Saving Child Care to Save Our Economy: America’s Governors Must Take Action
The CARES Act provides the $99 billion childcare industry with $3.5 billion in direct support through Child Care and Development Block Grants (CCDBG) and access to additional financing through Small Business Administration Loans (SBA) and increased Unemployment Insurance (UI). While these investments are important steps in the right direction, they are rapidly proving to be insufficient considering the scope of the crisis, the precarious financial position of child care, and states’ frequent declarations of child care as an essential service.
Getting additional, necessary, and substantial funding from Congress is crucial, and depends in part on governors spending the emergency CCDBG funds swiftly and wisely. On any given day, more than 12 million children birth through age 5 and their families depend on child care. Close to two million educators provide it. But in the first two weeks of the COVID-19 pandemic, child care attendance dropped by 70 percent. Many providers have closed their doors and have no idea how they will reopen, even after the pandemic passes. The additional health and safety precautions it takes to care for the children of doctors, nurses, and other essential personnel are adding up to substantial losses.
Governors are powerful leaders. In a global pandemic, their decisive action is paramount, as they have proven time and again over the past month.
Their priority with the new funds from CCDBG must be to get immediate funding to child care providers — whether or not they have previously received public support for caring for low-income children, or whether or not they have stayed open to serve essential workers or closed for health, safety, or economic reasons.
As we work collectively to preserve child care in this moment and for the recovery to come, and in the spirit of avoiding the chaos of 52 separate and distinct approaches, we offer an eight-step roadmap for relief and recovery that can be tailored to reflect states’ unique factors.
1. Spend the money now. This is not the time to budget across months and years. This is the time to spend money as quickly as possible. We recommend the $3.5 billion in CARES Act funding be fully expended in the next three months. The funds can be distributed with flexibility and creativity to allow providers to pay mortgage and rent, payroll, and/or benefits.
2. Make CCDBG authorized in the CARES Act simple, efficient, and accountable. We recommend a flat rate biweekly or monthly payment where all providers who are eligible for CCDBG are eligible for funding, regardless of whether they were or are currently serving families receiving subsidies. Eligible programs include center-based programs and family child care homes; for-profits and nonprofits; programs that are closed and those that have remained open; those historically supported by government subsidies and those where families pay out of pocket; and the majority of programs whose financial structures depend on a combination of multiple funding streams.
To provide the support that allows for the kind of known survival capacity currently appreciated by K-12 and Head Start programs, the payments should be based on licensing capacity, not attendance or enrollment. States can direct the payments to cover fixed costs (mortgage or rent, utilities, employee benefits) and structure applications so they ask the minimum number of questions required to create appropriate accountability based on a demonstration of actual fixed costs. We estimate that those fixed monthly costs will range on average from $1500-$2500 for family child care to $15,000-$30,000 for center-based programs, depending on licensing capacity. To confirm these costs and their contexts, the state needs to know whether programs are also receiving SBA loans, how much they typically receive in annual CCDBG subsidy payments, and the percentage of enrollment that is covered by subsidies vs. parent payments. Payments should also confer an expectation and establish a verification procedure to confirm that employees who are working in programs serving children of essential workers are compensated commensurate with their work during a public health crisis.
3. Ensure the CARES Act CCDBG, annual CCDBG, Small Business Administration funding, and unemployment insurance all work together. Imagine a scenario in which the state has dramatically relaxed eligibility requirements for typical CCDBG funding; the governor is encouraging and supporting child care programs in applying for SBA loans by providing funds for technical assistance and supporting lenders to be inclusive of child care program needs; providers have furloughed their employees so they are receiving unemployment insurance, but employers are still paying their benefits (included in their fixed costs); and employees who are working receive monthly “heroes pay” or incentive payment in recognition of the current public health crisis. In states with this best-case scenario, more providers and their employees will be able to weather the storm. But it takes strong partnership, proactive communication, and efficient planning and implementation by the governor’s office and state CCDF administrators to unwind the complexities in unprecedented and challenging times.
4. Recognize early childhood educators who have continued to work through this public health crisis. At a minimum, early childhood educators who are currently working should be paid at the same levels as those who are accessing increased unemployment insurance benefits. Given that the average child care worker makes only $10.70 an hour, the “heroes pay” could be large--and well-deserved.
5. Fast-track public health guidance and access to Personal Protective Equipment (PPE) to child care providers and staff. For those providers that have remained open to serve essential personnel, their risk of contracting and spreading COVID-19 is no different than frontline employees in other essential fields. States can leverage the role of licensing staff to ensure these providers get ongoing daily public health support and guidance and immediate and sustained access to PPE including masks, booties and child care-appropriate cleaning supplies and protocols.
6. Lift income eligibility levels, but maintain existing licensing and regulatory requirements. The law gives states flexibility in setting income eligibility levels, payment rates to child care providers, and parent copayments for ongoing CCDBG and CARES Act CCDBG funding. Within the guidelines of the law, it is critical that states provide the maximum flexibility to providers so they can pay their monthly bills without asking hard-pressed families for more. Conversely, a public health pandemic is not the time to lift existing licensing and regulatory requirements to establish provisional care, allowing unprepared and minimally-qualified people to care for our children. Existing licensed providers can adequately meet the demand if there is strong coordination.
7. Acknowledge part of the child care sector was left behind in the CARES Act SBA provision. While more than 90 percent of child care providers are eligible to access SBA loans, some are multi-state providers with substantially more than 500 employees. These providers are an essential segment of the market, employing tens of thousands of early childhood educators and serving hundreds of thousands of families. It is imperative that Congress address this reality in the next relief package and through technical fixes in the current package. In the meantime, states should ensure these providers are eligible for CARES Act CCDBG funding.
8. Leverage employers of essential employees. Before COVID-19, more and more employers were recognizing the value of employer-sponsored child care at the worksite, by purchasing “slots” for their employees in community-based settings or providing back-up child care. While most sectors are suffering significantly during this public health crisis, others such as online food supply and delivery services are thriving and even expanding their businesses. We encourage states to ask these private employers to help finance child care so that they, too, have a stake in ensuring their essential employees receive access to quality care.
Our nation’s governors are making herculean efforts to protect the public from harm, support the health systems that are needed to fight this virus, address the severe economic impact on many businesses, and set the stage for a swift economic recovery.
Child care is essential for each of these efforts. In fact, none of them can happen without a well-functioning child care system. Adults won’t go back to work and leave their children alone. We ask that you give child care the investment, time, attention, and creativity required to get through this crisis and help our country get back on its feet. After all, high-quality child care is the foundation on which all other industries exist.
Rhian Evans Allvin is the chief executive officer of NAEYC. She is responsible for guiding the strategic direction of the organization as well as overseeing daily operations. Before joining NAEYC, Evans Allvin was a guiding force in Arizona’s early childhood movement for more than 15 years, including serving as CEO of Arizona's First Things First.