LOUISVILLE, Ky. — In the wake of the coronavirus pandemic, Congress set aside an unprecedented $39 billion to save the child care industry from catastrophic collapse. Now, just over a month before the final deadline to spend that money, states are scrambling to fill the budget chasms that are about to open when those federal funds dry up.
Lawmakers in 33 states and the District of Columbia approved 83 bills this year to fund or support child care facilities and the workers who staff them, according to the National Conference of State Legislatures.
“We have seen a significant increase in state legislative policymaking focused on child care during and since the pandemic,” said Jenna Bannon, associate director of NCSL’s Children and Families Program.
Many of those bills were meant to replace the almost $15 billion in federal money, allocated through the American Rescue Plan, that must be spent by the end of September. That was the last tranche of money Congress allocated to avert decimation among child care facilities — most of which are small, women-owned businesses — that faced extinction during lockdowns.
But the crisis in child care did not begin, or end, with the pandemic. Roughly 100,000 child care centers closed between 2011 and 2021, said Erica Phillips, executive director of the National Association for Family Child Care. After the pandemic, as job prospects improved for low-income workers, child care facilities had trouble holding on to employees who found better pay in other fields.
Rob Grunewald, a former economist at the Federal Reserve Bank of Minneapolis who now serves as a consultant, said there are no alternatives to raising pay to meet worker demand.
“This is a labor-intensive business model, and there is no way to replace an early educator through outsourcing or technology or AI,” he said.
Advocates of more spending on child care programs say broader availability of care slots has a ripple effect that travels through the economy. While parents with infants or toddlers tend to earn less per hour and work fewer hours overall than their childless peers, parents — and especially women — who have access to care are more likely to participate in the workforce than those who do not.
“If you want workers to stay, we’ve got to look at child care,” Kentucky Rep. Samara Heavrin (R) said in a panel at NCSL’s annual Legislative Summit. “Our generation is very different in being employable.”
Kentucky lawmakers passed Heavrin’s legislation this year to give local governments new chances to expand child care access. Lawmakers in Alabama and New Mexico have set up trust funds to provide long-term support for child care facilities.
In New Jersey, lawmakers approved a bill to allow the state Economic Development Authority to provide facility improvement grants to existing providers. Maryland legislators approved a measure expanding access to prekindergarten programs. Colorado lawmakers extended preschool funds to provide extra services to children of low-income parents; they also approved new tax credits for teachers who provide child care.
States take myriad approaches to funding child care programs. New Mexico and Nebraska employ land trusts to fund self-sustaining funds. Louisiana uses taxes on gaming, Colorado taps into tax revenue from legal marijuana sales, and four states — Arizona, California, Colorado and Maryland — use tobacco taxes to pay for early childhood education.
Legislators are likely to return next year for a new round of funding measures, especially if the end of federal funding renews the crisis within the industry.
Several states where Republicans control the legislature, including Arizona and North Carolina, are likely to consider measures to incentivize big businesses to provide child care at their workplaces. Some GOP legislators said chambers of commerce in their states, a typical Republican ally, are advocating for those incentives.
In states where Democrats hold the reins, lawmakers are considering ways to bolster pay for existing care providers in an industry in which the average employee makes less than a restaurant server.
Legislators from both parties say the economic case for supporting child care businesses and workers outweigh the financial commitment required.
“It’s about having women get back into the workforce,” said Virginia Sen. Barbara Favola (D), who has authored several laws related to the care industry.