising taxes in 2012, he was re-elected to a third term the following year, the same year the first Pre-K 4 SA center opened. In 2014, he was tapped by President Barack Obama to serve as U.S. secretary of housing and urban development. His willingness to support early childhood education, with the sharp teeth of a dedicated revenue source, helped launch him to the national stage. If Mamdani envisions having a strong record on childcare and charting a similar path, he needs to investigate exactly where and how to create a dedicated revenue stream. Otherwise, he risks seeing childcare deprioritized by a future mayor or during a future budget crisis — and sending New York families back to where they started.
