OKLAHOMA CITY — The owners of child care centers face a financial cliff as federal funding that helped stabilize the industry and keep parents working comes to an end.
Despite state and federal efforts to increase access for low-income families, day care owners say it’s a daily battle to staff facilities for parents who struggle to afford child care.
The federal government invested billions to keep day care centers open during the pandemic, but much of that aid is expiring. Advocates say those dollars stabilized an already vulnerable industry and are still needed to compete for staff and bolster the number of centers.
In Oklahoma, slightly more than 44% of counties are classified as child care deserts. An estimated 55% of Oklahomans currently live in a location where there’s more demand for care than providers.
That’s despite a slight uptick in expanded or newly licensed centers since 2019, according to the Department of Human Services, which regulates the industry. The state has seen 70 new centers open during that time, bringing the state’s total to 3,108, an agency official said.
Workers often struggle with low wages and the absence of benefits. Owners say they relied on additional federal daily rate reimbursements to boost pay during the pandemic to help attract more workers. Free child care for their employees also helped attract working mothers.
Rachel Proper, who owns seven Oklahoma City day care centers, said in 2021, she was serving about 50% of her state licensed capacity because she couldn’t find enough staff, but federal aid helped her reach 75% capacity.
Federal aid packages to states totaling $24 billion expired Sept. 30, and another $15 billion is set to end Sept. 30, 2024.
“What happens when those supports go away?” Proper asked. “Unfortunately, the employment market hasn’t gotten much better in any industry.”
A federal program that paid 100% of low-income parent’s share of subsidized child care costs expired on Sept. 30. Parents must now pay 50% of the cost, but Ardmore owner of Kidzone, Gayla Ham said they struggle to pay even that.
She said a single mother told her she couldn’t pay because “everything has gone up.”
“It’s sad stories, you know?” Ham said.
She also said parents aren’t the only ones feeling the pinch of inflation.
“Our utilities and groceries have tripled,” she said. “That’s my concern. What are we going to do about that?”
State intervention
The state is taking some action to offset the funding cliff.
The Oklahoma Department of Human Services (DHS) has included $30 million to boost the daily reimbursement rate it pays centers for low-income families in its current budget.
Agency spokesperson Casey White said the funding is likely to meet or offset the loss of a federal $5 per day, per child aid set to expire on Sept. 30, 2024. DHS set aside those dollars to compete with the rising private pay market for child care services, White said.
State lawmakers this week held an interim study on labor shortages, including those in the child care industry. Sen. Carri Hicks, D-Oklahoma City, a former teacher who requested the study, said increasing child care access is in the state’s best interest if it will move forward with economic growth.
She cited a Greater Oklahoma City Chamber of Commerce study which found the state loses an estimated $1.2 billion annual economic loss “because of the child care crisis.”
“In my opinion, making those smart investments in things that can really allow folks to go to work and know their children are cared for, will pay dividends in the long run,” she said.
Policy recommendations to lawmakers included extending a grant to increase the number of child care centers. The federal grant helped expand or open new facilities, but it expired in July. A state grant to replace it is not included in the agency’s 2024 budget.
Calls for policy change
Angie Clayton, owner of Kids R Us in Tecumseh, said continuing the grant would have done little good in small towns like hers. She said medical cannabis dispensaries have taken up low cost buildings, and she said the expansion grant didn’t cover land or building purchases.
Clayton said she saw firsthand how a lack of access and staff inflicts economic consequences when a Shawnee manufacturer asked her if she could open a 24-hour center for his workers.
“Oh my gosh, are you kidding me,” she said. “I can’t find enough workers for 12 hours. I don’t even know where to go to open one. I just don’t have a piece of land. That’s revenue our state could be losing.”
Clayton and Proper serve on the Oklahoma Child Care Association board and advocate for policy changes, including one to change the reimbursement criteria.
The state reimburses providers based on child attendance rather than enrollment, a fee structure that private pay centers have long used to keep wages higher than subsidized centers.
If a child attends the minimum number of days, the center is paid a monthly rate, but if attendance drops, the center is paid a daily rate. The difference in pay can be as much as $500 while the center has to keep up staffing levels, Proper said.
“That’s where the industry really struggles,” Proper said. “You can’t budget for that because when you have children they get sick, and there’s different family structures where they’re with mom one week and dad the next.”
The Administration for Children and Families, a division of the U.S. Department of Human Services has announced a proposed rule to convert reimbursement from attendance to enrollment.
A final rule is expected next spring and if it is finalized, the agency will implement it, White said.
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