The Real ROI of Childcare: How One State Turned $300M Into $11 Billion (And What Every Director Can Learn From It)

Childcare funding advocacy, universal childcare, childcare business sustainability, SBA loans childcare

There’s a statistic that Barbara Tedrow, a multi-site childcare owner and advocate from New Mexico, says in committee hearings when she needs to make a point:

“There is no other industry in the state of New Mexico where you can make an investment of one dollar and get a return of anywhere between thirteen and seventeen dollars. That only happens in high-quality childcare.”

She says it because it’s true. And because the people who fund public programs often don’t know it.

If you’ve ever felt like you were running a business that everyone relies on but no one adequately supports — this post is for you.

The Business Case That Changed a State

In 2020, a New Mexico state senator named John Arthur Smith did something that had never been done before in early childhood education funding. He took $300 million from the state’s oil and gas revenue and created an Early Childhood Trust Fund.

Not a grant program. Not a temporary appropriation. A trust fund — managed like an investment portfolio, designed to generate returns indefinitely.

Six years later, that fund sits at $11 billion.

The returns from that fund now pay for universal childcare for every child in New Mexico, regardless of family income. Children of families making six figures? Covered. Foster children? Covered — at any provider they’re already attending, with no disruption if the family situation changes. Grandparents raising grandchildren? Covered, even if they’re retired and not working.

It is the most comprehensive childcare funding model in the country. And it came about because a community of advocates spent decades showing up, telling stories, and refusing to accept that childcare didn’t matter.

How They Built the Political Will

What Barbara and her colleagues understood — and what most advocates in other states are still learning — is that the argument for childcare funding cannot be limited to any single lane.

Is it a workforce issue? Yes. If parents can’t access reliable childcare, they can’t go to work. When Amazon and Meta and other major employers come to New Mexico looking to hire 800 workers, the Secretary of Economic Development needs to be talking to the Secretary of Early Childhood. Because without childcare, those workers don’t show up.

Is it an educational issue? Also yes. The first five years of life are when children build the most neural pathways, the most motor connections, the most capacity for learning that will carry them through kindergarten and beyond. Barbara puts it plainly: “A child doesn’t just magically need services starting at five years old. Education starts at prenatal.”

Is it a public safety issue? The district attorneys of New Mexico would say absolutely yes. The DA association supported early childhood funding by saying: “I would much rather be out of a job with no money. That means the children are okay because childcare has done its job.”

The lesson: don’t argue about which lane childcare lives in. Build a coalition that claims all of them.

What This Means for You — Right Now

You don’t need to be in New Mexico for this to matter to your business.

If you are running a childcare program that accepts any form of government subsidy, you already know what inadequate reimbursement rates feel like. You know what it means to serve a family who needs your program, take less than market rate for the spot, and then not be able to hire enough staff to fill the room safely.

Oklahoma is living the opposite version of the New Mexico story right now. Budget cuts have left providers unable to charge “gap pay” — the difference between what the state reimburses and what a center actually needs to charge. A major hospital system just closed its childcare program, citing $1 million in annual losses. If a hospital with those resources can’t make it work, what does that say about the rest of us?

Three Things You Can Do in Your State

1. Know your advocacy numbers. Find out what your county or state pays per day per child in childcare subsidy reimbursement. Compare that to what your local animal shelter receives per day per animal. In many states, the shelter receives more. That number — once you have it — is a story you can tell.

2. Join your state childcare association. New Mexico’s success was built by a coalition of providers who showed up together over many years. One person can tell a story. A coalition can change a law. The NMCCA, your state’s AEYC chapter, your local CCA — find them. Show up.

3. Invite your legislators into your program. Barbara’s most effective advocacy tool wasn’t a spreadsheet. It was a tour. Once a legislator walks through a quality childcare program and sees what actually happens in those rooms, they become champions. Invite yours.

And for the Business Side — Get Your House in Order

The advocacy work matters. But so does your individual business strategy.

Dr. Mia Young, a childcare owner in Orlando, secured a $5.7 million SBA 504 loan to build a second location from the ground up. She didn’t do it overnight. She spent years getting positioned — building banking relationships, understanding her personal credit and cash reserves, learning the language of commercial lending.

Her advice to anyone dreaming about expanding: “You have to have a business plan. And I don’t want you to go out and buy one. If you have to buy a business plan, you’re not ready yet. You need to be able to write your own — from your heart — and then put it on paper.”

The businesses that survive long enough to influence policy are the ones that are financially stable enough to still be in the room. Profitability isn’t just a business goal. It’s a mission goal. You can’t serve families, advocate for the industry, or invest in your staff if you’re not financially sustainable.

The Takeaway

The story of New Mexico is proof that childcare can be valued the way it deserves to be valued — but it takes time, coalition, and persistent advocates who refuse to leave the room.

The story of Dr. Mia Young is proof that individual programs can grow, expand, and build financial strength — but it takes preparation, education, and the willingness to do the homework.

Both of these are available to you.

You are running businesses that return $13–17 for every dollar invested in them. Start talking about it that way.

Want to hear both of these conversations in full? Listen to the April 23 and April 28 episodes of Childcare Conversations. And subscribe to the newsletter for a twice-weekly dose of leadership support, straight to your inbox.