A universal childcare program in Minnesota could cost taxpayers between $3.1 billion and $6.2 billion annually if extended to all children up to age 13, according to a new analysis published by the Center of the American Experiment in 2025. The estimate comes as the state's DFL could pursue a policy similar to New Mexico's first-in-the-nation universal childcare program during the 2027 legislative session. Even focusing only on children under 5, the report finds costs would reach at least $1.7 billion per year under conservative assumptions.
The cost estimates vary widely based on enrollment rates and care arrangements. For children under 5, a Nordic-style program with 70 percent participation would require funding for 218,243 kids out of the 311,776 not already enrolled in federally funded Head Start. Splitting enrollment between center-based care, which costs an average of $18,235 per child annually, and home-based care at $9,464 per child, produces a yearly price tag of $3.4 billion. If all children used center-based settings exclusively—a goal some advocates have pushed—annual costs would climb to $4 billion. Under more conservative participation rates modeled after other developed countries and U.S. programs, where roughly 36 percent of eligible kids enroll, costs drop to $1.7 billion with mixed care arrangements or $2 billion for center-only care.
Adding school-age children between 6 and 13 more than triples the eligible population and substantially increases program expenses. Assuming these older kids need childcare for 26 weeks per year rather than the full 52 weeks required by younger children, a 70 percent enrollment rate would add $2.8 billion to the program. At the lower 36 percent take-up rate, school-age children would contribute an additional $1.4 billion annually. Combined with costs for children under 5, the total program would consume between 9 and 17 percent of Minnesota's entire state budget, requiring potentially ten times current childcare spending at a time when the state already faces a multi-billion dollar structural deficit.
The report points to New Mexico's experience as a cautionary tale about the fiscal challenges of universal childcare. Despite the state's oil and gas revenues providing deeper financial resources than most states possess, New Mexico's program has run into significant budget problems. Two state officials filed lawsuits in August 2024 alleging they were terminated for highlighting that the program exceeded its budget by up to $83 million, and the Legislative Finance Committee estimated peak costs could reach $800 million annually—nearly $400 million above initial projections. Governor Michelle Lujan Grisham requested a 54 percent funding increase for the agency managing the program, though legislators approved only an 8 percent boost. Tellingly, lawmakers built in guardrails that would strip away the program's "universally free" status under certain fiscal pressures, including allowing co-pays for higher-income families if inflation rises, oil prices fall, or demand outstrips available funds.
The analysis concludes that if an oil- and gas-rich state like New Mexico can't sustain universal childcare without budget overruns and policy compromises, Minnesota faces even steeper obstacles. The report warns that funding such a program would demand massive tax increases on top of existing budget shortfalls, making the policy fiscally unsustainable. For Minnesota lawmakers considering a similar initiative in 2027, the bottom line is stark: even under the most optimistic scenarios, universal childcare represents a multi-billion dollar commitment the state budget may not be able to absorb.