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Quality control measures implemented on programs receiving federal Child Care Services have put an even deeper financial strain on the Texas child care system. Now, thousands of Texas children are shut out of affordable child care as the state struggles to keep the strained program within its budget.
In August 2023, the Texas Workforce Commission revealed that the cost of child care per student under the federal Child Care Services program had surged beyond what the program could sustain. This critical program assists low-income families by covering all or part of child care tuition. Consequently, the commission announced a reduction of nearly 10% in the number of children it would serve statewide by 2027, exacerbating an existing backlog of over 100,000 young children awaiting subsidies.
According to a recent report by the Legislative Budget Board, inflation and an increase in programs qualifying for higher payments were the primary factors driving the cost increase in child care subsidies. The Texas Rising Star program, which guarantees higher payments to providers per child, saw the number of qualified providers more than double between 2021 and 2025. A significant spike occurred between 2024 and 2025, with nearly 2,000 new providers qualifying, primarily in the 2-Star category—the lowest level of the program. Meanwhile, many programs advanced to 3 and 4-Star levels, which receive even higher payments.
This growth stemmed from a 2021 bill, HB 2607, requiring programs accepting students whose tuition is subsidized to be qualified as Texas Rising Star. State Rep. James Talarico, who is currently running as the Democratic candidate for U.S. Senate against Texas Attorney General Ken Paxton, led this initiative. His campaign has proposed various strategies to enhance child care access and affordability, including the idea of nationwide universal child care. Talarico has emphasized his legislative work to improve child care quality, safety, and affordability in Texas.
“This was a way to ensure that the lowest-income children, who are the ones that receive subsidies, are in a high-quality program that all kids deserve,” stated Kim Kofron, director of early childhood education for Children At Risk, a nonprofit child advocacy organization. However, the mandate was passed without any additional funding from the state, leaving the program vulnerable to inflation and stagnant federal dollars. This vulnerability became evident when Texas Workforce Commissioners voted earlier this year to cut the number of children receiving subsidies.
“They knew, in 2021, that we would face these challenges today,” remarked Tim Kaminski, president of the Texas Licensed Child Care Association. “They just didn’t take action.”
Child Care in 2021
Before HB 2607 was enacted, taxpayer dollars were allocated to programs without regard for the quality of care provided. The bill established a framework to help parents better understand the quality of available child care options, enabling more informed decisions. Previously, parents primarily relied on informal reviews or the availability of spots at centers.
“You could take a subsidy; your only requirement was to meet the minimum licensing standards,” Kofron explained. “In Texas, we take the word ‘minimum’ very seriously. These standards were designed to keep children healthy and safe, and that’s all they did.”
HB 2607 transformed the existing Texas Rising Star framework into a prerequisite for receiving subsidies. Prior to 2021, only about 30% of providers participated in Texas Rising Star, but now nearly 75% of all providers in Texas are certified.
The Rising Star program establishes specific educational expectations for young children in daycare, exposing them to foundational skills in literacy, language, math, and science at an early age. Teachers are required to possess higher qualifications and foster relationships with children to help them develop emotional regulation and understanding of rules. Facilities must adhere to quality guidelines, ensuring access to age-appropriate toys and learning materials, among other resources. Children graduating from a Texas Rising Star 4 program are expected to be well-prepared for kindergarten.
Kofron and many advocates view this change as a significant improvement in Texas’s child care landscape. Legislative documents related to the bill indicate minimal debate among lawmakers, with it passing through committees with minor amendments and receiving majority support in the House and only a handful of dissenting votes in the Senate.
Analyses conducted prior to the bill’s passage suggested that new requirements would not impose additional costs on Texas. One analysis indicated that the state could depend on American Rescue Plan Act funding to offset any potential cost increases associated with the bill.
However, critics cautioned lawmakers that this mandate would likely lead to reduced enrollment in the program. They pointed out that federal funding can be unpredictable and that Texas’s contributions were insufficient to cover increased costs.
This prediction has now materialized, with the average monthly cost per child in Texas projected to rise from $581 in 2022 to $904 by 2027, as reported by the Legislative Budget Board in September. Although lawmakers reallocated $100 million of unused federal dollars for needy families to the subsidy program for 2026 and 2027, the Texas Workforce Commission still had to reduce the number of children served. That one-time funding boost was entirely consumed by inflation, according to Texans Care for Children.
Why Didn’t Lawmakers Fund It?
The 2021 legislative session commenced under a new presidential administration, with President Joe Biden taking office amid ongoing challenges stemming from the COVID-19 pandemic. Initially, former Texas Comptroller Glen Hegar forecasted a $1 billion revenue shortfall due to the pandemic. However, by April, his outlook shifted, predicting a surplus of $3 billion, leaving the state with a surplus of $725 million.
This financial outlook did not factor in the trillions in federal spending through stimulus packages, much of which benefited Texas. The American Rescue Plan Act was referenced in legislative documents related to HB 2607 as a potential funding source for any cost increases resulting from the bill passed in June 2021.
Minutes from the 2021 session reveal little deliberation among lawmakers regarding the use of state funds to support HB 2607. Critics had warned against over-reliance on federal dollars, as outlined in legislative documents associated with the bill.
Kaminski expressed concern that depending on ARPA funding would lead to problems once those funds were exhausted. The stipulations for ARPA dollars mandated that they be allocated by 2024 and spent by the end of 2026. With a focus on reducing government spending, the Trump administration did not cut child care service budgets but also failed to provide additional funding to offset the impending funding shortfall as ARPA dollars dwindled.
“There needs to be a sustainable funding mechanism in place. That’s crucial,” Kaminski asserted. “Without it, we’ll continue to cycle through good intentions
