Without More Federal Funds, Half of All Child Care Centers Could Close Forever

As the days of a national shutdown stretched on, Aliya Johnson-Roberts knew she would have to start cutting employees’ hours and laying off some of her staff. When her child care center in northeast Philadelphia closed its doors in mid-March due to the coronavirus, she immediately started to lose out on a large portion of her revenue: $7,000 a month in tuition from private-paying families, co-pays from families who receive state support, and money she would normally receive through a federal food program. Johnson-Roberts, who has 35 employees to support and $20,000 a month in rent for the building that houses Bustleton Learning Center, estimated she would likely run out of money by early June.

But in late April, Johnson-Roberts received hopeful news: her center was the recipient of a $20,000 grant from a new emergency fund for Philadelphia child care centers, funded by the William Penn Foundation, Vanguard and the Reinvestment Fund, a community development financial institution. “It was a huge relief,” Johnson-Roberts said. “It was a way to allow us to breathe for a moment.” With the help of the grant and a discount from her landlord, Johnson-Roberts used the funds to pay rent, and cover her payroll and other expenses.

Efforts like this one in Philadelphia have emerged across the country as local foundations, organizations and city officials have stepped up to try to give child care centers a temporary boost as the federal government has failed to take sufficient action. In San Mateo, California, the city council recently allotted $120,000 in rent relief to home-based child care providers, many of whom have been unable to obtain funding from the Coronavirus Aid, Relief and Economic Security (CARES) Act, an aid package passed by Congress in March. In Nebraska, the Sidney Community Donor-Advised Fund recently provided five grants totaling more than $184,000 to local child care centers. And some organizations are stepping in to provide critical materials: In Alameda County, California, the nonprofit First Five Alameda has provided masks, thermometers, books and educational materials to centers that are open and providing services for the children of essential workers.

In its first round of funding, the Philadelphia Emergency Fund for Stabilization of Early Education (PEFSEE) awarded a total of $1.2 million in grants to 89 childcare providers, including Johnson-Roberts, with plans to continue awarding grants until they have depleted $7 million in emergency funds. The need has been overwhelming: Those 89 recipients were chosen from more than 400 applicants. Bevin Parker-Cerkez, who oversees the Reinvestment Fund’s early childhood loans and grants, said the goal of the emergency fund is to make sure child care centers are not forced to close permanently, especially in low-income areas where families already lack access to high-quality childcare. Among the first round of grantees, 85 percent of the centers are led by women and 71 percent are owned or led by people of color. Ideally, Parker-Cerkez said, the financial assistance will help centers stay afloat so that they will be ready to open when it is time. “We want to be opening [centers] that are serving our most vulnerable populations and we want to make sure staff is there and ready to be there.”

Nationwide, the coronavirus pandemic has devastated the child care industry: an estimated 50 percent of licensed child care centers in the nation are at risk of closing permanently, a loss of more than 4.4 million child care slots, according to a report by the Center for American Progress. Even before the coronavirus, child care centers were running on thin margins: tuition and government funded tuition reimbursement for low-income children fall short of covering the actual costs to care for children. Experts and child care centers say there’s a desperate need for federal funds to keep struggling centers afloat. “It’s going to be decimating to our overall recovery if [child care] is not addressed,” said Mark Shriver, president of the Save the Children Action Network, or SCAN.

A recent poll of 1200 registered voters by SCAN and Child Care Aware of America found 87 percent of those polled support providing enough federal assistance to child care centers during the coronavirus crisis to make sure centers can make payroll and pay their expenses. Shriver said this rare bipartisan support is a sign that the public understands how dire the situation is for the nation’s child care system. “I think it shows that people realize that if they’re going to go back to work their kids have got to be in a safe place.”

There have been some federal efforts to help child care centers, but those efforts fall far short of what is needed. The CARES Act includes initiatives like the Paycheck Protection Program, which provides loans that are converted to grants if small businesses meet all requirements. But some child care centers have found the requirements for the application difficult to meet and banks have been overwhelmed by applications. The aid package also provided $750 million for Head Start programs and $3.5 billion for the Child Care Development Block Grant (CCDBG), the program that provides states with funding to pay or supplement the child care tuition for low-income families. This month, Democrats in the House of Representatives introduced another aid package that if passed, would provide an additional $7 billion for the CCDBG. That came after more than 30 senators signed a letter in April calling for Congress to pass a legislative package that would include at least $50 billion in emergency funding for child care centers. But experts say even that would be a drop in the bucket. “Our estimates show that $50 billion is actually far less than what the system needs if the crisis lasts longer than a few months,” said Rebecca Ullrich, senior policy analyst for child care & early education at The Center for Law and Policy (CLASP) in a statement. At least $9.6 billion in public funding is needed each month to avoid permanent closure of child care centers and preserve the child care system during the coronavirus pandemic, according to an analysis by CLASP.

In Philadelphia, Johnson-Roberts never heard back from her bank about her application for the Paycheck Protection Program. Nervous about how much longer the center could survive, she reapplied for the program through the Reinvestment Fund and received $170,000 one week later. Johnson-Roberts said she is now much more confident that she will be able and ready to open her doors for the center’s 180 students when deemed safe, something that is critical for many families. “We do know the economy needs people to get back to work,” Johnson-Roberts said. “But they can’t go back to work if they don’t have childcare.“

This story about child care centers was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Sign up for Hechinger’s newsletter.