The True Cost of Childcare Act Signed by Governor Newsom!

EveryChild California was proud to support AB 1981, the True Cost of Childcare Act, which was signed by Governor Newsom on Sunday evening, September 27, 2026. Authored by Assemblymember Cecilia Aguiar-Curry and co-sponsored by Child Care Providers United (CCPU), SEIU California State Council, and United Domestic Workers/AFSCME Local 3930, the bill represents an important step toward creating a reimbursement system that better reflects the realities of providing high-quality early care and education. 

For providers, the bill reinforces something our members know well: the cost of providing high-quality child care is not the same as what families in a particular community are able to pay. Programs must recruit and retain qualified staff, maintain safe and appropriate facilities, comply with licensing and program requirements, serve children across different ages and developmental needs, and operate in communities with vastly different costs. California’s reimbursement system needs to better reflect those realities.

AB 1981 helps move the state further in that direction by strengthening California’s transition toward a single-rate reimbursement structure informed by an alternative methodology based on a statewide cost study and cost estimation model reflecting the actual costs of providing care. 

The methodology must consider important factors including:

• Salaries and wages

• Geography

• Type of care setting

• Regulatory and statutory requirements

• Time categories, including nontraditional hours

• Child age

• The cost of delivering inclusion supports

AB 1981 does not mean California’s rate reform work is finished. The state is still developing and implementing a new reimbursement system across its complex mixed-delivery system. Without AB 1981, key implementation deadlines could have kept getting pushed back. By establishing new statutory milestones and requiring regular public reporting, the law helps keep the state accountable for completing the transition to a reimbursement system based on the true cost of care.The legislation requires continued quarterly implementation updates through July 2028. Beginning in July 2027, CDSS must also report on how Cost of Care Plus payments will be incorporated into existing child care contracts. 

There will continue to be important opportunities for providers and advocates to weigh in as the details of the new system are developed and implemented. We are grateful to Assemblymember Aguiar-Curry, the bill’s co-sponsors, and the many providers, advocates, and partners who helped move this work forward. EveryChild California will continue tracking implementation and keeping our members informed about what these changes mean for your programs.