But now, in the wake of a new focus among Ohio lawmakers on supposed fraud in the state’s childcare system, they are on the verge of ditching the idea altogether. A under consideration would require providers to be paid based on attendance rather than enrollment as they are by parents who pay out of pocket.

In December, conservative YouTuber Nick Shirley posted a video claiming to uncover widespread fraud in Minnesota’s childcare program, particularly among daycare centers run by Somali American residents. The video went viral and reached federal officials, and the Trump administration cited it as motivation to pursue an and various efforts to restrict federal childcare funding. Despite the video offering no verified evidence of fraud — and the fact that the state was several cases of fraud in its childcare system — some states have responded by intensifying their focus on supposed fraud. Texas Gov. Greg Abbott agencies to launch investigations into childcare fraud, while Idaho’s Department of Health and Welfare heightened reviews of funding. (The reviews found of providers guilty of any wrongdoing.)

Shirley’s video sparked an immediate reaction in Ohio, according to Tamara Lunan, a childcare organizer with the Ohio Organizing Collaborative. The state has the Somali American population, just behind Minnesota. in Columbus, Ohio claimed centers were receiving public funding for nonexistent children even though evidence at least two of those claims. According to the at The Ohio State University, just 0.43% of all the providers who accept vouchers through the state’s publicly funded childcare program were found to be misusing funds in 2025. In a of 124 complaints sent to the state’s Department of Children and Youth last year, the agency found no evidence of fraud in 100 of them.

In January, Ohio lawmakers two proposals — House Bills 647 and 649 — they said were aimed at combatting fraud in the state’s publicly funded childcare system.  

Marquita McClendon, who has operated a childcare program in Cincinnati since 2023, acknowledged that fraud exists. “But I feel like the systems that we already have in place already do the job necessary,” she said. “We’re changing laws over an unsubstantiated claim. It’s just beyond me.”

The state made some changes ahead of implementing the new enrollment-based payment system that have led to sacrifices for providers. It a requirement for counties to use presumptive eligibility, which allows families to receive childcare vouchers if they already qualify for another program like food stamps, and allows parents to enroll immediately once they get a new job, rather than waiting weeks for their paperwork to be approved. Some providers accept children into their programs during that interim period anyway, Lunan said, but often aren’t paid for all of that time. The state also reimbursement rates for some types of in-home providers and increased the threshold for children to qualify as full time, which allows providers to be reimbursed at a higher rate. 

“There were things taken away from us,” McClendon pointed out. With those reductions, she’s making $10,000 less each month, she said. “We’re in the red.” The loss of revenue has meant she can’t buy new equipment for the children in her care or do field trips this summer as she normally would. “I can’t run an effective program,” she said.

If providers were paid based on enrollment, it would help them weather children’s absences for illness or snowstorms, “things that providers can’t possibly be able to plan for when they’re making their budgets,” Lunan said. It “would help to stabilize the programs.” Instead, “Providers are hemorrhaging income based on these changes,” she said. “It’s killing their bottom line.”

Reversing the decision to pay based on enrollment is just one of the changes included in the legislative proposals Ohio lawmakers have put forward in the name of fighting fraud this year. Some others have since been toned down or removed. initially that would have given the state’s Department of Children and Youth the power to cut off funding or suspend a license for any provider merely suspected of fraud, waste or misuse of dollars without a hearing. That language has since from the bill; now those actions can be taken if “evidence demonstrates” that a provider knowingly engaged in fraud or misuse of funds. But providers remain concerned about lawmakers giving the attorney general more power to prosecute perceived fraud, which in the bill. 

“We don’t want to see childcare providers get penalized because the state made an overpayment to them,” Lunan said. Both overpayments and underpayments are included when states calculate their payment error rates, and those can be due to the state government’s error, not providers acting with ill intent. Her organization is pushing for the state to create a committee made up of childcare providers that could distinguish between clerical errors and actual, intentional fraud. 

The original proposal for , introduced by Republican lawmaker Josh Williams, would have mandated the installation of cameras in all childcare programs that receive government funding to “allow visual inspections in real time,” . It would have given the Department of Children and Youth the ability to view the footage at any time. McClendon pointed out that she has diaper changing stations in her classrooms. “There’s no way to protect my children’s privacy,” she said, calling the idea “a bit extreme.”

While that idea has since been abandoned, lawmakers have adjusted the bill to facial recognition for children who attend programs that receive public funding. Such technology won’t work on young children, particularly infants, given how rapidly their faces are developing and changing, McClendon and Lunan pointed out. McClendon also noted the challenge of keeping kids still long enough to take a photograph. Lunan pointed out that there is already an existing mandate for programs to have an attendance system in place that takes pictures of parents when they sign children in.

An made to that bill the storing of photos of the children. But many parents are still opposed, Lunan said: a against mandating facial recognition has been signed by nearly 900 people. 

Lawmakers are also reducing the time given for allowing a child to be checked in retroactively, if their attendance was originally missed, from 30 days to seven. “That would be a tremendous hardship,” Lunan said, on both providers and the parents who are the ones who have to go into the system and fix the problem.  

The legislation calls for spending up to over two years on data analytics to detect patterns of fraud or abuse. The facial recognition proposal alone would be “expensive for the state and providers, diverting scarce public dollars and provider time away from care itself and toward unnecessary surveillance infrastructure,” said Ali Smith, senior project coordinator at Policy Matters Ohio, . Lunan agreed. “We don’t need funds to come out of childcare,” she said. What Ohio childcare providers need instead, she said, is more funding, not less. “Providers are not defrauding the system. They are barely breaking even — most providers are in the red,” she said. “The conversation really needs to shift from fraud to funding.”

The anti-fraud bills “would just destabilize childcare, or destabilize it further, because it’s already unstable,” Lunan said. 

That began to change in 2022, when Kentucky became the first state in the country to roll out an initiative making most early childhood educators automatically eligible for childcare subsidies. 

Novel at the time, this program — which, in effect, provides free childcare to early childhood educators in licensed programs through an expansion of the state’s Child Care Assistance Program — caught the attention of leaders in dozens of other states and has been replicated widely in the years since. 

“It’s not just happening in one type of state,” said Diane Girouard, state policy director at the National Association for the Education of Young Children, a nonprofit that advocates for high-quality early learning experiences. “It’s happening in [states] big and small; blue, red and purple; rural and non-rural. States are just seeing that it’s working. It’s unique. It’s a really good workplace benefit.”

The idea to make early educators automatically eligible for childcare assistance was conceived as a strategy to help recruit and retain early childhood educators in the wake of the pandemic. By 2022, many families needed childcare to return to a normal work schedule but often couldn’t find spots for their children because early care and education programs were so severely understaffed, leaving slots unfilled and entire classrooms vacant. 

The model was so successful in Kentucky that other states took notice and began to fund their own versions of an effort to provide childcare assistance to early childhood educators, primarily through pilot programs. More recently, some states have even moved to make the program permanent. 

Last month, both and enacted laws making most early childhood educators automatically eligible for childcare assistance. Iowa’s governor signed a bill on April 9, while Kentucky’s program was made permanent a few days later, on April 14. 

“We’re psyched,” said Sarah Vanover, director of policy and advocacy at Kentucky Youth Advocates and one of the champions of this program in the Bluegrass State. 

“We’re known for being frugal and conservative with money,” Vanover said of Kentucky’s legislature, which is overwhelmingly Republican. “And yet this is something we’re investing in. When you have that dialogue with [program] directors, they’ll tell you they have been able to open classrooms and keep staff.”

The reason states have continued to invest in this type of program, Vanover and other state leaders shared in interviews, is because it works. By delivering free or discounted childcare to early educators — many of whom have jobs with low wages and few, if any, benefits — several states have seen workers who are more willing to stay in their jobs. And some educators who had left the workforce to stay home with their young children are finding it’s just enough of an edge to lure them back into their teaching positions, surveys and program directors have shared.

Since 2022, leaders from 38 other states have reached out to Vanover about the model, she said. Many of those leaders have gone on to pursue some form of the program. At least a dozen states, including , , , and , currently have at least a pilot program in place providing childcare assistance to early childhood educators. Two others, New Jersey and West Virginia, have introduced related bills. is the only state known to have initially offered and then ended this type of program, and in that case, it was the result of a severe budget deficit, Girouard said. 

While the model has spread, no two initiatives are exactly alike, Girouard added.  

Kentucky and Iowa, for example, make this benefit available to early childhood educators regardless of income, while most other states only have enough funding to increase the income threshold above what is available to all families in their states. In Rhode Island, for instance, the state’s childcare subsidy program is available to all families with an income less than 261% of the federal poverty level. For , that income cap increases slightly, to 300%. 

And Kentucky’s program includes any staff member working in a center-based early care and education program — from teachers to administrators, cooks to early intervention specialists. 

“You can’t run a childcare program without the assistant teachers, without the nutrition staff, without the administrators,” Vanover said. “If you’re looking at doing this without the other staff, you’re going to have teachers get shuffled around. It’s essential for the whole program to take advantage of it — every employee.”

Meanwhile, a in Maine — called the “childcare employment award” — has emerged as unique in a couple of ways. 

Maine’s program provides at least a 50% discount on childcare for early childhood educators, according to Heather Marden, co-executive director of the Maine Association for the Education of Young Children, a state affiliate of NAEYC. For staff who were already eligible for childcare subsidies before the pilot, the state also covers the cost of their co-pays, which can run anywhere from $3,000 to $8,000 a year, Marden said.

Importantly, Maine’s program is distinct in that it allows home-based childcare providers — a group often left out of this benefit — to participate. (The legislation that made Kentucky’s program permanent also allows home-based providers to use the benefit for the first time.)

A recent of Maine’s pilot program found that it has had a positive impact on workforce retention, noting that nearly every participant was considering leaving the field before receiving the award.

Moreover, the report found, many of those participants were weighing whether to leave the workforce altogether to stay home with their children, rather than looking for jobs in other fields. The discounted childcare has put enough money back into their pockets that they have been able to stay.

Marden noted that while that’s good for each individual teacher, it’s also good for entire communities. 

“The impact of retaining one educator is pretty incredible,” she said, explaining that a single educator gained or retained opens up licensed classroom slots for four to 12 children. 

Maine’s childcare employment award program was serving 511 children from 313 families as of September 2025, with nearly as many children and educators on the waitlist. The state has funded the pilot at $2.5 million a year for the past two years, and it just hasn’t been enough to reach everyone, Marden explained.

While many early childhood leaders in Maine want to see the pilot program funded at a higher amount, the reality is that it will likely soon cease to exist altogether. During the recent legislative session, which ended in mid-April, policymakers did not fund the pilot for another year. As of now, the program is slated to end after June 30.

In Iowa, uptake has been strong. As of September 2025, more than 3,600 children from 2,153 families had taken advantage of the benefit, according to data from the Iowa Department of Health and Human Services. And a survey conducted by the state agency, the results of which were shared in January 2025, found that 87% of participants remain in their roles, and 12% began working in childcare as a result of the pilot. 

Hollie Allen, co-owner of Vine Street Child Care, a large center-based program in West Des Moines, Iowa, said that at least 13 of her teachers — out of about 60 people on staff — are enrolled in the program. They still owe co-pays between $35 and $100 per week, depending on factors like household income and number of children, she said, but that’s a big improvement over the full cost of a spot in her program.

“I don’t understand why they’re calling it free childcare. It’s not,” Allen said, but added that, compared to the $360 per week she charges for an infant slot, “paying $67 is awesome.”

The program has been a “double boon” for Allen, she said, because she was previously giving staff who weren’t eligible for other financial support a 50% discount on childcare at Vine Street — and losing money on those slots in the process. Now, with the state’s childcare assistance program covering the cost of early childhood educators’ childcare, Allen has been able to give every person on payroll a $2 per hour wage increase. 

“It was a big cashflow injection for our program,” Allen said. “Those across-the-board wage increases were critical.”

In other states, such as Rhode Island, where the pilot program has been extended through 2028, the impact on turnover in the field has been real but modest, said Lisa Hildebrand, executive director of the Rhode Island AEYC. 

“It’s still helpful,” she said. “The intent is there. It’s still retaining some educators. But it could be a lot better.”

Hildebrand added: “We just need way more money in the system. This is not going to solve all the problems. It’s a little bit of Band-Aids. You’re giving free childcare to educators because you’re not paying them enough that they can afford childcare on their own. You’re still not paying people enough, and that’s the problem.”