An Opportunity to Equitably Fund Child CareJanuary 4, 2022 | By Child Care Aware of Kansas
By MK Falgout, Research Assistant for Early Childhood Policy, Center for American Progress.
Article originally published in the Fall 2021 Issue of Kansas Child Magazine.
For decades, America’s child care system quite simply has not worked. Families struggle to afford quality child care, if they can find it at all. Meanwhile, child care providers operate on razor-thin margins, unable to cover the true costs of providing quality care. This means that child care providers — who are overwhelmingly women — go woefully undercompensated for their work, with many experiencing poverty-level wages.
This was the case even before the pandemic caused a public health crisis that forced many children to stay home — decreasing child care business revenue while simultaneously increasing the operating costs that programs had to cover in order to meet public health and safety recommendations. Together, these shifts brought the child care industry to the brink of collapse and created devastating impacts for women-owned small businesses already struggling to break even.
Moving forward, creating a more equitable child care system — one that expands access to resources for low-income communities, communities of color, children with disabilities, and rural communities — will require the thoughtful and targeted implementation of current and future public investments.
In response to the country’s extraordinary and urgent child care needs, Congress made the largest-ever investment in child care, providing a historic $39 billion in the American Rescue Plan Act. These funds are intended to help child care providers pay their bills, keep their doors open or resume business, and expand access to child care to more families.
Knowing that more still needs to be done, policymakers can leverage public resources slated for child care to create a more equitable system where families from all backgrounds have access to high-quality child care and providers are paid like the professionals they are.
The American Rescue Plan Act includes $15 billion for the Child Care and Development Block Grant (CCDBG) and $24 billion for a COVID-19 child care relief and stabilization fund. State leaders have the opportunity to leverage these investments, as well as future funds, to ensure that child care workers and early educations are fairly compensated for their critical work.
The $15 billion investment in the CCDBG increases funding to states to expand access to child care subsidies for families with low incomes. The historically underfunded subsidy system is currently only able to serve one in seven eligible children, according to the U.S. Department of Health and Human Services, with subsidy payment rates that do not cover the actual cost of providing quality child care.
The other $24 billion is intended for states to distribute as quickly as possible as grants for providers to address immediate financial needs and protect the existing child care market. They may be used to cover expenses such as:
• Personnel costs
• Rent or mortgage obligations
• Personal protective equipment and cleaning supplies
• Supplies to respond to the COVID-19 public health emergency
• Goods and services necessary to maintain or resume child care services
• Mental health support
This child care relief and stabilization fund provides an opportunity for states to leverage historic investments as a down payment toward building systems that more equitably serve families and providers. States can largely decide how to administer these funds to address the needs of their local communities. Some states have processes in place to directly subgrant to thousands of child care providers, while other states require expanded capacity to ensure that funds reach all the providers in need.
Additionally, state offices that administer CCDBG funds are typically set up to send money to programs that accept child care subsidies. However, it’s important to note child care relief and stabilization funds are available to all licensed providers in the United States.
While distributing these stabilization funds swiftly is critical to preventing more child care programs from closing, this funding has the potential to extend significant and immediate financial relief to child care providers, including both child care centers and family child care homes. Prioritizing equitable funding distribution processes that have the capacity to reach providers quickly, consult directly with impacted providers, and actively support providers in accessing funding will help ensure that we build a more equitable child care system.
Equitable Funding Implementation
In order to distribute funds equitably, policymakers should consider partnering with community-based intermediary organizations that hold relationships with child care providers, such as Child Care Aware of Kansas (CCAKS). These community-based organizations can serve in a variety of partnership roles to close resource gaps and maximize the distribution of funds.
Intermediaries can leverage long- standing and trusted relationships within their communities, positioning them well to support child care providers. Recently, intermediaries have used public funds to administer successful programs that support child care providers, while remaining responsive to providers as stakeholders.
The proximity of intermediaries like CCAKS to the early care and education field allows them to administer subgrants rapidly, while targeting a wide range of child care providers who meet varying community needs or need funding the most. Many intermediaries have proven processes to distribute public funds efficiently to child care providers. In states with less capacity or without systems designed to administer thousands of checks directly to child care providers, intermediaries can subgrant to child care programs quickly. This added capacity creates an opportunity to ensure funds reach the providers most in need of financial relief.
Intermediaries can also serve as a bridge between providers and policymakers to promote equity in funding distribution. Intermediaries can harness their far-reaching networks so that all programs — especially family child care programs where the child care provider often stretches her capacity to manage the business side of the program — know what resources are available to help keep their doors open. Some intermediaries also have processes to connect providers with policymakers deciding how best to address child care needs. This kind of direct consultation helps ensure that funding distribution addresses the barriers that providers experience when accessing funds.
Intermediaries can also offer technical assistance to support child care providers on a variety of topics, including applying for grants, tax and payroll, and the efficient use of grant funds on allowable expenses. For smaller child care centers and family child care programs, which are often overextended, this added capacity can make all the difference — ensuring that providers in communities with fewer financial resources and those with fewer staff can access all available resources.
Success in Kansas
The way Child Care Aware of Kansas has partnered with the Kansas Department for Children and Families (DCF) and the Kansas Department of Health and Environment (KDHE) is a prime example of how intermediaries can work with policymakers to ensure an equitable distribution of resources to support the child care field. Throughout the pandemic, CCAKS has led a variety of initiatives aimed at protecting the current supply of child care and supporting providers as they navigate the public health and economic crises.
In March 2020, CCAKS launched a child care grant program as part of the Kansas DCF Hero Relief Program, which offered subgrants directly to providers to sustain the supply of child care across the state, ensuring that even programs in hard-to-reach frontier communities gained access to resources. CCAKS tracked who was applying to receive grants so they could better target their outreach to fill the gaps.
The program provided revenue replacement funds as enrollment in child care programs dropped and compensated providers serving the children of essential workers through bonuses. In six months, the program subgranted more than $11 million in CARES Act funding equitably to more than 4,500 child care programs. This was a direct result of the program’s access to providers across the state, facilitated by CCAKS.
Additionally, in partnership with KDHE, CCAKS used CARES Act funds to create the Child Care Health Consultation Network. This program offered health consultations to more than 500 child care providers, helping programs find the best ways to meet COVID-19 health and safety recommendations — from setting up partitions to accommodate social distancing to establishing separate entry and exit points to limit contact during parent pick-up and drop-off. The program then helped providers apply for grants to make those changes. This targeted program built capacity for child care providers to adjust their operations during the pandemic and enabled those with limited resources or staff to implement these changes.
An Equitable Future
As the country continues to respond to the COVID-19 pandemic, the thoughtful distribution of public investments will be key to building an equitable child care system — the industry that makes all other work possible.
Building off proven strategies and lessons learned from previous distribution of public funding, intermediaries like CCAKS can leverage their experience to help states prioritize equity in distributing the $24 billion for child care relief and stabilization and future public investments.
An important first step toward building an equitable child care system was the federal infusion of $39 billion to stabilize and protect the current child care industry.
But expanding access to quality child care for all families of young children will require sustained, long-term public investments that offer fair, livable wages for early educators and that provide affordable, high-quality child care options in the many settings required to meet families’ needs.
Through policy research, MK’s work focuses on advocating for progressive system change that will increase access to quality child care and early learning opportunities for all families, while fairly compensating early educators and child care providers.