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Expiration of Pandemic-Era Funding Threatens to Devastate US Child Care Industry

If child care legislation isn’t passed soon, the funding cliff could decimate care sites and erase decades of progress.

One of the unused rooms at Nurtury Early Education in Roxbury, Massachusetts, on August 9, 2021.

Part of the Series

During the COVID-19 pandemic, few industries were thrown into a state as precarious as that of U.S. child care. One of the major retaining walls of state support that kept the stricken industry in place amid the crisis was the 2021 American Rescue Plan Act (ARPA), which earmarked close to $40 billion for disbursal in the form of block grant bulwarks for existing parent voucher programs and discretionary “stabilization funds,” together constituting the single largest child care grant ever supplied to states.

That support funding is now set to expire as soon as September 30. Some prominent Democrats have launched late-game legislative efforts to extend the funding, but at present, the chances of its preservation — and, were it to lapse, the possible effects on a societally critical industry — remain unclear.

Though there are mitigating factors, think tank projections have anticipated significant damage to the beleaguered field, which only recently has been attaining a semblance of recovery from the pandemic’s onset. The worst predictions warn that over 3 million children could lose care — a harsh blow to a low-wage, high-turnover and singularly important industry that’s already been on the back foot from years of underfunding and depredation.

Perilous States

The shock of the pandemic on U.S. policy was remarkable for temporarily reinstating a level of social assistance predating the erasures of neoliberal austerity. State support was rolled out to an extent unseen in recent memory; even the few thousand dollars in support checks, not exactly inordinate sums, reduced poverty to historic lows. But by now those dollars are gone, all too quickly eaten up by rising rents and food prices. By now, we have indeed achieved a “return to normal” — a normal that is for many intolerable.

So too with child care, which has long been in a dire state. Child care is wildly expensive, rivaling rent. And that’s when it’s available at all: Low-income, working-class and rural populations, particularly people of color, often lack access to any child care services. Things can be just as hard for the caretakers themselves — disproportionately women of color — who struggle with some of the lowest pay in the nation, crushing hours and soaring classroom ratios. Consequently, stress and turnover are endemic, and the field is shedding even the most dedicated and value-driven employees.

Nat Glitsch is an experienced child care worker in Oregon, and an organizer in a child care employees’ union. Asked about conditions on the ground, Glitsch commented:

“At this stage in the pandemic, we’re still dealing with really, really intense staffing shortages. People have left the field and not come back… the conditions are just so stressful. The workers I talk to who quit and leave have this huge sense of relief when they get out of child care.”

U.S. child care remains in this dispiriting condition because the full extent of government support constitutes little more than a threadbare quilt: various federal and state block grants, Head Start, and other programs that keep the industry, at best, treading water. These have always been underfunded and woefully insufficient to meet the scale of need. Across this tenuous network, major barriers to access, of the type common to means-tested (income-targeted) social services, are commonplace, and their effects break down along class and racial lines. For these reasons, the U.S. compares dismally to care networks among other wealthy countries: By UNICEF metrics, the United States child care system ranks 36 out of 38.

Funding Breakdown

Together with pandemic aid measures like the Child Care and Development Fund (CCDF) block grants in the CARES Act, the ARPA funding, now mere days from expiration, represented a major lifeline for child care. As the White House touted last year, the funds assisted as many as 200,000 individual providers, employing more than a million workers to serve 9.5 million children. That represents a major intervention — one that was sorely needed.

Mary King, a professor of economics emerita at Portland State University who is involved in child care advocacy and policy work, told Truthout that a funding lapse could have harsh consequences: “It’ll be devastating for the federal government to abandon pandemic-related child care supports, particularly on top of the loss of the federal child tax credit.”

Supporting child care is beneficial policy in every respect — it has outsized positive social effects, and the White House’s failure to ensure its continuance is negligent, even from the standpoint of purely self-interested returns, King noted: “We in the U.S. invest very little in our children, despite the well-known, enormous economic return on such investments for individuals, families and the country as a whole.” Which is to say that, were we to ignore the moral urgency and the social necessity of making nurturing child care accessible (which, of course, we cannot) undermining child care would still be senseless and self-defeating.­

And, though the child care cliff has been looming for months, the Biden administration did not take the opportunity to request continued funding. It could have done so in its August supplemental funding request — but instead it asked for, along with aid and disaster relief, $24.1 billion in weapons for Ukraine and $4 billion for border security. (The expiring ARPA funds comprised $24 billion in stabilization grants and $15 billion in CCDF discretionary funds.)

For an explanation of these funding vehicles, Truthout contacted professor Julia Henly, the deputy dean for research and faculty development at the University of Chicago’s Crown Family School of Social Work, Policy and Practice. As Henly explained, those two types of grants — stabilization grants and CCDF block grants — were intended to work in tandem to support the industry.

Stabilization grants are discretionary and disbursed by states, and, Henly said, can be thought of “as being ‘supply-side:’ direct to providers to shore up their programs, and to improve the quality and stability of providers.… Here in Illinois, we use that stabilization money in a lot of ways. [The state has been using] ARPA funds for grants to providers if they agree to spend a certain percentage on enhancing teacher compensation, because child care teacher salaries are super low. Some of that money also goes to help providers with operational expenses.”

Meanwhile, the $15 billion in CCDF money, she clarified, is effectively “a demand-side program meant to help parents afford child care. So, it’s from the other side: Parents have to go find a provider that takes subsidies. And if they’re eligible based on work or school requirements, they can get low-cost child care.… Most of the $15 billion was undoubtedly used to give additional ballast to the ongoing voucher programs that states have.” All of this funding is potentially at risk of expiration.

Democrats have launched late-game legislative efforts to extend the funding, but at present, the chances of its preservation … remain unclear.

Much of the media coverage of the funding cliff has drawn on a report from a think tank called The Century Foundation, which has issued some rather drastic projections. Were all ARPA funding lost, the report found, 70,000 child care programs would “likely” close — resulting in the loss of as many as 232,000 more jobs, and an estimated 3.2 million children losing care slots. (For reference, the Center for the Study of Child Care Employment documented that the first month of the pandemic saw a loss of 676,000 jobs; with over 40,000 appearing permanently erased after the three-year recovery.) In other words, the report’s figures would represent a devastating blow, with consequences that would ramify unequally, tracing demographics, patterns of programs and resources and existing inequalities. The report predicts that some states may lose under 10,000 slots, while Texas and New York could count losses in the hundreds of thousands.

These projections are, of course, just that, and the report’s numbers represent a worst-case scenario. Certain funds may persist past the September 30 cliff, as they have already been “obligated,” or earmarked. But this is not the case for all funds, and the extent and effects of potential cuts are not yet clear. Regardless, major cuts of any kind would be a bitter pill, especially as the government’s new willingness to support child care in the last three years had led to some tentative optimism among advocates.

“Many researchers and advocates thought maybe Americans were seeing for the first time that the child care industry actually needs government subsidy, even in a good economic climate,” said Henly. And for a while, “a lot of people thought child care would be funded [as part of Build Back Better] in some form. It didn’t happen.” (King, too, decried the “complete abandonment of the ambitious care goals of the Build Back Better Bill, evidently intended only as a congressional bargaining chip.”) After that chance at reform was dashed, Henly said, “A lot of people were hoping [the ARPA funds] might continue [because] they ended up really helping providers stay afloat.” With such help, since 2020, the field has made both day-to-day economic progress and allowed policy makers to envision and instantiate more far-reaching mechanisms of change.

“Some states have used the post-pandemic period and the stabilization funds to really rethink, and to think creatively about, new infusions of dollars into the child care industry,” Henly added. “But it will be far easier to carry out these plans if we have federal funding support.”

At stake, then, is also the possibility of higher order setbacks to reform. First of all, yanking funding in this manner is not so easily reversed. There is a ratcheting effect; when centers close, resources are lost for good — employees, networks, institutional knowledge, startup costs. Toggling a funding source back and forth means diminishing returns, even if businesses do reopen and jobs and access are restored.

Henly told Truthout that the sudden end to the child care funding “also may disrupt some interesting new initiatives that really have the potential to help a lot of families, and also help give a little more respect and security to the people that work in that industry.” In the same vein, The Century Foundation singled out examples of comparable initiatives, including some robust policy responses in New York, Vermont and New Mexico that had been directly enabled by ARPA funds.

“A lot of states were really hoping to move forward to improve the quality of jobs in the industry and the quality of care for families and kids,” Henly added. The past three years were “an exciting time,” she recalled, but cautioned that advocates’ hopes will all be dashed “if we lose a bunch of the resources that were going to help make that happen.”

The worst predictions warn that over 3 million children could lose care

Moreover, if child care’s supportive social role is broadly compromised, it could interrupt long-term social progress. As King commented, “Publicly provided child care is a two-generation strategy, critical to fighting poverty and inequalities by race, gender and class for both children and parents.” The unfortunate reality is that child care’s potential to create outsized, exponential beneficial effects carries with it the possibility of the inverse: Decay in the child care system will inflict additional social deprivations on a public already browbeaten by decades of neoliberal austerity.

A Late-Game Turnaround

Child care is an issue that often enjoys bipartisan support, since coming out against children is a move even the most craven politicians are reluctant to make — publicly, at least. (Among Democrats, reliable goon Sen. Joe Manchin of West Virginia has been known to side with his corporate chain-care lobbyists in voting against subsidies. That very vote is, in fact, a key reason why the funding is now expiring.)

There has been a stirring of congressional action in response to the funding cuts. Senators Patty Murray (D-Washington) and Bernie Sanders (I-Vermont) have joined in introducing legislation called the Child Care Stabilization Act (CCSA) in the hopes of preserving the flow of funds. (Sanders and Murray had, in fact, been warning of the potential cliff for months.) The CCSA “would prevent this crisis by providing $16 billion in mandatory funding each year for the next five years to continue the successful Child Care Stabilization Grant Program,” per an official statement.

And Senate Democrats in general have echoed their colleagues in widespread calls for action and backing for the bill. CCSA cosponsors include Democratic Senators Chuck Schumer (New York), Richard Blumenthal (Connecticut), Amy Klobuchar (Minnesota) and Elizabeth Warren (Massachusetts); Kirsten Gillibrand (New York) was an original cosponsor and has issued statements in support.

In the House of Representatives, Suzanne Bonamici (D-Oregon), who is “helping lead the push [for child care] in the House,” was quoted by CNBC saying that “she hopes to attach to the funding to an [sic] $44 billion emergency supplemental request.” However, it appears that the Biden administration declined to oblige.

The status of the CCSA is unclear at present, with just a handful of days before the cliff drops off. Less promising are other, hazier efforts that are evidently underway as well: Representatives Nancy Mace (R-South Carolina) and Ro Khanna (D-California) have joined together in the “Congressional Bipartisan Affordable Childcare Caucus” to mend this homegrown crisis. Khanna wrote on social media that he is “working on a plan to provide child care at $10 per day and to guarantee a federal investment in a livable wage for care workers.”

As for the Republican contingent of the caucus, Mace spoke to CBS News to float the notion that regulations are (of course) behind the industry’s struggles. Evidently, the caucus has found some points of agreement on higher pay for teachers and “some government policy support.” Whether Republicans like Mace are sincere or are using the issue to smuggle in more spending cuts and giveaways to for-profit corporate child care mega-chains is unclear, but past behavior is typically the best predictor of future results.

With the deadline immediately impending, there is dwindling hope that this coalition of powerful Democrats will be able to hasten the bill through in time — and that it isn’t eviscerated in committee and gutted of meaningful aid; too often Democrats snatch defeat from the jaws of victory, pass a hollowed-out gesture and congratulate themselves for the win. In any case, the bill’s $16 billion stabilization grant guarantee will not replace $40 billion in cuts to stabilization and block grants.

Child care workers on the ground like Nat Glitsch will feel the effects on their workplaces, themselves, and the children they care for. “Already, with or without the extra funding, the margins are always really tight,” Glitsch said. “We’re always hearing that the egregiously low wages are because of [the lack of funds].… It’s so incredibly hard. The vicious cycle of understaffing makes it harder for everyone involved and amplifies that stress. I don’t get the sense that things are improving… I think we’re still in the same child care crisis.”

The denial of the hopes surrounding the potential for reform is cause for some justifiable bitterness. As Henly said: “It was kind of a hopeful period, before this shutdown. These programs have a lot of support. When you see things happen like the stabilization dollars going away, it’s just disappointing if you believe that the government should be investing in children.”

Indeed, it can often seem like the United States rewards workers to an extent inversely proportional to the social necessity of their labor. Child care, by any metric, is one of the most critical functions underpinning the entire edifice of the working world — to say nothing of the contemptible dereliction of denying parents some help, and robbing children of safe and quality care. Yet this state of affairs persists, with child care reduced to a so-called “broken market,” as Treasury Secretary Janet Yellen has admitted. Others might respond that such a “market failure” is more akin to a glaring indication, among many others, that competitive markets are catastrophically unsuited to furnishing essential human needs.

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