New Report by the Century Foundation: The Child Care Cliff Meant the End of Federal Funds - But Some States Are Stepping In to Fix That - Early Learning Nation

New Report by the Century Foundation: The Child Care Cliff Meant the End of Federal Funds – But Some States Are Stepping In to Fix That

The Covid-19 pandemic ushered in unprecedented federal spending in the child care industry. When schools and child care programs shut down, child care was recognized for what it is: a necessary component of a functioning economy. Through bipartisan legislation, funds were provided to keep the industry afloat and stable – a lifeline for providers and families who already found the industry precarious. But now, the emergency phase of the pandemic ended and much of the aid has run out. Despite cries from child care advocates and families, partisan politics have blocked Congress from making the federal funding permanent.

Each state deployed the American Rescue Plan Act funds (also known as the “ARPA funds”) to stabilize their child care sectors. The success of the American Rescue Plan stabilization funding provided the impetus for select states to dedicate their own resources to continue the investments. Whether the product of years or organized lobbying, or a decision to reroute surplus funds back to families and educators, 11 states and the District of Columbia have taken concrete steps to shore up their own child care sectors.

In a new report out this month from The Century Foundation, authors Julie Kashen and Laura Valle-Gutierrez detail the how and why of states deciding to invest in child care. Kashen was kind enough to share some of her insights from the report with Early Learning Nation magazine. A lightly edited Q and A follows:

Rebecca Gale: It took the American Rescue Plan to show what so many advocates of robust social policy have been saying for decades: government investment works and can make a difference, stabilizing industries and lifting people out of poverty. But the moment the funds ran dry, many policymakers were satisfied to return to the status quo. What do you think changed from their initial support of ARPA to their unwillingness to continue what has been shown to positively impact so many lives? 

Julie Kashen

Julie Kashen: First, let’s acknowledge how bad the status quo was. Before anyone had heard of the COVID-19 pandemic, families struggled to find quality, affordable child care, and child care providers grappled to retain staff and afford basic necessities.

There were a lot of policymakers who were not satisfied to return to that status quo. In fact, the House of Representatives in November 2021, passed historic legislation proposed by President Biden—the Build Back Better Act—which included robust investments in child care and early learning that would have lowered child care costs for nine out of ten families with young children, while giving parents the choice to find the right program for their family in center-based, home-based, family-based, school-based and Head Start programs.

It would have expanded free preschool for three- and four-year-olds, raised wages in the early education sector and supported the cost of high-quality care. In fact, when ARPA passed, many envisioned that when the funding expired, there would be the foundation of a sustainable child care and early learning system in place. Unfortunately, that bill, with no support from Republicans, did not pass the Senate, and so did not become law.

When the funding expired, Congressional Democrats and President Biden both called for $16 billion in emergency child care funding to address the immediate needs caused by the child care stabilization funding cliff. So, I would argue that we have quite a number of policymakers fighting hard for change at the federal level, but being blocked in their progress by partisan politics.

Gale: The 11 states and DC that opted to invest in child care are overwhelmingly “blue” states (D.C., California, Illinois, Maine, Massachusetts, Minnesota, New Mexico, Vermont, Washington) with a handful of “red” or “purple” ones thrown in (Alaska, New Hampshire, Kentucky). Many families struggle to find affordable child care, despite party affiliation. What do you think sets the states apart that opted to direct extra funds to the child care sector?

Kashen: All of the states that deployed their own resources for stabilizing their child care sectors experienced the positive impact of the ARPA stabilization funds and saw the benefits to communities and local economies of putting resources into children and families. Most of the states had long-term organizing campaigns, including grassroots organizing and union campaigns, that combined with a moment of greater awareness of, support for child care and political leadership that helped them succeed.

It’s also worth noting that there are a number of “red” and “purple” states that took additional action leveraging federal funds. While we did not include them in our list of states that put their own resources in, the results of their leadership are similar using federal dollars. In Wisconsin, for example, after Wisconsin Governor Tony Evers’ multiple attempts to move $356 million through the state legislature were blocked by legislative opponents, he reallocated $175 million in Federal Emergency Management Agency (FEMA) funds to cover half of this gap. Missouri, Ohio and North Dakota are just some of the additional states that have improved their child care programs.

Gale: Ten states went through their state legislatures to take action, but New Mexico went through a ballot initiative to create a permanent fund which has the potential to offer some of the longest lasting impact (D.C. took action through the Office of the Mayor). Have you found that social issues like support for child care could do better at the ballot box than in state assemblies?

Kashen: We know child care is popular among voters regardless of political party. In fact, new polling from GQR and the Child Care for Every Family Network shows four in five Republican parents of children under 18 (79 percent) support guaranteed child care, as do 83 percent of independent parents and 97 percent of Democrat parents. So, ballot initiatives are often a good route.

But it’s worth noting that more states improved their child care systems and invested in child care in 2023 than we have seen in any recent time, much of it because they finally had the federal resources to help. So, we now have clear evidence that when the federal government and states come together to take action, children, families and local economies all benefit.

That said, a concerning trend we also saw in 2023 was that when states found themselves with significant surpluses, rather than invest in families, many states instead made a deliberate decision to cut taxes that primarily benefited wealthy households and corporations. These tax cuts will reduce state revenues precisely at a time when more revenue is needed to invest in child care. The amount of lost state revenue will grow over time and make it even harder for these states to invest needed funding on child care and reap the economic benefits of those investments. Not only have these short-sighted tax cuts reduced states’ abilities to invest in child care programs, this lack of investment can induce further collapses in state revenues, since we know child care investments support local economies.

Gale: Child care is an industry where the math will never quite add up. Your report quotes Treasury Secretary Janet Yellen as saying the current state of the nation’s child care is “the textbook example of a broken market” since existing market forces cannot solve it. What about the nature of child care makes it both different from other market services, and makes it hard for people and policymakers to understand why federal investment is needed?

Kashen: Families across all income levels share the same determination to provide the best possible foundation for their children, especially in their early years. Two-thirds of children under age 6 have all of their parents (either solo or coupled) in the workforce. Parents need the freedom to afford child care and to have peace of mind that their children are safe and nurtured while parents go to work or to school and make the best choices for their families.

Most families don’t send children to fourth grade with a check to cover the cost of their teacher’s salaries or to maintain the school building. The same should be true for child care. Our shared interest in making sure our children thrive shouldn’t start when they turn five. Like public education, public libraries, safe food and clean drinking water, child care benefits all of us. And child care and early learning investments are as essential to economic growth as physical infrastructure or energy.

Most parents need child care at a time when they can least afford it because they are early in their career. This has particular impacts for families of color due to, at least in part, ongoing systemic and structural inequities that perpetuate overrepresentation of communities of color in jobs paying lower wages, the ranks of those experiencing higher unemployment rates, and families living below the federal poverty level. Unlike college tuition, which is also too expensive, parents don’t have eighteen years to plan and save. To access child care, families are forced to pay an amount equivalent to that for college tuition, rent, or a mortgage, put together patchwork solutions that create instability for their work lives and for their children, or be one of the fortunate few who receive child care assistance.

“The turning point is that (1) people saw clearly the value of caregiving; (2) the government took historic action that worked and we can now point to as evidence of the value of these investments.” — Julie Kashen, Director, Women’s Economic Justice; Senior Fellow

Meanwhile, staffing shortages in the early care and education sector will continue to put upward pressure on prices as child care businesses will have to raise wages to attract early educators – or go out of business. Even before the pandemic wreaked havoc on the child care sector, data from the Center for American Progress showed that more than half of families with young children live in a child care desert (a census tract where there are more than three times as many children as licensed child care slots).

Underlying all of this is the devaluing of care work in American society. One of the many legacies of slavery is the shouldering of care responsibilities by the people in our society with the least power and fewest resources. In the early twentieth century, white lawmakers excluded care workers—who were overwhelmingly Black women—from fair wages and labor protections to preserve the status quo. To this day, our culture and policies continue to undervalue caregiving, leaving caregivers underpaid or unpaid, and without the support they need to thrive.

This history has also contributed to the expectation that family care is an individual responsibility, rather than a communal one: if you struggle, there’s something wrong with you. In reality, care has been a universal need and a public good that requires public-policy-supported solutions, and now more than ever must be treated as such. This is why the pandemic removing the invisibility cloak from all of the hard work of caregiving that had been going on all along was so important.

Gale: Even the most generous state support—like Vermont and New Mexico—is not a substitute for robust federal support. From a policy perspective, what could that federal support look like, and what do you think is possible in the existing political climate?

Kashen: The Build Back Better Act is the closest we’ve come to the robust, comprehensive child care and early learning system we’ve needed since President Nixon vetoed the Comprehensive Child Development Act in 1971. Build Back Better would have made sure that every family who needs it could find child care that works for their families, nurtures their children and doesn’t break the bank.

The Child Care for Working Families Act, reintroduced in April of last year, took many of the lessons of the Build Back Better fight and the American Rescue Plan implementation, and built on a solid foundation to become an even stronger approach.

While Congressional champions, advocates and organizers work toward the next big opportunity, the immediate need is significant. The hope is that a combination of an increase in existing child care and early learning programs through the FY24 appropriations process and supplemental emergency child care funding will both make it through Congress as soon as possible.

Gale: You’ve been researching and working on social policy for the better part of two decades, yet it took the Covid-19 pandemic to finally give child care its moment in the sun. As we move further away from the emergency lockdown phase of Covid, how do you think people will remember this time in our country’s evolution on public policy? Do you see this as a turning point?

Kashen: The turning point is that (1) people saw clearly the value of caregiving; (2) the government took historic action that worked and we can now point to as evidence of the value of these investments.

The pandemic underscored the importance of investing in our care infrastructure—it crystallized how caregiving makes all other work possible, and how our failure to treat care as a public good burdens families and stifles our economy. The U.S. investments in children and families during the pandemic demonstrated the life-changing and economy-sustaining power of equitable policy. The investments in child care, the child tax credit and increased home and community-based services for older adults and disabled people were historic, serving millions of families, reducing poverty and supporting more people to age with dignity at home.

I remain optimistic, but the ease with which many of these policies have since been allowed to sunset, or roll back, or be eliminated altogether shows the extent to which bias, discrimination, and inequity are built into our economic system and structures. Two steps forward, one step back – it’s frustrating, but it’s progress that we can keep building on.

Rebecca Gale is a journalist based in Washington, D.C. and a reporting fellow for Better Life Lab at New America.

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