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Child Care Funding Deadline Approaching: It’s Your Move, States

With no federal child care deal in sight, some states are acting to ensure child care programs don’t have to close once pandemic relief funding runs out.

By Jennifer Palmer  |  September 21, 2023

It has been one blow after another for the child care workforce. Financial strain from rising operational costs and reduced enrollment during the pandemic forced many child care programs to cut staff or close their doors. Last summer, one-third of early childhood workers reported struggling to pay for basic needs such as housing, food or utilities. Surveys show those with the greatest financial hardship also experienced the greatest emotional distress. Researchers warn this degree of stress on caregivers can negatively affect their ability to provide nurturing and responsive care.

But we can’t blame everything on the pandemic, awful as it was. Low pay in the early care and education sector predates the pandemic, and families everywhere have long struggled to find affordable, high-quality care and early learning opportunities for their children.

At an average hourly wage of $14, early childhood professionals earn about the same as fast food workers and slightly less than pet sitters.

At an average hourly wage of $14, early childhood professionals earn about the same as fast food workers and slightly less than pet sitters. More than half of child care workers turn to Medicaid, SNAP or some other form of public assistance to get by. Low wages and lack of health and retirement benefits also contribute to persistently high turnover in the field.

Since 2020, states have funneled federal relief funds directly to early childhood professionals to stabilize the field and support recruitment efforts. The financial relief kept many programs from closing indefinitely, but the sector is far from fully recovered. There are still nearly 50,000 fewer people employed in child care than in early 2020, and the price of care continues to climb, outpacing inflation.

With the Sept. 30 deadline to spend down one pot of pandemic child care funds fast approaching, many advocates are ringing the alarm on the potential impact of a major fiscal cliff. The Century Foundation estimates that 70,000 child care programs could close once the funding runs out. Using data from the federal Office of Child Care and surveys of over 12,000 early childhood workers, the left-leaning think tank estimates that closures could mean a potential loss of child care for 3.2 million children.

With no federal child care deal in sight, some states are taking matters into their own hands. State lawmakers leading the charge see strengthening child care and early learning opportunities as key to keeping parents—particularly mothers—in the workforce and preparing the next generation for school.

None of it can happen without early childhood workers.

Raising Wages, Cutting Costs

To bolster recruitment and retention, several states enacted legislation to increase wages for early childhood educators. Illinois, Maine and North Dakota approved use of state dollars for stipend and grant programs in this year’s legislative session. Illinois will invest $130 million in grants targeting infant care providers and raising the share of grant dollars that must be spent on staff from 50% to 75%. Maine is doubling average monthly salary stipends for all eligible child care workers in licensed settings from $200 to $400. North Dakota approved $7 million in grants and $2 million in stipends expected to reach roughly 2,000 child care professionals in the state. Additionally, Tennessee established a new child care improvement fund to administer state dollars through grants to support provider recruitment and wages, as well as development of new child care facilities.

Reimbursement rates for child care providers serving families with subsidies will soon increase in California, Minnesota and Vermont. California is raising rates for more than 40,000 unionized home-based providers who offer subsidized care and has committed to developing an alternative method for setting rates that more accurately reflect the cost of providing care. The state’s budget includes $80 million for a retirement fund and $100 million toward health care costs for unionized home-based providers, and it nearly eliminates copays for families using subsidized care.

Minnesota will continue retention payments to eligible child care providers on top of raising reimbursement rates to 75% of the state’s market rate, the level recommended by the federal government to ensure low-income families have equal access to the child care program of their choice. In addition to raising reimbursement rates by 35%, Vermont will cut copays for families and expand eligibility to child care subsidies to parents earning up to 575% of the federal poverty level.

Colorado and Georgia will raise compensation for preschool teachers. Colorado will offer bonuses to providers to encourage participation in the state’s new universal preschool program, while Georgia’s budget includes $2,000 raises for lead and assistant teachers in the state’s prekindergarten program, and for educators of preschool-age children with disabilities.

Early Childhood Educator Training

Colorado, Minnesota and Texas passed legislation in 2023 to train early childhood educators and reduce barriers to entry into the field. Colorado will give over $38 million in general funds to community and technical colleges to cover tuition and expenses for students in short-term credential programs, including early childhood education. Minnesota will provide $6 million in grants to establish “Grow Your Own” early childhood educator programs. Texas’ new prekindergarten partnership program and scholarships aim to help current and prospective child care workers qualify to teach prekindergarten.

Legislative efforts to pull back on requirements for early childhood educators were vetoed by governors in Ohio and Kansas. Ohio’s budget bill would have required fewer child care providers to participate in Step Up to Quality, the state’s quality rating and improvement system. If not for a veto, legislation in Kansas would have increased adult-child ratios and eliminated some training requirements for child care providers.

More to Come

States also enacted legislation to improve quality and increase access to child care subsidies for low-income families. Those and other bills can be found in NCSL’s Early Childhood Legislative Database and will be included in our annual early childhood legislative summary later this year. Additional resources can be found in this newly launched Early Childhood Workforce Policy Toolkit.

Jennifer Palmer is a senior policy specialist in NCSL’s Children and Families Program.

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