Funding Cliff Means Closure Or Tuition Hikes For Child Care Centers Across The U.S.

President Biden’s American Rescue Plan Act (ARPA), passed in March 2021, was a historic piece of legislation. But while many associate the plan with stimulus checks and the increased child tax credit in the form of monthly direct payments to parents, ARPA funding went far beyond these better-known programs. One such initiative, the $24 billion Child Care Stabilization Program, has helped child care centers remain open since 2021. But on Sept. 30, the last of that funding will dry up, leaving many child care workers, and the millions of families who rely on them, facing a veritable child care cliff.

“This is not a new problem at all,” said Karin Swenson, executive director of Meadow Park Preschool and Childcare Center and a leader with Kids Count on Us during a recent virtual press conference organized by the Raising Child Care Fund. “The child care cliff has existed for decades. It was beginning long before the pandemic and we’ve been slowly sliding down it and losing child care programs as we go. The pandemic shed light on how precarious our system is. If the federal government allows ARPA funding to expire without a plan in place, we will indeed endure a worsening child care cliff.”

It’s a truth, and conundrum, many parents and caregivers understand firsthand. On the one hand, the cost of child care is a massive financial burden for many families. On the other hand, even with parents dropping an exorbitant amount on this expense, child care facilities run on extremely thin profit margins. From paying staff to maintaining facilities, it’s a hugely expensive undertaking.

Child care center employees — disproportionately Black, brown, and immigrant women — fare no better in this deeply broken system. “They are underpaid, under-resourced, and overwhelmed by the sheer amount of physical and emotional labor they’re performing for our families,” said Tarezz Thompson, an early childhood educator and leader with the CEO Project in Ohio. “The end of pandemic era funding will only make things worse.”

We saw a lot of families going back to the workforce. I saw families who were able to buy their first home because they could both work. As eligibility is cut back and funding decreases, centers are closing down. Child care is not a viable business, but the economy doesn’t work without it.”

But between March 2021 until the end of September 2023, the Child Care Stabilization Program helped.

According to data from the HHS’s Office of Childcare, the program served more than 220,000 child care providers and, in turn, up to 9.6 million children as of Dec. 31, 2022. This funding went toward staff wages and benefits, rent and utilities, supplies, and sanitation. Assistance was received by more than 8 out of every 10 licensed child care centers across the country. In most states, funding reached at least 98% of counties with persistent poverty rates. The average child care center award size has been about $140,000, most of which went to personnel, whereas the average family child care provider received about $23,000, most commonly used for rent, mortgage, and utility payments.

In many cases, this funding was the difference between open and closed doors.

“Without ARPA funding most of our providers would not have been able to stay in business,” said Tyrone Scott of First Up, a Pennsylvania early education advocacy organization. “Even with those dollars, we still saw almost 2,200 child care providers shut down permanently. If the federal government does not step in, child care providers will shut down and that means families will not be able to work.”

The Century Foundation predicts that, following the Sept. 30 expiration of this program, approximately 70,000 child care programs are projected to close, leaving 3.2 million children without care. Even many of those that do manage to stay open will do so at a cost, one that will almost certainly fall on working families by way of rate increases. For families already stretched precariously thin by child care expenses, this could, as Scott predicted, prompt parents — overwhelmingly mothers — to drop out of the workforce, which will have a domino effect on the economy and families’ quality of life overall.

We need the local, state, and federal government to realize that if we cannot open our doors, people cannot go to work, and the economy will fail.”

“In West Virginia, we have low workforce participation and battles with poverty. But ARPA funding helped a lot of families go back to work, which helped some come out of poverty,” explained Melissa Colagrosso, owner of A Place to Grow Childcare. “We saw a lot of families going back to the workforce. I saw families who were able to buy their first home because they could both work. As eligibility is cut back and funding decreases, centers are closing down. Child care is not a viable business, but the economy doesn’t work without it. This is an economic decision that you can’t get people to work if you don’t have children in a safe healthy environment.”

While Democratic lawmakers recently introduced the Child Care Stabilization Act, which, if passed, would provide $16 billion in mandatory funding annually for the next five years to keep facilities open, some state governments and grassroots organizations have worked to bridge the looming gap.

In short, for many families, a federal plan extending ARPA-style spending is their only hope.

“There is no economy without early care and education,” said Rochelle Wilcox, owner of four early childhood learning centers in the New Orleans area. “People cannot go to work and businesses cannot run without early childhood education and care. These small businesses are the backbone of the economy. We need the local, state, and federal government to realize that if we cannot open our doors, people cannot go to work, and the economy will fail ... We are already at the cliff.”