Federal government rejects the states’ call for permanent funding of its planned childcare law

The federal government has turned down the states’ demands for more money to pay for its planned childcare law. In its formal reply to the Bundesrat’s opinion on the planned Start Opportunities and Quality Development Act (our translation of Startchancen- und Qualitätsentwicklungsgesetz), it rejects further financial demands and says permanent, index-linked relief for the states is out of the question. The document is before the Bundestag as printed paper 21/8827, dated 28 October 2026, and the parliament’s news service reported on it on 29 October. What is new is the federal government’s answer: the states had adopted their criticism in the Bundesrat on 16 October.

The government bill (printed paper 21/8239) is meant to replace the KiTa Quality Act (our translation of KiTa-Qualitäts- und -Teilhabeverbesserungsgesetz), through which the federal government has supported the states since 2019. At its core is a compulsory assessment of every child’s language and development in the fifth year of life at the latest, in other words at the age of four. Where a need is found, suitable support is to follow. Day-care centres are to receive two hours of staff time per child for the assessment and at least 30 minutes per child per week to plan and oversee the support. At least 10% of centres in each state are to get extra staff if they look after many children in challenging circumstances. The bill also sets minimum times for specialist advice to the centres.

The rules are to apply in stages: the first parts of the law would enter into force on 1 January 2027, the language and development assessment and the extra staff for centres in difficult circumstances on 1 January 2029, and the rules on specialist advice on 1 January 2032.

Less federal money for higher standards

At present the federal government gives the states €1.993 billion a year for childcare quality through a larger share of VAT revenue. That contribution expires in 2026. For the new law it plans €1.493 billion in each of 2027 and 2028, €1.243 billion in 2029 and €993 million a year from 2030 to 2034, about €9.19 billion in total according to the government. The bill itself puts the extra annual cost to states and municipalities at about €1.41 billion, including about €754 million for planning and overseeing the support alone.

The Bundesrat calls the falling federal funding, limited to eight years, unacceptable. It wants reliable, permanent and index-linked federal funding, including for the existing measures worth €2 billion. The fixed VAT amount has not been raised since 2021, it says, despite marked increases in wages and prices. The states point to the principle of Veranlassungskonnexität, which in our translation means that whoever imposes a task should also pay for it. They say the federal government set the principle down in the coalition agreement, and that the state premiers and the Chancellor reaffirmed its core idea on 25 June 2026. They also expect the actual costs to exceed the federal estimate. Without adequate, permanent and index-linked federal funding, the Bundesrat says, it cannot support the bill.

The government’s answer

The government counters that early childhood education is a core task of the states and municipalities and, under Article 104a(1) of the Basic Law, is theirs to finance. Eight years of federal support already offers a much longer perspective than before, it says. It points to the difficult state of the federal budget and to falling birth rates, which are likely to push down the cost of the new standards too. The cost estimate is probably too high, it argues, because staff already working in language support, social work in day-care centres and specialist advice could not be deducted, or not fully.

On some technical points the government is open to change. It will examine the states’ proposal to hold the assessment in the second-to-last year before compulsory schooling instead of the fifth year of life. It agrees to one further amendment. It rejects most of the others, such as replacing the fixed time allowances for the assessment and support with a general wording, or replacing the minutes set for specialist advice with ‘an appropriate amount’.

What happens next

According to its enacting formula, the law is to be passed with the consent of the Bundesrat. Such consent laws, the Bundesrat explains, can only be passed if the Bundestag and the Bundesrat agree; a final no from the chamber of the states means they fail. Our explainer How the Bundesrat works sets out the procedure up to the mediation committee. Most of the work would fall to the municipalities: as the local youth welfare authorities, the Bundesrat says, they bear the main burden of putting the rules into practice.