The Journal Gazette
Sunday, July 26, 2020 1:00 am

Avoiding the coming child care collapse

John Peirce

Employers in northeast Indiana and across the country are likely feeling a false sense of security that they will be able to keep employees coming to work and add more as the economy reopens. That will not happen – unless Congress provides something like $50 billion in the next coronavirus relief package to save the child care sector. Here is why.

In Indiana and across the country, about two-thirds of households need child care because all adult caregivers in the home have to or want to work. Child care is essential to filling jobs and getting America back to work.

During the lowest point, so far, of the crisis in Indiana – the week of April 11 – 2,500 child care programs were closed, about a third of them. This included child care homes, centers, Head Start, faith-based and school-based programs. Many that stayed open operated at 20% to 40% of break-even capacity.

Child care programs are businesses, too. Most must operate at 75% to 95% capacity to survive.

Thanks to the passage of The CARES Act that included $3.5 billion of emergency Child Care Development Block Grant funding, child care programs that stayed open to serve first responders and essential workers were able to continue. As Indiana began to restart its economy, this funding also allowed closed programs to reopen so employees could return to work.

To date, Indiana's Family and Social Services Administration has deftly provided $60 million of child-care grants to sustain and reopen child-care programs to serve the increasing demand. Grants paid for excessive absence of private-pay children and closures as a result of COVID-19.

Today, 82% of child care programs are open. One wonders whether the other 18% will ever reopen.

That 18% is about the same as Indiana's recent unemployment rate. Employers may have a false sense of security because enough of the child care sector has survived to fill their current needs.

Unfortunately, the CARES Act funding is about to run out, just when schools are trying to reopen and businesses are trying to expand.

What is more, the cost of operating a child care program has risen substantially during the pandemic. Until now, those costs have also been subsidized, not just by the CARES Act but also by the Lilly Endowment's new $15 million Come Back Stronger Fund grants.

These grants will help offset new expenses incurred by programs for sanitation, altering facilities for social distancing and investing in personalized sets of learning materials to limit cross-contamination among children.

Safety measures adhered to by Indiana's child care facilities were recently highlighted as a model for schools to follow. They are necessary for families to feel confident in sending their children.

Our child-care sector has been propped up the last few months like a house on sticks to survive a hurricane. We are now in the eye of the storm, and things feel calm. That will change in a few weeks when the federal funding expires.

It was one thing for a third of Hoosier child care programs to be closed when our economy was shut down on purpose and workers were forced to stay home. It was heroic for some to stay open at below their break-even point to serve first responders, but that heroism is not sustainable.

In good economic times, most child-care programs survive on razor-thin margins. Families find it hard to afford quality care, even though the average child care teacher makes $25,000 a year and child care workers average $20,000.

It is likely that more child-care facilities will close without federal help. What is certain is that the cost of providing child care has gone up substantially because of this crisis, including the revenue loss from having to close periodically because of positive coronavirus cases. Many programs cannot survive 14 days without revenue.

Is $50 billion the right amount to sustain the child-care sector through this uncertain crisis? It is according to analysis by the Center for Law and Social Policy and the National Women's Law Center. It is also the amount supported by Child Care Aware of America, the Indiana Association for the Education of Young Children, and Indiana United Ways.

That amount will likely sustain the sector for five months, says Aaron Sojourner, labor economist at University of Minnesota's Carlson School of Management and researcher on the analysis. If aid is approved, it is reassuring to know that Gov. Eric Holcomb's administration has proven its stewardship of our federal tax dollars by the way it distributed the CARES Act money to child care programs in two-week increments based on need.

Given the vulnerable financial status of many child-care programs and the upsurge in coronavirus cases across the U.S, employers and employees who need child care have an important choice.

They can prepare for the coming collapse of our child-care sector or urge their representatives in Congress to sustain it though this crisis.

John Peirce, a Fort Wayne resident, is a public policy consultant.

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