WASHINGTON — Congress is considering its largest one-time investment in child care as the industry faces an unprecedented crisis.
Across the country, 4.5 million child care slots may be lost just as the nation reopens and parents try to return to work, the Center for American Progress found. In Connecticut, the crisis would deepen an existing problem.
Before the pandemic, Connecticut was staring at a shortage of 50,000 infant and toddler child care slots, the state Office of Early Childhood said. The coronavirus is predicted to eliminate an additional 45,000 spots, according to the Center for American Progress.
After appropriating $3.5 billion for child care in March, Congress may approve another massive investment to stabilize the industry, but exactly how much, they haven’t decided yet. Child care providers have been slammed by closures, revenue drop-offs, new regulations and unforeseen costs — stiff blows for an industry marked by slim margins and low wages in good times.
In Connecticut, about 75 percent of child care providers closed in March due to coronavirus, including most larger child care centers, although they were marked essential businesses, said Merrill Gay, executive director of the Connecticut Early Childhood Alliance. Many have yet to reopen.
House Democrats included $7 billion to prop up child care providers in a coronavirus relief bill it passed in May. Although it was their bill, many Democrats felt that number wasn’t enough to stem the economic hardship. Rep. Jahana Hayes, D-5, called it “disappointing.”
Hayes, Rep. Rosa DeLauro, D-3, and Sen. Patty Murray, D-Wash., and Kirsten Gillibrand, D-N.Y., have proposed a one-time $50 billion infusion distributed in grants to child care providers across the country.
“The COVID-19 pandemic has our nation on the precipice of an economic catastrophe the likes of which we have never seen, and child care providers are facing financial ruin,” DeLauro said.
A spokesperson for Republicans on the Senate’s education committee said its team is working on a response.
“Committee staff are looking at ways to provide more support to child care providers, who have been severely harmed by the COVID-19 outbreak,” a committee spokesperson said. “Child care is necessary for getting parents back to work because parents can’t go to work if they don’t have someone to safely take care of their children during the day. So while the ultimate solution to getting our economy back on track is widespread testing, treatments and vaccines, child care is a critical part of our recovery.”
Although for many parents the cost of child care is similar to paying for college, child care providers operate on razor-thin margins and often rely on subsidies to get by.
“For most child care programs, about 80 percent of your revenue gets used on paying staff,” Gay said. “The rest is your fixed costs — your mortgage, your utilities, your insurance, your supplies. There just isn’t much in the way of profit ... for a small program, it’s a very dicey situation.”
A stimulus package passed by Congress in March included $3.5 billion for child care subsidies. Connecticut used most of its $22.5 million grant to cover the cost of child care for essential workers, keeping a limited number of kids in child care during the height of the pandemic and some payments flowing to providers. Another $8 million of those funds will be distributed primarily to private child care providers.
The Dalio Foundationalso invested $3 million to ensure child care for doctors and nurses.
The state also supported child care during the pandemic with $78 million by continuing subsidies that cover the cost of care for low-income children at pre-pandemic levels even though many of those children were no longer going to child care centers. Those payments started in March and will continue through the end of June.
“The fear in the industry is after June 30, what happens?” said Georgia Goldburn, director of Hope for New Haven, a nonprofit that runs Hope Child Development Center in New Haven.
Child care centers were marked essential businesses by the state, but the number of children they could take was initially capped at 30. The number was upped to 50 children this week, unless a providers get a waiver to care for more.
For Hope Child Development Center, which remained open, the caps meant taking less than half of the 77 children it normally serves.
“In an industry where you have to have every single slot filled, to slash our capacity by that much is an incredible blow to our operating budget,” Goldburn said. “If nothing fundamentally changed with our numbers, we estimate it would be a $240,000 deficit that would result for our program [in 2020].”
Some child care providers, Hope Child Development Center, took out forgivable Paycheck Protection Program loans to help them meet the costs of payroll. But for other providers, like CAST Preschool and Childcare Center in Woodbury, their employees preferred to take unemployment — now amplified by an extra $600 a week during the pandemic — than remain on the payroll because their wages are so low.
CAST Preschool and Childcare Center has been closed since March because too few children were attending to justify operating, said head of school Julie Clark. Under normal times, about 100 children a day attended. Her staff is on unemployment, and they hope to reopen in August.
Clark said she has just enough in savings to cover the cost of closure until then — any longer, she’s unsure. But reopening comes with new costs.
The state mandates that child care providers must cap groups of children at 10, and they can’t mingle groups or staff throughout the day. That raises staffing costs and poses logistical challenges for larger child care centers. It is easier for smaller family-based child care operations, which are often in homes and take just five or six children, Gay said.
In addition, nearly all child care centers face new costs like purchasing masks and gloves and increasing cleaning.
“It will cost us so much money that it will be hard to stay in business,” said Clark, adding state and federal relief will be essential.