Children play at a Baltimore day care center in 2021. Money put into place at the start of the COVID-19 pandemic to shore up the child care industry and keep costs down is ending.
Photo by Matt Roth, courtesy The Washington Post/Getty Images
Kentucky’s pool of child care centers was shrinking to alarming levels long before the COVID-19 pandemic upended the sector. By the time the virus arrived in 2020, half the state was already considered a child care desert.
“Child care workers are among the lowest-paid workers in the state, and child care centers can’t charge parents what it actually costs to recruit and retain staff,” said Dustin Pugel, MPA, policy director at the Kentucky Center for Economic Policy. “It’s a classic market failure.”
The number of child care centers in Kentucky had dropped more than 40% in the years before the pandemic, Pugel reported. In some parts of the state, it cost more to secure child care than to attend a public college.
Then COVID-19 hit. With plunging enrollment and closures, the nation’s under-resourced child care sector was immediately overwhelmed. Congress and both the Trump and Biden administrations responded with emergency response funds to help states keep child care centers afloat.
Kentucky received about $1 billion for child care over four years, the majority via the 2021 American Rescue Plan Act. Despite its tragic origins, the funding infusion finally stabilized the state’s child care sector after eight years of decline, Pugel said, with the number of centers now holding steady at about 2,000.
“It got us off a cliff,” he said. “Child care here was in a bad way for a long time.”
But it is unclear if the impact will last. Families and child care providers in Kentucky — and around the country — are facing a new funding cliff as federal pandemic funds dry up. Some state legislatures have acted to help fill the gap, but the loss is expected to put considerable strain on a still-fragile sector.
“We’re finally getting back to employment levels in child care that were in place prior to the pandemic, but it took longer than other sectors,” said Karen Schulman, MPP, director of state child care policy at the National Women’s Law Center. “And it’s still not where it needs to be.”
The American Rescue Plan provided $24 billion in child care stabilization grants and $15 billion in additional funds for the Child Care and Development Block Grant, the main source of federal child care assistance for low-income families. The stabilization grants — which went directly to child care centers — reached more than 220,000 providers and nearly 10 million children, according to the U.S. Administration for Children and Families.
However, the grants expired last fall, and the new block grant money will dry up in September.
Julie Kashen, MPP, director of women’s economic justice and a senior fellow at the Century Foundation, said the emergency funding “absolutely saved so many (child care) programs.” In particular, she said the stabilization grants allowed centers to raise employee wages and recruit and retain staff.
“It showed us what’s possible when the government puts funding into the child care sector,” Kashen told The Nation’s Health.
Now-expiring stabilization grants help protect care for nearly 10 million children.
Photo by FatCamera, courtesy iStockphoto
Millions of families depend on child care, which can play a central part in a family’s health and well-being. For children, research finds early care and education may lead to short- and long-term health improvements, such as better access to health screenings and less chronic disease as adults. For families, child care can mean greater financial security because more parents can work.
Single parents, people of color and low-income families are more likely to be unable to afford child care, widening socioeconomic disparities.
Women typically shoulder the burden when child care is out of reach. In surveys, far more women than men cite caregiving as the main reason they are not working. Research also shows that lack of child care is a common reason why women miss or delay their own health care.
Public health advocates are worried the end of pandemic child care funds will stall or reverse the damage control — and any gains — achieved in the last few years.
Kashen said the funding loss is already leading to higher child care prices, staffing shortages and program closures. She and her colleagues estimated that more than 3 million children could lose their child care spots.
Some policymakers are stepping up. At least 11 states and Washington, D.C., have acted in the last two years to shore up child care, Kashen said. In New Mexico, voters approved a ballot initiative to establish a permanent child care fund. Vermont lawmakers passed a bill that expanded eligibility for child care assistance; in Maine, lawmakers doubled funding for child care worker stipends; and in Minnesota, lawmakers created one of the first state-supported programs — funded at $316 million for the first two years — to directly pay child care providers and push up wages.
An analysis from the National Women’s Law Center shows that state funding is having an impact. The research, released in May, found that in D.C. and the 11 states that invested more in child care, the share of women with kids younger than 12 who wanted to do paid work but were not able to because of barriers to child care dropped from more than 45% to about 32%.
Mary Solheim, director at Playschool Child Care in Maplewood, Minnesota, and a longtime child care activist, said the new state funding is helping her meet payroll. But the center still operates with extremely thin financial margins.
“We face (the risk of closure) every two weeks here,” Solheim told The Nation’s Health. “There’s such a grand pay gap between education and child care and we’re all working with the same kids.”
In addition to state action, advocates are urging Congress to significantly increase funds for the federal Child Care and Development Block Grant, which serves just 1 in 6 eligible children. Schulman, at the National Women’s Law Center, said the larger vision remains universal access to affordable, quality child care.
“Relying on states means access to affordable child care depends on where you live,” said Schulman. “That’s why it’s really important to have the federal government make a sustained, substantial commitment that covers the whole country.”
In Kentucky, Pugel said state lawmakers knew they had to do something to blunt the loss of pandemic child care funds. But he said the additional state funding that legislators approved — about $39 million in 2025 and almost $50 million in 2026 — is a “drop in the bucket” compared to the $330 million in yearly federal funds that Kentucky is losing.
Pugel is already hearing reports of child care tuition hikes and he suspects closures are on the horizon.
Photo by Lostinbids, courtesy iStockphoto
“I’ve gotten calls from dozens of providers asking me, ‘What am I supposed to do?’” Pugel said. “The best I could do was connect them to a legislator. But I don’t have any money for them.”
For more information, visit www.nwlc.org and www.tcf.org.
- Copyright The Nation’s Health, American Public Health Association
