Attendees hold signs at the Day Without Childcare rally in front of the Federal Building in San José on May 12, 2025. Since 2019, the union representing some 60,000 workers who provide child care out of their homes made landmark gains. As they negotiate a new contract, the workers say they’re worried the state wants to cut back some benefits and delay a plan that would increase their wages. (Martin do Nascimento/KQED)
California made history two years ago by agreeing to establish the nation’s first retirement fund for home-based child care workers and to pay them fairly for providing subsidized care.
The deal was considered a huge win for the roughly 60,000 members of Child Care Providers United, who said for years that the state doesn’t pay them enough to cover the costs of caring for children out of their homes. But with their current contract set to expire at the end of June, and bargaining for a new one under way, they’re worried the state wants to cut back some of the benefits and delay implementing a new plan that would bring their payments up to the “true cost of care.”
“We had some victories, but right now, it’s like [they’re] turning their backs on us,” said Patricia Moran, a family child care provider from San José and member of the union’s bargaining team.
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When asked about the union’s stance, the California Department of Social Services said it doesn’t comment on ongoing contract negotiations.
As small-business owners, home-based child care providers don’t have access to employer-provided benefits. In 2019, they won the right to collectively bargain because many of them receive reimbursements from the state for serving lower-income families.
Khulood Jamil (center) and other child care providers and supporters march to the Federal Building in San José on May 12, 2025. (Martin do Nascimento/KQED)
In California, more than 70% of families who receive child care vouchers send their kids to Family Child Care homes or they choose friends, family or neighbors as caregivers, according to state data.
Over the last few contract deals, the union secured a $100 million fund to help reduce health care expenses for its members, $80 million in annual funding for retirement benefits, plus more than $40 million for training.
The state also committed to using an “alternative methodology” to calculate subsidy rates based on how much it actually costs to provide early care and education, instead of on the current system which is based on what parents have been paying for it.
Experts agree that the current system is flawed (PDF). Because providers lower tuition prices to meet what parents in their communities can afford for child care, the rates don’t reflect what it actually costs.
A 2022 study (PDF) commissioned by the state found the rates are far below the current costs to provide child care, resulting in lower wages for the workers and a chronic shortage of licensed child care. The most recent state data shows (PDF) that while the number of licensed Family Child Care spaces slightly increased between 2021 and 2023, only 26% of working families have access to licensed child care.
“Essentially when the state doesn’t pay child care providers fairly, that really just shifts costs towards California families,” said Julia Forte Frudden, a policy analyst at the Child Care Law Center, an advocacy group based in Berkeley. “And I think that’s really hard right now when so many families are feeling the squeeze of cost of living and are really fearful too about where our economy is going.”
When contract talks began, Moran said negotiators representing the state proposed eliminating the health care fund and reducing the retirement fund.
The past two years, the health care fund helped her cover out-of-pocket expenses for medication for her rheumatoid arthritis, which costs $5,000 per month, she said.
“Without that medication, I can’t lift a baby, I can’t sit down with my children for circle time,” Moran said.
She said she’s also frustrated that the state wants to delay implementing the new payment method by at least two years. In his revised budget for the 2025–26, Gov. Gavin Newsom cited needing more time to update technology systems for the change. Last month, he said that while he’s proud of his administration’s unprecedented investments (PDF) in child care, he must “hold the line” in his budget proposal due to a bleak fiscal outlook. The governor blamed President Donald Trump’s chaotic tariffs strategy for creating financial uncertainties.
Children’s cars and scooters at Lisa Zarodney’s home in Livermore, where she runs a child care operation, on March 7, 2025. (Gina Castro/KQED)
But to Max Arias, the chief negotiator for the union, that reason “is like taking advantage of the moment.”
“It also seems like a 180 turnabout on what they were saying up until a few months ago, that it was a priority of the administration to get to the cost of care,” Arias said.
He said workers should at least get a bump in reimbursement rates while they wait for the new model.
As the talks continue, union members are calling on Newsom and legislators to include funding for them as they negotiate a final budget before the July 1 start of the fiscal year.
“If they really value what we do, they’re going to pay us like we’re professionals,” Moran said. “We want to have peace of mind when we pay our bills at the end of the month.”
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