One July morning, Liz Arnold’s workday started with a knock at the door from someone less than 3 feet tall.

She was the first of two toddlers, both clad in strawberry-patterned T-shirts. The younger sibling was still in his mother’s arms as the pair were entrusted to Arnold for the day.

This is the usual rhythm for Arnold, a licensed childcare provider who has operated Just Like Mine Daycare in Lincoln, Nebraska, since 2020. This summer she’s taking care of six toddlers from four families in her home daycare center. Two of those families who arrived that morning are using federal subsidies distributed by the state to pay for some of the costs of Just Like Mine Daycare. On average, private-pay clients are charged $1,080 a month.

While the subsidy helps, it has drawbacks.

“We’re not getting paid the cost of care,” Arnold said.

Childcare providers who take the subsidy as payment must comply with additional rules and paperwork, as well as inspections from the state to monitor for fraud.

There’s also a financial cost.

“I make more money when I have private-pay clients, but it is important to me that I support my subsidy families because that was the family that I was when my kids were growing up,” Arnold said.

While subsidies do help families, they also require additional work from parents.

Tiffany Belford, one of Arnold’s parents who uses the subsidy, said that the paperwork and dealing with bureaucracy required to keep the subsidy felt like a job itself. She said she found state workers to be unhelpful.

“Luckily, I’m off for the summer,” Belford said, describing waiting on hold for hours. “When I was working, I would have to literally have a headphone in, which was not allowed.”

No matter from which perspective you view childcare — as a parent, a caregiver or an employer — the math isn’t adding up: Families say childcare is often unaffordable and providers say they are underpaid.

According to an analysis of the different types of childcare, ChildCare Aware of America estimates that nationally the average cost of childcare was $13,184 annually per child in 2025. In some cases childcare costs rival mortgage payments.

Adding to the equation is that many states have pulled back COVID-era subsidies. Economists who study the childcare market warn that rising costs could push young parents out of the workforce, particularly those with incomes that leave them close to no longer qualifying for the subsidy.

However, bipartisan legislation led by Nebraska Sen. Deb Fischer and Iowa Rep. Ashley Hinson could change how the grants that fund the subsidies are calculated – potentially reducing the cost of childcare by increasing the supply and quality of childcare providers.

A Failing Market

Childcare and Development Block Grants provide nearly $9 billion in assistance to families with children younger than 13. States have some flexibility to determine who is eligible for subsidies, which means some states are more restrictive than others.

According to the First Five Years Fund, on average, families receive slightly more than $1,000 in subsidies a month.

The current grant system is using the same formula to calculate subsidies since 2014, meaning it hasn’t accounted for economic change since then.

Making childcare accessible and affordable is a policy goal of the Buffett Early Childhood Institute at the University of Nebraska. In October 2024, the institute held a roundtable with policy experts and economists discussing the problems plaguing the childcare system nationwide.

The panelists agreed that the system is failing, and that both supply and demand investment is needed to have enough providers available, and for those providers to provide affordable care to families.

Walter Gilliam, the executive director of the institute, said he wants lawmakers to think about childcare as a public good.

“Many Midwesterners needed two things in order to get to work today: They needed a road to drive on and somebody to take care of their children,” Gilliam said. “One of those we treat as infrastructure, roads; the other one is childcare.”

Unlike public education, which taxpayers largely fund, families pay childcare costs. Some states, like Michigan, are trying to solve the problem by having businesses and the state pay part of the costs. Other states have tried targeted approaches, such as Iowa providing childcare assistance to childcare workers.

Universal pre-K programs are also a cost-saving measure for parents of 4-year-olds, with four states and Washington D.C. offering programs. An additional eight states provide a service that falls short of the universal definition, according to the Education Commission of the States.

According to the Missouri Independent, one in five Missouri children eligible for subsidized childcare services is not receiving help. There are 7,389 children on the waiting list, the Department of Elementary and Secondary Education told The Independent in July.

Low wages for providers play a role in finding childcare, as workers choose to leave the industry for higher-paying jobs — which in turn reduces the number of providers and increases the price of care.

“You’ll find out quickly that this is a really hard job,” Brenden Timpe, a University of Nebraska-Lincoln economics professor who took part at the roundtable, said. “It’s hard mentally. It’s hard physically. It’s hard emotionally.”

A January report from the United Methodist Health Ministry Fund found that 7.4% of potentially eligible Kansas children are served by care providers, and that fewer than half of licensed childcare providers accept the subsidies. In other words, families that qualify might have a hard time finding a provider.

Increasing public funds might be one of the only ways to improve pay for caregivers, as increasing the price of care would mean that many families couldn’t afford it at all. Timpe said many parents await the day when their children start kindergarten.

“If you think about K-through-12 education as a society, we’ve decided to use the tax system to provide that to everybody,” Timpe said. “For kids under that age, we haven’t made the same choice.”

Earlier this year, Nebraska Gov. Jim Pillen signed into law LB304, which extended a COVID-era eligibility expansion of federal subsidies set to expire this year. The new law maintains the expanded eligibility threshold to 185% of the federal poverty level. For a family of four, that sets the income cap to $61,050 a year.

Gilliam was supportive of the move, but the broader problem remains unsolved, he said.

“Essentially, what Nebraska decided to do was to not rip off a Band-Aid while the patient is actively bleeding on the table, and so, as a result, we are able to continue some of those supports for childcare,” Gilliam said. “But it certainly isn’t enough to make it truly affordable for all working families.”

Bipartisan Support

As of late July, efforts to update existing funding streams for childcare are moving in the U.S. House and the U.S. Senate.

Nebraska Sen. Deb Fischer introduced the Childcare Modernization Act of 2025 last September. In the House, Iowa Rep. Ashley Hinson introduced a similar version. Both bills have bipartisan backing.

“Across our states, we consistently hear about three core challenges: limited supply, workforce challenges and high costs for families,” Fischer said at a Senate committee hearing in April.

“The Childcare Modernization Act directly addresses all of these.”

By loosening the rules in the grant system, the bill aims to lower the cost of childcare by increasing the supply of eligible providers and providing more subsidies to families.

“Family is at the heart of everything I do, and I’ll keep fighting to make it easier to raise one,” Hinson said in a release.

Both bills will:

• Allow for construction and renovation of existing childcare facilities.
• Update reimbursement rates for grants tied to the cost of childcare.
• Loosen regulations on small, rural and home-based providers.
• Allow states to widen income eligibility for grants.

“Childcare remains one of the biggest household expenses for families in Iowa and across the country,” Hinson said in a release in June. “After more than a decade without reauthorization, the federal government’s primary childcare program simply isn’t equipped to meet the needs of our families.”

To become law, the two versions need to be passed by their respective bodies, and then be approved in the opposite chamber to send the reconciled bill to President Donald Trump’s desk.

Timpe, the economics professor, said he thought the bill would help improve access to childcare, but stressed that increased wages and worker retention would be key to maintaining a level of heightened supply.

“There are people who want to work in this sector but they simply can’t make it work as providers (because of low pay),” Timpe said.

The Realities Of Caregiving

Much like parents, childcare providers are expected to know a little about a lot – including changing nutrition standards, food recalls and the latest recommendations for early childhood education.

That’s why breakfast that morning at Just Like Mine was bananas, blueberry muffins and milk — foods deemed safe from the current cyclospora outbreak.

Arnold is also the Nebraska representative for the National Association for Family Child Care, whose conference wrapped up earlier this summer. She said caregivers nationwide are feeling the pinch of rising unaffordability, and a shared frustration of a lack of focus and investment on early childhood development.

“It’s so much more than singing ‘Itsy Bitsy Spider’ and snuggling babies,” Arnold said. “I wish I had more respect from the community.”

No matter what happens in Congress, the routine of daycare drop-off and pickup continues.

Elizabeth Potter, the mother of the two toddlers in strawberry T-shirts, has been using Just Like Mine for three years, but is not receiving a subsidy. She’s stayed with Arnold because of the relationship the family has built with her.

Potter’s daughter is particularly fond of the dance class that Arnold takes her to during the day.

“It’s been great,” Potter said. “We love it here.”

With hugs and a wave goodbye, Potter headed off to work while the two toddlers waited for their friends to arrive.

This story was produced by The Midwest Newsroom, an enterprise journalism collaboration that includes Iowa Public Radio, KCUR, Nebraska Public Media, St. Louis Public Radio and NPR. Read the article here: https://nebraskapublicmedia.org/en/news/news-articles/childcare-is-too-expensive-and-too-hard-to-find-a-nebraska-lawmaker-is-working-to-change-that/