10 Critical Insights into America's Preschool Investment Boom and Quality Crisis

State-funded preschool programs are experiencing unprecedented growth in enrollment and spending, yet a deeper look reveals troubling disparities in quality and access. This year's 'State of Preschool: 2025 Yearbook' from the National Institute of Early Education Research (NIEER) paints a complex picture: while more four-year-olds than ever are in state pre-K, the gap between high-performing and lagging states threatens to create a two-tiered system. As one researcher put it, 'If this were a race, some states are near the finish line, others have stumbled, and a few haven't left the starting blocks.' Here are ten must-know findings from the report.

1. Record Enrollment—But Not for Everyone

The 2024-2025 school year saw the highest number of four-year-olds in state-funded preschool ever reported. However, the growth is unevenly distributed. A handful of states—California, New Jersey, New York—drive the national numbers, while many others have flat or declining enrollment. This imbalance means that a child's chance of attending pre-K largely depends on their zip code, raising equity concerns about a 'preschool divide' between states that invest heavily and those that don't.

2. Funding Hits $14.4 Billion—But It's Top-Heavy

Total state spending on preschool reached an all-time high of nearly $14.4 billion. Yet nearly half (45%) of that money came from just three states: California ($4.1B), New Jersey ($1.2B), and New York ($1B). While more than two dozen states increased their budgets, the concentration of funds means that the national average hides vast differences. States like Texas and Florida, with large child populations, spend far less per child, widening the quality gap.

3. Quality Lags Behind Access

Despite the spending surge, NIEER experts warn that quality is not keeping pace. 'Right now, the focus is on access, and we don't want states to forget about quality,' says Allison Friedman-Krauss, an associate research professor at NIEER. Many programs lack key quality benchmarks such as low teacher-to-student ratios, comprehensive curricula, and well-trained staff. Simply enrolling more children without ensuring high standards risks undermining the long-term benefits of early education.

4. Per-Child Spending Increases Are Slowing

Adjusted for inflation, states spent an average of $45 more per child than the previous year—a modest gain compared to a 16-times larger increase just a year earlier. This slowdown signals that while states are still investing, the rate of improvement is decelerating. In fact, 17 states actually spent less per child (adjusted for inflation) in 2024-2025 than in 2023-2024, often due to budget deficits or declining enrollment.

5. Teacher Compensation Remains a Key Weakness

Preschool teachers are chronically underpaid, often earning less than kindergarten teachers or even burger flippers in some regions. The report notes that increased spending can help improve teacher-to-student ratios and compensation, but many states still lag. Low pay leads to high turnover, which disrupts children’s learning and weakens program quality. Without competitive salaries, attracting and retaining qualified educators is a persistent challenge.

6. A Few States Lead—Others Fall Behind

New Jersey, Oregon, and the District of Columbia each provided more than $15,000 per child in state funding. Six others (California, Connecticut, Delaware, Michigan, New Mexico, Washington) spent over $10,000 per child. At the other end, many states spend less than $3,000 per child, forcing programs to rely on low-quality settings or large class sizes. These disparities create a 'haves and have-nots' dynamic among states and even within them.

7. State Budget Deficits Threaten Progress

NIEER researchers attribute some of the spending slowdown to overall state budget deficits and falling enrollment. However, not all states with deficits cut preschool funding. New Jersey, despite a budget gap, invested an additional $100 million to expand programs. 'That's a conscious decision,' says NIEER director Steve Barnett. 'You have to ask if states that cut are prioritizing children.' This shows that political will, not just financial constraints, shapes preschool investment.

8. Enrollment Declines in Some States Hurt Funding Formulas

Falling enrollment in K-12 public schools has also affected preschool, since many states tie pre-K funding to overall education budgets. As fewer children attend school, budgets shrink, and preschool programs can lose funding even if demand remains. This creates a perverse incentive where states with lower birth rates or population loss may inadvertently reduce access to early education, even as the need for quality childcare grows.

9. Access Gaps Widen for Low-Income Families

The variation in state funding means that children from low-income families in underinvesting states have fewer opportunities. While some states offer universal pre-K, others have limited programs that serve only a fraction of eligible children. The report highlights that without a federal push or national standards, the quality and availability of preschool will continue to depend on local priorities, perpetuating inequality from the earliest ages.

10. The Path Forward: Quality as Well as Quantity

The NIEER report concludes that states must balance expansion with quality improvements. Simply raising enrollment numbers without ensuring high standards—such as well-paid teachers, small class sizes, and evidence-based curricula—risks diluting the long-term benefits of preschool. Policymakers are urged to use increased funding wisely, targeting teacher compensation and program quality. The race to provide universal preschool is far from over, but the finish line should include both access and excellence.

As states continue to invest record amounts in early childhood education, the critical takeaway from the 2025 Yearbook is clear: money alone isn't enough. Without a concerted focus on quality, the promise of preschool to close achievement gaps and prepare children for school may remain unfulfilled for millions of families. The choice now lies with state leaders to ensure that every four-year-old, regardless of location, gets a strong start.