Vermont lawmakers found a way to support child care throughout the state. Its example could help other states.

Vermont's child care system is partially supported by
a new payroll tax. (Shutterstock photo)

Vermont lawmakers made dramatic changes to support child care businesses and family needs throughout the state. System advocates say the state's success could be a national model. "In a February 2023 survey of child care providers in the state, nearly 1 out of 5 said they feared they’d go out of business within the year," report Katherine Barrett and Richard Greene of Route Fifty. "That dramatic response fueled officials and state partners to find a solution."

The state's "new law increases the number of families that can receive financial assistance for child care by increasing eligibility from 350% of the federal poverty level to 575%." Barrett and Greene write. "The law also provides for higher reimbursement rates for child care businesses, with the expectation that increased funding will improve pay for hard-to-find staff. . . Most importantly, the law ensures that state funding continues in future years based on a dedicated new payroll tax that began July 1 and is projected to bring in $80 million in its first year."

The new eligibility and child care pay structure has already had positive results. "Six months after the law’s passage, the state’s 2024 survey of child care providers showed a dramatic reversal in their attitudes about the future," Route Fifty reports. "Just 5% said they’d expect to go out of business over the next two years, down from 20%. In the first three months after the law’s passage, more child care centers and home-based businesses opened than closed. That was the first time that had happened since the state started tracking this data in 2012."

Bipartisan support and advocacy for better funding and business options for child care within Vermont are a big reason why the legislation was successful. "This multiyear buildup has also meant that a healthy supply of both local and national evidence was brought to play in creating the law," Barrett and Greene add. "The motivation to find a solution was bolstered by extensive research on child development, which strongly demonstrates the link between high-quality experiences in the first years of life and future health, happiness and success."