States Create Trust Funds to Bolster Child Care and Early Childhood Education – The 74

Report on State-Level Trust Funds for Early Childhood Education and Sustainable Development Goals

Introduction: Addressing Funding Instability in Early Childhood Education

In the wake of the COVID-19 pandemic, state governments have recognized the critical role of early care and education as essential infrastructure. The expiration of temporary federal funding has prompted an urgent search for stable, long-term financial solutions. A novel approach gaining traction is the creation of state-level trust funds, designed to provide dedicated and permanent funding streams. This strategy directly supports the achievement of several United Nations Sustainable Development Goals (SDGs), primarily by creating resilient institutions to deliver essential services.

SDG 4 (Quality Education): These funds are a direct investment in Target 4.2, which aims to ensure all children have access to quality early childhood development, care, and pre-primary education.
SDG 8 (Decent Work and Economic Growth): Stable child care enables parents to participate in the workforce and promotes the creation of better-compensated jobs within the early education sector.
SDG 10 (Reduced Inequalities): By making child care more affordable and accessible, these initiatives help level the educational playing field for children from diverse socioeconomic backgrounds.
SDG 5 (Gender Equality): Accessible child care is a key enabler of women’s economic empowerment and full participation in the labor force.

Pioneering Models for Sustainable Funding

Several U.S. states have implemented trust fund models, each tailored to its unique fiscal landscape but united in the goal of securing a sustainable future for early childhood education.

Case Study: New Mexico’s Land Grant Permanent Fund

New Mexico has established a leading precedent by constitutionally dedicating a portion of its existing Land Grant Permanent Fund, sourced from oil and gas revenues, to early childhood services. This action has yielded significant progress toward multiple SDGs.

A 2022 voter-approved ballot measure secured this funding stream, demonstrating strong public and institutional commitment (SDG 16).
The state successfully made child care free for the vast majority of families, directly addressing SDG 1 (No Poverty) and SDG 10 (Reduced Inequalities) by removing significant financial burdens.
Investments have been made to increase teacher pay and provider reimbursement rates, enhancing the quality of education and promoting decent work (SDG 4, SDG 8).
In April, legislation was passed to double the minimum annual expenditure from the fund, reinforcing the long-term commitment to these goals.

Case Study: Connecticut’s Surplus-Fueled Endowment

Connecticut has created an early childhood education endowment that is strategically funded with year-end state budget surpluses. This model leverages fiscal prudence to build a long-term asset for sustainable development.

The fund received an initial investment of $300 million and is projected to receive up to $300 million annually in subsequent years.
The endowment’s capital will be invested by the state treasurer, allowing it to grow and become self-sustaining over time, ensuring financial resilience in line with SDG 16 (Strong Institutions).
The stated goals are to provide free child care for families earning under $100,000, cap expenses at 7% of income for others, and create 16,000 new child care slots by 2030, directly advancing SDG 4 and SDG 10.
While a significant step, advocates note the endowment’s projected revenue will not be sufficient to create a fully universal system, highlighting the need for continued and diversified investment strategies.

Case Study: Montana’s Integrated “GO Trust”

Montana’s approach integrates child care funding into a broader “Growth and Opportunity Trust,” positioning early education as a core component of the state’s essential infrastructure alongside housing and public works.

The child care portion of the trust received an initial $10 million investment and is expected to generate approximately $5 million annually from interest.
Advocacy was successful in framing child care as foundational infrastructure, a key strategy for linking SDG 4 (Quality Education) with SDG 9 (Industry, Innovation and Infrastructure) and SDG 8 (Decent Work).
The creation of this fund in a more conservative state demonstrates the model’s potential for broad, bipartisan adoption, fostering SDG 17 (Partnerships for the Goals).
A key concern is that the trust could be perceived as a final solution, potentially diminishing political will for other necessary investments in the early childhood system.

Analysis: Advancing Sustainable Development through Stable Funding

The trust fund model offers a powerful mechanism for states to make tangible progress on the Sustainable Development Goals. The primary benefits and challenges are outlined below.

Key Benefits

Financial Sustainability: Trust funds create a buffer against economic downturns and shifting political priorities, ensuring that funding for early education (SDG 4) remains stable and predictable.
Economic Enablement: By ensuring access to reliable child care, these funds support robust labor force participation, contributing directly to SDG 8 (Decent Work) and SDG 5 (Gender Equality).
Enhanced Equity: The focus on reducing or eliminating costs for low- and middle-income families is a direct mechanism for advancing SDG 1 (No Poverty) and SDG 10 (Reduced Inequalities).

Challenges and Considerations

Scale of Investment: Current funding levels, while substantial, may not be sufficient to achieve fully universal, high-quality systems that pay educators a professional wage.
Risk of Complacency: The existence of a trust fund must not preclude other forms of state and federal investment required to build a comprehensive and equitable early childhood system.

Conclusion: A Replicable Model for SDG Achievement

The adoption of dedicated trust funds for early care and education represents a significant institutional innovation (SDG 16). This strategy provides a concrete and replicable pathway for states to advance a range of interconnected Sustainable Development Goals. By establishing permanent financial mechanisms, states are building a resilient foundation for quality education, economic growth, and social equity, ensuring that the child care system can reliably support children, families, and employers for the long term.

SDGs Addressed in the Article

SDG 4: Quality Education

The article’s central theme is ensuring stable funding for “early care and education.” This directly aligns with SDG 4, which aims to ensure inclusive and equitable quality education for all. The initiatives discussed, such as creating trust funds and dedicated taxes, are mechanisms to achieve the goal of providing quality early childhood education.

SDG 8: Decent Work and Economic Growth

The article establishes a clear link between child care and economic stability, stating that when it disappears, “it creates chaos for families, providers and employers.” It also highlights the argument made in Montana that child care is “part of our state’s infrastructure.” This connects to SDG 8 by recognizing that accessible child care is essential for enabling parents to participate in the workforce, thereby promoting full and productive employment. Furthermore, the mention of efforts in New Mexico to “increase teacher pay” addresses the “decent work” aspect for educators.

SDG 1: No Poverty

The high cost of child care is a significant financial burden that can push families into poverty. The article discusses policies aimed at alleviating this burden. For example, New Mexico made “child care free for nearly all families,” and Connecticut aims to ensure “families making $100,000 or less pay nothing for child care.” These measures are direct interventions to reduce the financial strain on families, contributing to poverty reduction.

SDG 10: Reduced Inequalities

By making early childhood education more accessible and affordable, especially for lower-income families, the policies discussed in the article work towards reducing inequalities. The goal in Connecticut to cap child care costs at “no more than 7% of their income” for those earning above the free threshold is a specific policy to reduce the disproportionate financial burden on families, promoting economic inclusion as outlined in SDG 10.

SDG 5: Gender Equality

Although not explicitly mentioned, providing affordable and accessible child care is a critical component of achieving gender equality. It supports women’s participation in the labor force by addressing the unequal burden of care work. The public funding of child care, as discussed throughout the article, is a key policy for recognizing and valuing care work, which is a core aspect of SDG 5.

Specific Targets Identified

Target 4.2: Ensure access to quality early childhood development, care, and pre-primary education.

This is the most prominent target. The entire article focuses on state-level strategies to create “ongoing, stable sources of money for early care and education.” The goal of these funds is to make child care accessible and affordable, as seen in New Mexico’s move to make it free and Connecticut’s plan to create “16,000 new slots by 2030.”
Target 8.5: Achieve full and productive employment and decent work for all.

The article supports this target in two ways. First, by framing child care as “vital” infrastructure for “employers,” it acknowledges that accessible child care is a prerequisite for parents’ full participation in the workforce. Second, by highlighting that New Mexico “has also increased teacher pay,” it addresses the decent work component for the early childhood education workforce.
Target 1.2: Reduce at least by half the proportion of men, women, and children of all ages living in poverty.

The policies described directly address the high cost of living, a driver of poverty. By making child care free or capping its cost as a percentage of income, states are implementing social protection policies that reduce the financial vulnerability of families, directly contributing to this target.
Target 10.2: Empower and promote the social and economic inclusion of all.

The initiatives aim to ensure that access to early childhood education is not determined by a family’s economic status. New Mexico making child care “free for nearly all families” and Connecticut’s tiered system based on income are direct attempts to promote economic inclusion and reduce the inequality gap in access to essential services.
Target 5.4: Recognize and value unpaid care and domestic work through the provision of public services and infrastructure.

The creation of state-funded trust funds and endowments for child care is a direct application of this target. By treating child care as a public good worthy of “dedicated, permanent funding streams,” states are providing public services and infrastructure that formally recognize and support the value of care work.

Indicators for Measuring Progress

Indicator 4.2.2: Participation rate in organized learning.

This indicator is directly implied by the article. Connecticut’s specific goal to “create 16,000 new slots by 2030” and New Mexico’s efforts in “creating more slots” are actions that would be measured by the participation rate of children in early education programs.
(Implied) Affordability of Child Care as a Percentage of Family Income.

The article provides specific, measurable data points for this indicator. Connecticut’s plan for families to “pay no more than 7% of their income” on child care provides a clear benchmark. Similarly, New Mexico making child care “free for nearly all families” is a direct measure of affordability.
(Implied) Compensation Levels for Early Childhood Educators.

Progress towards decent work can be measured by educator salaries. The article mentions that New Mexico “has also increased teacher pay” and that a truly universal system in Connecticut would involve “paying providers equivalent to public school teachers.” These statements imply that educator compensation is a key metric for success.

Summary of SDGs, Targets, and Indicators

SDGs	Targets	Indicators
SDG 4: Quality Education	4.2: By 2030, ensure that all girls and boys have access to quality early childhood development, care and pre-primary education.	4.2.2: Participation rate in organized learning (Implied by the creation of “16,000 new slots” in Connecticut and “more slots” in New Mexico).
SDG 8: Decent Work and Economic Growth	8.5: By 2030, achieve full and productive employment and decent work for all women and men.	(Implied) Compensation for Early Childhood Educators: Mention of New Mexico having “increased teacher pay.”
SDG 1: No Poverty	1.2: By 2030, reduce at least by half the proportion of men, women and children of all ages living in poverty.	(Implied) Affordability of Child Care: New Mexico making child care “free for nearly all families” and Connecticut’s plan for families to “pay nothing for child care” or no more than “7% of their income.”
SDG 10: Reduced Inequalities	10.2: By 2030, empower and promote the social, economic and political inclusion of all.	(Implied) Equitable Access to Child Care: Policies making child care free or affordable based on income level promote economic inclusion.
SDG 5: Gender Equality	5.4: Recognize and value unpaid care and domestic work through the provision of public services.	(Implied) Public Investment in Child Care Infrastructure: The creation of state-funded “trust funds” and “endowments” for child care.

Source: the74million.org