Some DFL legislators will reportedly reintroduce a bill to cap childcare costs at 7 percent of household income for parents — with the Minnesota state government paying the rest — after it failed to pass last year.
Currently pegged at around $500 million, the proposal is an outcome of a legislative task force created in 2021 to combat childcare unaffordability in Minnesota. If passed, the “Great Start Minnesota program” would wrap around existing programs such as Early Learning Scholarships and the Child Care Assistance Program (CCAP), and cover households with incomes up to 150 percent of the state median — about $135,000 or less.
Certainly, Minnesota is one of the least affordable states for center-based care — something that American Experiment has drawn attention to numerous times. Subsidies, however, are unlikely to address this issue. Given the looming budget deficit, more spending could only likely mean bigger problems for the state budget.
The budget deficit
The 2024 November budget forecast came with some predictable bad news: after starting the 2023 legislative session with an $18 billion surplus, Minnesota is looking at a potential budget deficit of over $5 billion in the 2028-29 biennium. Even more worrisome, while the $5 billion budget deficit materializes in the 2029 fiscal year, issues have been underway.
In the 2024-25 biennium — the period between July 2023 and June 2025 —, Minnesota will spend $71 billion but collect only $61.4 billion in revenues. This leaves a structural imbalance of over $9 billion mainly being covered by the historic $18 billion surplus.
The general fund budget is projected to end the 2026-27 biennium with a $600 million surplus but revenues collected in that period (current revenues) are $3.14 billion less than total spending. This structural imbalance grows further in the 2028-29 biennium, leading to the $5 billion budgetary deficit — over $3 billion after excluding discretionary inflation spending.
Table 1: November 2024 Budget Forecast

Simply stated, with spending expected to exceed collected revenues in every fiscal year between 2024 and 2029, the state budget has no room for more spending, whether on childcare or anything else.
The tax system’s underlying ability to support public spending has been deeply compromised. What Minnesotans need from their lawmakers are serious spending reforms, not more spending ideas.
Stringent regulations are to blame for high prices and shortages
According to data from ChildCare Aware, sending an infant to a licensed daycare center cost over 20 percent of the median household income for Minnesota parents in 2022. Minnesota ranked as the fifth most expensive state for infant center-based care among the 50 states and surpassed all its four neighbors — South Dakota, North Dakota, Iowa, and Wisconsin.
Regulatory differences reveal why this is the case.
South Dakota allows up to five infants per center staff, while in Minnesota the maximum is four. In South Dakota, North Dakota, and Iowa, staff dealing directly with children must only meet age and training requirements. Sure, child-care workers in North Dakota operate under supervision, but those supervisors only need to have a school diploma and one year of child-care experience. While Wisconsin does require child-care workers to have college credits, it only requires two courses for teachers and one course for assistant teachers. Moreover, a center can hire an assistant teacher with no prior experience, and a teacher is only required to have 320 hours of experience, not thousands.
Strict rules — from staff-child ratios, and minimum square footage rules to staff hiring requirements — raise operating costs for daycare centers. These costs are passed on to parents through higher tuition. To the extent that centers cannot find enough qualified workers to care for children, shortages and childcare deserts ensue as centers shut down or reduce capacity.
More spending will merely transfer high childcare costs to taxpayers without addressing the true cause of the childcare crisis. By increasing demand for childcare services without improving supply, subsidies could also worsen affordability issues.
With a budget deficit in sight, Minnesotans will be best served by a legislature that looks beyond throwing money at childcare and tackles the burdensome regulations largely to blame for high prices and shortages.