Participation in high-quality early care and education (ECE) is associated with positive academic and social outcomes for children. However, Black and Latinx children are significantly less likely than White children to attend a high-quality ECE program, a disparity that may be linked to differences in funding. Using a critical policy analysis framework, we explored the extent to which Pennsylvania’s tiered funding policy, which awards greater funding to ECE providers with higher quality evaluation scores, differentially benefits children and communities along racial lines. We found that the average Black and Latinx children’s ECE providers received substantially less tiered funding than the average White child’s provider. Funding also varied by the racial composition of children’s communities, with providers serving children from predominantly Black communities receiving far less funding than providers serving children from predominantly White communities. Racial funding gaps widened over time as state policy changed to award greater tiered funding to providers with the highest quality scores. We discuss findings within the context of longstanding historical racism in federal ECE funding policy, and make recommendations for more racially just policy alternatives. (author abstract)