The 2020 Childcare Implosion Is a COVID Crisis

July 15, 2020; Washington Post and WBEZ

As the Senate wanders toward consideration of the HEROES Act, which may address the $50 billion hole (as currently assessed) in the needs of childcare providers, the heroes in childcare are valiantly managing the frontlines with a damaged business model, increased regulatory needs and costs, and, in many cases, daily decisions to make to balance safety and sustainability.

For the nation to fully recover from the coronavirus pandemic, it must meet both its health and economic challenges. Finding effective ways to limit the virus’s spread, treat those who fall ill, and ultimately create a vaccine will still leave us sick—we also need to ease the fiscal hurt and stem the loss of jobs and businesses. One essential ingredient of recovery, the nation’s childcare sector, is in dire distress and must be rescued before it suffers irreparable harm.

In a nation where, as reported by the New York Times, “93 percent of fathers and 72 percent of mothers with children at home are in the labor force, and 40 percent of women are their families’ breadwinners,” a functioning childcare system is critical. Public schools are the de facto provider of care for most school age children. Responsibility for serving millions of preschoolers has fallen to a diverse set of nonprofit and for-profit providers that, even in the best of times, struggled to provide affordable, quality care. Their business model relied heavily on user fees, targeted government subsidies for low-income students, fundraising, and aggressive expense control. Now, they face an environment where this model isn’t working.

Childcare providers have had to change their operating model to protect children and staff from contagion. This has meant lowering the number of students in each classroom, modifying facilities, increasing the frequency of cleaning, and adding new equipment and more employees and volunteers. At the same time, they must field the varied and often conflicting demands of public health officials, workers, and parents. Then, with all that, they must put this puzzle together in a way that lets them meet their financial obligations.

The National Association for the Education of Young Children (NAEYC) recently surveyed the sector to see how it was faring as the nation battles the virus. The picture they painted is grim. More than 40 percent of the 5,000 providers surveyed expect to have to close if they do not get financial help soon. The reasons are pretty simple—over this period of doubt regarding the safety of such sites, enrollment is down on an average of 67 percent. That is a decline in participation that cannot be met with layoffs. As enrollment declines, fixed costs loom ever larger as immutable cost loads, as do the increased expenses of doing the work differently:

• “Ninety-one percent of respondents indicate they are incurring additional costs for cleaning supplies; 76 percent say the same for personal protective equipment and 23 percent say they are spending funds for necessary facility changes.”
• “Seventy-two percent of centers and 15 percent of family childcare homes also say they are spending more money on increasing staff costs that allow them to maintain small and consistent groups of children. All told, large child care centers report that they are spending, on average, $3,136 additional dollars per month on these increased expenses; small child care centers report $868 per month; and family child care homes report $500 per month.”

“Given that they were operating on razor-thin margins even before the pandemic,” the survey says “childcare programs do not have any cushion in their budgets to absorb these costs. Operating in the red to meet these needs, as they are doing now, is unsustainable, particularly as their programs struggle with the ongoing loss of income.”

Rhian Evans Allvin, CEO of NAEYC, after reviewing her organization’s findings, observed:

The childcare sector is approaching this catastrophic situation with both courage and determination. At the same time, providers rightly are weary, skeptical, and scared. As a country, we have a choice to make. Are we going to continue to underfund and undervalue a system that is the backbone to the rest of the economy or are we going to make the necessary investments that recognize the essential nature of childcare?

Many childcare programs were able to get temporary relief via Paycheck Protection Program loans and specific funding in the CARES Act. Now that this money is gone, the US must recognize the critical position childcare occupies and the need to subsidize it to sustain our national welfare. The Center for Law and Social Policy estimates “the child care industry requires public funds of at least $9.6 billion each month during the pandemic to sustain the viability of our providers.”

The federal government should allocate $50 billion in relief funds for childcare in the next coronavirus package. This infusion would cover the cost of over five months of emergency care and relief for the overall childcare system to ensure it’s maintained to support families of essential workers who need care now and all families who will need care when they return to work.

Keeping the childcare sector viable will allow the nation to recover without forcing impossible choices on providers and those they serve. Cathy McHorse, Vice President of Success by Six at the United Way for Greater Austin, recently told KXAN that by not providing the needed financial support, the government leaves every provider to make the decisions from the wrong perspective.

“Unfortunately,” says McHorse, “the state is a position of really saying to the childcare programs, ‘Make the best decision you can in the best interest for your business,’ and as an advocate and as a parent, I would want child care programs to make the best decision they can, [but] in the best interest of the children in their care.”—Martin Levine