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The state’s announcement about a $225 million budget shortfall and the resulting 10%–25% cut in child care provider reimbursements highlights how fragile Indiana’s early learning system has become.
As lawmakers prepare their priorities for the 2026 session, the timing to take action could not be clearer. Any parent who has hurried to find child care understands that the system is stretched thin.
The challenge isn’t just about families finding care—it’s a major burden on Indiana’s economy.
A report from the Indiana Chamber of Commerce and Early Learning Indiana estimates that child care problems cost the state $4.22 billion each year. That includes $3.05 billion in lost productivity and turnover costs for employers and $1.17 billion in lost tax revenue.
To put it simply: That amount is more than Indiana’s annual spending on higher education. Solving this could generate $4.22 billion in economic activity, which could be a game changer for Indiana’s economy.
The solution isn’t more bureaucracy or a one-size-fits-all mandate. Instead, Indiana should establish a preschool system that reflects Hoosier values: local decision-making, fiscal responsibility and parental choice.
Last session, Rep. Blake Johnson proposed a framework along these lines. Although the bill didn’t move forward, the proposal remains a solid model for allowing counties to give preschool funding directly to voters.
If approved, a trusted community organization such as a United Way would oversee the program, and families could choose from various providers, including churches, schools and community centers. It is voluntary, accountable and keeps decision-making local.
This approach puts parents in the driver’s seat. Just as families today can choose between traditional public schools, charter schools, private schools or homeschooling, they would also be able to select from various preschool options. For some, that might be a church-based program. Others may prefer established providers like Day Early Learning or schools offering Montessori, classical or dual-language programs. A system that offers families choices while ensuring those options meet quality standards is the best way to guarantee positive outcomes.
This approach also makes practical sense. Indiana already has buildings that could be used more effectively. Many of our school facilities are underused. Converting some of these classrooms into pre-K programs would help more families without the need to build new infrastructure. It is a fiscally responsible way forward that also respects taxpayers.
The pressure on families quickly becomes a burden for employers, decreasing the state’s ability to attract and keep talent. The Early Learning Indiana report showed that 27% of Indiana parents with young children have had to make major job changes—such as quitting, declining promotions or switching from full-time to part-time work—because of child care problems.
At a time when employers are struggling to find workers, Hoosiers are leaving the workforce simply because affordable, reliable child care isn’t available. Other states invest in early learning to strengthen their talent pipelines, and Indiana cannot afford to fall behind in the competition for jobs and investment.
The fact that not every county will develop the same system is an advantage, not a problem. What works in Indianapolis or Hamilton County might not work in Crawfordsville or Greencastle. Rural Indiana faces very different challenges than urban areas.
Only 61% of children needing care statewide can be served with current capacity, and the gap is often greatest in smaller communities. The flexibility to create regional systems, similar to what Indiana has done with the READI program, lets counties collaborate and address local needs without imposing a one-size-fits-all mandate.
Getting there won’t be easy. Communities will need to recruit and train teachers, adapt buildings and establish clear quality measures that reassure parents and taxpayers alike. State and local partners have a vital role in setting the standards for quality so parents can choose safe, reliable options instead of settling for whatever is available. Accountability and choice must work hand in hand.
Federal universal preschool is unlikely in the near future, and a one-size-fits-all state program isn’t practical either. But a universal preschool system tailored the Hoosier way—locally designed, fiscally responsible, rooted in family choice and quality—can be achieved.
Budget shortfalls force tough choices, but they can also create opportunities for better solutions. As lawmakers approach their 2026 session, they have a chance to lead with a forward-thinking framework. A plan that empowers local voters, ensures quality, uses existing facilities and supports both families and workers would strengthen our economy and give every parent a fair shot at providing their child with the best start.
If we want Indiana to stay competitive, this is exactly the kind of practical, fiscally responsible solution the General Assembly should pursue.•
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McAlister is principal of PM Strategies and previously directed the Indianapolis Mayor’s Office of Education Innovation.
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