Feb 11, 2022
America’s Childcare Providers Are Still Struggling to Survive
(Bloomberg) -- The U.S. childcare industry has been crushed by the Covid-19 pandemic.
Since the virus arrived in earnest in early 2020, about one-third of centers have closed and some 111,000 workers have departed the sector. To stem the bleeding, Congress allocated tens of billions of dollars, including $39 billion last March under the auspices of the American Rescue Plan Act signed into law by President Joe Biden. That package included $24 billion in grants to states meant to quickly help providers who were struggling to stay open.
But it’s taken the better part of a year for many states to even start the application process, let alone get cash to those in need. And now that money has become more important than ever: With the promise of a structural fix for the ailing industry on hold following the demise of Biden’s “Build Back Better” plan, those ARPA funds are all that stands between many providers and shutting down for good.
Some states like Connecticut did what they were supposed to do, namely get funds to providers as early as last June. But others—like Florida, Missouri and Texas—had yet to make applications available even by the start of this month. Colorado, Iowa and New Jersey only recently opened their portals, while some states that already accepted applications still haven’t distributed funds. As of mid-January, nine of those states had yet to pay childcare providers, according to Stephanie Schmit, director of child care and early education at the Center for Law and Social Policy.
After the pandemic struck and lockdowns ensued, Congress included $3.5 billion for childcare in its initial rescue package in April 2020 and another $10 billion in a second bill that December. But at $39 billion, “the scale of the ARPA funding is very different,” said Anne Hedgepeth, senior director of federal and state government affairs at Child Care Aware of America, a network of childcare care resource and referral agencies.One of the biggest challenges states faced, early childhood education advocates said, was the lack of an existing infrastructure to get grants to childcare providers. Before ARPA, public childcare funding (and thus staffing for agencies that distribute it) was usually limited, and reached only “a small number of providers,” Schmit said.
Most states just didn’t have the capabilities in place to quickly distribute so much money to so many businesses, she said.Read More: How Child Care Became the Most Broken Business in AmericaU.S. childcare providers have been dragged from pillar to post during the pandemic. Many were forced to shut down during initial lockdowns. When they reopened, they were hamstrung by a lack of employees willing to return and parents leery of sending their kids amid the drumbeat of infection waves. As the industry contracted, the lack of childcare forced working parents to stay home, further fueling a broader labor shortage.
Providers faced additional challenges. Keeping employees and children uninfected is an expensive endeavor. Social distancing and other precautions necessarily limit the number of kids who can be safely accommodated—which in turn limits potential revenue. While most of the U.S. economy has suffered greatly as a result of the crisis, the childcare industry has been in the eye of the storm.
And the storm isn’t over yet. “There’s a desperate and ongoing need for a lifeline,” Hedgepeth said.
Tim Kaminski owns the Gingerbread Kids Academy in Richmond, Texas, which before the pandemic served 230 children as well as another 350 kids in after-school programs. He said he still isn’t able to apply for ARPA money.
Last year, he received $221,000 as part of the second rescue package, money that enabled him to hang on to employees by raising pay $2 an hour. But come March that money will run out, Kaminski said, and he’ll be forced to cut back on workers and programs. Meanwhile, his enrollment is around 75% of pre-pandemic levels at his two main daycare locations, and around 50% at his five after-school venues, he said.
His ARPA grant, which Kaminski said should exceed $600,000, would cover payroll through the end of the year, he said. But even with Texas officials saying the application process will begin this month, Kaminski expressed doubt the money will arrive in time. “Not knowing how quickly we’ll get this other round of money is stressful, because I don’t have additional income coming in,” he said. “All the things are up in the air right now.”
Francisco Gamez, a spokesperson at the Texas Workforce Commission, said the agency is currently modifying its systems in preparation for handling ARPA grants. Gamez said 13,386 permitted childcare providers (out of 15,606 operations total statewide) will be “invited to apply this month.”
“It’s not the will that’s the problem,” said Kim Kofron, director of early childhood education at Children At Risk, a nonprofit focused on childhood poverty. It’s that Texas has billions of dollars to get to thousands of providers, all of it routed through a complex governmental web. The state Health and Human Services Commission (HHSC) oversees childcare licensing; the TWC distributes subsidies. “One of the biggest obstacles was getting those two systems at the agencies to talk,” Kofron said.
But the damage has already been done. The number of childcare businesses overseen by HHSC fell by approximately 9% since February 2020, according to the agency. Providers that haven’t gone under, Kofron said, are “hanging on by a thread.”
“We needed help then. But we need it even more now.”But even in states where ARPA money has begun to flow, childcare is still in trouble. Tiffany Skaggs runs a small program in Waverly, Iowa, that serves just eight children. For micro-providers like her, the cost of protective equipment and food has become prohibitive. Skaggs said she and her husband have taken second jobs to pay bills, including working weekends at a library and doing data entry online.
Skaggs said the state gave her $500 a month in early 2021 and as much as $1,500 a month later in the year—only “a band-aid,” she said. Now, the way Iowa is distributing ARPA funds could mean those earlier grants bar her from additional federal funds.
“We needed help then. But we need it even more now.”
“I’ve had to make many tough decisions while waiting for funding,” she said, including capping enrollment. “But I refuse to give up because more and more family childcare programs close every week in Iowa.”
Childcare provider Kay Strahorn, who runs the Bidwell Riverside Center in Des Moines, Iowa, said she didn’t even know ARPA grants existed until recently. She’s down two teachers, which has restricted her ability to enroll more children. She said she applied for ARPA money two weeks ago and expects to get $80,000 this month, but “it sure would have been nice to have these funds a month ago,” she said. “Iowa kind of dropped the ball on this,” she said. State officials didn’t respond to several requests for comment.In their defense, Hedgepeth said most states had to build systems for ARPA from scratch while spending months on outreach. Family and home-based providers were especially hard to contact, she said. “It’s not just as simple as putting up a form and hoping people will submit their information.”
Still, state governments were often victims of their own red tape. The Missouri Department of Elementary and Secondary Education has been waiting to get appropriation authority from the state legislature, according to an agency spokesperson. Hedgepeth said Alaska’s decision to partner with the U.S. Department of Health and Human Services triggered a lengthy contracting process. And Colorado’s program was delayed because it sent a request for proposal outside its normal network of contractors, according to Schmit.
Conversely, in states that were able to get ARPA money out rapidly, the funds have made a huge difference.
In Connecticut, one of the primary goals was getting ARPA grants out “quickly and efficiently,” said Elena Trueworthy, director of the state’s Head Start Collaboration Office. Administrators prioritized making the application as simple as possible and worked with existing partners like the United Way of Connecticut, which already had relationships with all state childcare providers, to get the process going, she said.
The state said it has already disbursed $108 million of ARPA funds to 2,564 programs.The Bristol Child Development Center is one of them. Maegan Adams, the executive director, applied for money last May. By June, a first installment of $307,737 arrived, she said. Adams used the money to give staff bonuses (to encourage them to stay) and to fix a leaky roof among, other things. One classroom of toddlers had to be moved to a teachers’ lounge at the start of the pandemic to allow for social distancing, but the ARPA funds enabled her to renovate the old classroom so those children could safely return.
The money allowed the Bristol center to “continue to have a safe environment for kids,” Adams said. “It helped us stay afloat.” The ARPA funding has helped Connecticut hold “on to childcare supply,” said Beth Bye, commissioner of the state Office of Early Childhood. Connecticut saw 130 fewer childcare closures last year—during the height of the pandemic—than in 2019, before it had even began.
“I don’t know how they’re holding on, frankly, in other states,” Bye said.
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