There are numerous funding strategies state advocates and leaders can pursue for increasing the revenue from state and local sources that can be directed to support early childhood programs. There has been significant work done at both at the state and local levels, to support quality programs through dedicated taxes. These revenues can have a significant impact on long-term goals, and there have already been several early successes in using them to help close the extreme funding gap in early childhood.
Please click on the categories below to learn more about a few revenue generating sources:
Alliance for Early Success & Children’s Funding Project, Early Childhood Policy Advocates and Children’s Funding Project Talk Revenue Streams
Institute on Taxation and Economic Policy, Moving Toward More Equitable State Tax Systems
Alliance for Early Success, State Levers to Impact Family Economic Security – Tax Credits and Policies
Bipartisan Policy Center, What is the Employer-Provided Child Care Credit
Center for Economic Development, State Tax Credits for Child Care
AHA Voices for Healthy Kids – State Preemption Toolkit
Alliance for Early Success, Creating a Bigger Pie: Allies Share State Revenue-Generating Strategies for Early Childhood Programs
Children’s Funding Project, State Enabling Legislation for Special Taxing Districts
Louisiana Policy Institute, Prioritizing Our Future: How Cities and States Dedicate Funds for Early Care and Education
State Examples:
Florida: Chapter 125 of Florida Statutes (passed in 1986) governs the creation and operation of a children’s services council. Florida is the only state in the nation that empowers communities to create a local government with the sole purpose of investing in the well-being of families.
Missouri: A state statute was originally passed in 1998and then revised in 2015 allows for the establishment of local children’s funds.
Oregon: Enacted in 2003, the credit delivers revenue to the Office of Child Care, which uses the funding for child care initiatives.
Low Income Investment Fund, Philanthropy & CDFI Collaborations in Financing Early Education Facilities
Mission Driven Finance, Care Access Real Estate
STATE FUNDING STREAMS
Bipartisan Policy Institute — BPC examined how states manage federal early childhood programs to better understand if efficiencies were to be gained and where they occurred. The report outlines findings from all 50-states and D.C.
The BUILD Initiative, Center for American Progress, Children’s Funding Project, Institute on Taxation and Economic Policy, and University of Maryland College Park, Schools of Public Health and Public Policy — This brief introduces state and local tax policy areas for consideration as part of the push for expanded public investment in early care and education. Seven tax policy areas are presented. Each tax is defined, and examples are included showing current use of these taxes for early care and education, policy ideas that have been tried but have not yet passed and new, next-generation ideas. (2021)
Children's Funding Project and Harvard Graduate School of Education — This policy brief shines light on ten innovative methods to finance services for children and youth. (2019)
FISCAL MAPPING
Children’s Funding Project — This paper is a primer on documenting and analyzing the various sources of funding that support programs and services for children and youth in a state, city, or county. (2022)
P5 Fiscal Strategies -- P5 Fiscal Strategies compiles numerous early childhood revenue resources on its site, including a resource list of cost-modeling tools and and a clearinghouse of state cost-modeling reports.
FEDERAL FUNDING STREAMS
First Five Years Fund — This resource book is an introduction to the foundational early learning and care programs that originate at the federal level and are funded by Congress. It works alongside the FFYF Blueprint for Progress, which contains resources and information that policymakers can use to support the care and education of children from birth through age five. (2023)
Early Years Climate Action & Start Early — This resource, developed in partnership with Early Years Climate Action and Start Early, outlines how the IRA will advance federal policies and programs to support mitigation, adaptation, and resilience within the early years ecosystem. It provides a short description of relevant tax credits, financing mechanisms, and highlights the lead agency, eligible beneficiaries, and the potential benefits to children and families. (2023)
Children’s Funding Project — This resource explains how states are using American Rescue Plan and Elementary and Secondary School Emergency Relief Fund (ESSER) dollars to support community partnerships. (2022)
The American Rescue Plan has created funds for early childhood that states can can flexibly spend on children, and Children's Funding Project has developed this collection of tools and resources to help policymakers, service providers, and advocates use this historic level of federal aid to kick-start meaningful change for children.
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