The news from the 2026 Child Care Business Survey? Not great! The survey’s bottom line? “While Minnesota’s child care industry remains in a state of crisis, the downward spiral is showing signs of stabilizing.”

The June 2026 Child Care Business Survey, conducted by the Federal Reserve Bank of Minneapolis and First Children’s Finance, found that eighty percent of surveyed programs still report that the industry is in crisis—a slight improvement from 86% the previous year. However, this masks the deeper financial strains and a shifting landscape.

The core long-term struggles remain the same: if programs raise tuition, it puts child care out of reach for many parents, and leads to sluggish enrollment, which, in turn, makes it hard to stay in business. In addition, preschool children are increasingly enrolled in public school pre-K programs, and losing these children disrupts the business models of many centers and family child care businesses. Finally, child care centers continue to struggle to hire and retain qualified staff due to low wages, but they can’t raise wages by charging parents more. As one respondent said, “Money has to come from somewhere. I just wish I knew where!”

There are also two new factors in the overall child care landscape. The first is Minnesota’s new paid parental leave policy. While this is great for families, it has caused many parents to delay enrolling infants in care, and some are pulling older siblings out of care during the 20 weeks that they have time off. The second factor, especially in the Twin Cities, was the surge in Immigration and Customs Enforcement (ICE) raids that occurred early in the year. This affected attendance and caused missed tuition payments as many local immigrant parents lost employment and went into hiding.

Finally, the survey revealed two more troubling trends. More than a quarter of child care centers and family providers reported dipping into business emergency funds or personal savings in 2025, and many family providers frequently skipped paying themselves entirely. Long-term confidence in sustaining child care businesses is also eroding. For example, the share of child care center owners in the Twin Cities who say they expect to remain open indefinitely plummeted by 18 percentage points over the last year, dropping to just 44%. This suggests a potential gap in access to care in the coming years if a significant number of centers close their doors. This has already become a problem in a few Greater Minnesota cities.

The full article is available on the Federal Reserve Bank’s website.