U.S.-Federal Aid Is Making Childcare Affordable, but It Isn’t Permanent


Child care providers will continue to receive federal COVID-19 relief funding through 2022. This is a move that has seen support from all U.S. governors who say that affordable child care is what parents need so they can go back to work in today’s post-pandemic world. In this article, we will take a closer look at the funding, how long it is available, and what experts claim is needed to provide a long-term solution this the issue of affordable child care.

The Funding Is Viewed as a Band-Aid by Many

Child care providers and advocates across the country say the federal grants will not resolve two primary issues that have been plaguing the child care sector for the past several years:

●  Providing quality child care services

●  Paying workers a competitive wage while keeping services affordable

The $24 billion in child care business grants must be spent by states by 2023. An additional $15 billion in child care subsidies expire in 2024. The business grants, which have been made available to various providers, can be used on covering such operating costs as wages, rent, equipment, and other operating expenses.

The Grant Money Is Not Being Spent Everywhere…Yet

The total $39 billion in child care subsidies that were authorized through the American Rescue Plan Act are just starting to be spent, but only by select states. Some are holding back. Those delaying the process have done so for good reason—they are setting aside some of the funding for grants to support child care business startups and for existing service providers so that the money can be used by them to offer their staff bonuses.

This grant money assists states with the longstanding partnership they have with the federal government to give low-income families a way to afford child care. This is why the states have been encouraged to direct the funding to increase family grants, provider payments, training, and salaries. The timing of the subsidies has been crucial as the child care sector has been suffering in recent years with a drop in staffing and an increase in demand for services.

What They Had to Say

Idaho Governor Brad Little (R) says, “If we want to get the participation rate up, (daycare) is something we’re going to have to address.” Charlie Shepherd, Idaho Republican state representative adds he is concerned about the stipulations that often come attached to federal grant money. “If they try to implement their curriculum, or if they throw in any, ‘we must teach this’ or ‘we must teach that’—for me, that’s automatically a no-go.” Their concerns stem from the federal government requiring educators to teach social justice concepts and encourage mothers to seek employment away from the home.

More Action Requested from the Federal Government

Child care advocates claim that both levels of government (state and federal) should be doing more to support the child care industry. They suggest more grants for low-income families and greater access to public preschool as steps in the right direction. All agree that the federal government should take a greater role. According to Clare Sanford, government relations chair for Minnesota Child Care Association, “States cannot do it alone.” She claims that the issue is “so massive” that she feels the federal government should step in to bring solutions.

Child Care Service Costs Keep Climbing

There is no doubt the cost of child care is not related to the pandemic. Pre-pandemic, parents had difficulty finding child care and paying for the licensed programs. Many of these have a price tag that rivals in-state college tuition fees. On the other side of the coin are the child care workers. Many of them earn less than $12 per hour.

Then the pandemic hit and resulted in many different protocols that impacted how businesses operated. Child care services closed to be compliant and parents self-isolated with their children at home to reduce exposure to the virus. Additional safety protocols at child care facilities added to operating costs and reduced revenue streams.

How Some States Plan to Spend Their Funding

Several states are gearing up to funnel more funding into the child care sector. In New York, Governor Kathy Hochul plans to change requirements permitting access to child care subsidies by changing the state’s 200% poverty line earning limit to 225%. She also plans to increase child care worker wages with an expenditure of $75 million. In Colorado, Governor Jared Polis plans state building renovations to the tune of $30 million as part of the solution. His plan will see space made in these buildings for the addition of child care facilities. South Dakota Governor Kristi Noem says her American Rescue Plan Act allotment of $100 million will go to assist new and existing child care services, assist child care employers to add more qualified staff, and fund child care worker scholarships.

Thinking Outside of the Box May Build the Industry

An innovative idea from the state of Utah may open up the available seats for child care meeting the demand for space. The plan could see provisions to permit non-licensed, home-based child care centers. The idea is to serve more children and keep cities below the regulated child care numbers. According to Susan Pulsipher, Utah state representative, “All these things, we’re hoping, will help to increase capacity.”

Final Thoughts

Although the federal government has fed $39 billion to states to spend on child care through the American Rescue Plan Act, it is only a one-time subsidy program. Child care is an ongoing concern that requires regular funding to keep functioning. Current problems include a lack of service in many areas needing child care, the rising cost of child care, and the lower wages child care workers earn. Innovative means may be required to solve some of these issues. However, solutions cost money, and there is only so much to go around for early education needs. Lawmakers need to find better, long-term solutions, or the child care crisis will only get worse.

Sandra Chiu works as Director at LadyBug & Friends Daycare and Preschool.

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