More than $100 million in federal funds keeping child care open

New Hampshire Union Leader - 10/31/2021

Oct. 31—Linda Tremblay listened on the phone to the desperate dad.

He said, "I start my job on Monday. I have a 2-year-old. I need child care," Tremblay recalled the man pleading the previous day.

But Tremblay had no open slots at Ready Set Grow, which provides preschool and child care in Claremont and Enfield.

It wasn't a case of too many kids, but too few workers.

The man "literally cried on the phone," said Tremblay, the Upper Valley facility's executive director.

The pandemic uprooted the budgets of child care centers as many parents shifted work to home and kept children home for convenience or because of health fears. To keep them open in the short term, the state has doled out more than $100 million in federal funds to hundreds of child care centers across New Hampshire.

"It kept them open," said Jackie Cowell, executive director of Early Learning New Hampshire, an advocacy group for child care providers.

Without the funds, "I bet you would have 50% to 70% of the programs permanently closed," she said.

But the money hasn't solved the industry's long-term ills.

More kids, higher costs

On a rainy Monday morning, sleeping bags were spread out in several rooms at the Alpha-Bits Learning Center in Manchester. A beige teddy bear was partly tucked into a "Paw Patrol" sleeping bag. Its owner would soon follow. A Halloween party was slated for week's end.

Alpha-Bits had 190 children enrolled last week at its Londonderry Turnpike center, where it accepts kids 6 weeks old to 6 years. Current enrollment matches pre-pandemic numbers. But its sister center, on Manchester'sWest Side, is caring for 150 students, down from a pre-pandemic high of 290.

"They have more of a staffing crisis than we do," said Executive Director Lisa Schroder.

In the latest $42 million round of federal funding, more than 350 child care providers in New Hampshire received between $15,000 and $600,000 in stabilization grants, according to the state Department of Health and Human Services.

Alpha-Bits used some of its money to boost employee pay.

"Thankfully, the government money is helping us," said Schroder, who declined to say how much the business received.

"It is supposed to be a stabilization. I don't know how we're going to be able to sustain it," Schroder said.

"A lot of people didn't want to take this last round of money because they weren't sure: You put it out there, then we're not going to be able to sustain it after that if we're using it just for salaries and that sort of thing."

Schroder said Alpha-Bits raised tuition rates Sept. 1 for newly enrolled children, who today account for a "very small percentage" of her 190 kids.

But "as time goes on and you get new families coming in, hopefully, that's going to make the difference and we're going to be able to sustain the salaries," Schroder said.

Long-term, she believes more families should receive government help paying their tuition tabs.

A mother of twins who recently started at Alpha-Bits barely missed the state income cutoff for assistance paying her $490 weekly bill.

"These middle-class families need some sort of child care subsidy," Schroder said.

Since the spring of 2020, when the coronavirus undercut much of the state's economy — and many child care providers — the state said it has provided more than $100 million in federal money to child care programs.

The money helped with COVID-related expenses, operating expenses, tuition costs for children absent because of COVID exposure, and full-day care while schools were closed, according to Health and Human Services spokesman Jake Leon.

"The funding has supported over 35,000 children and 762 providers across the state," Leon said by email. "This has allowed care to continue uninterrupted and kept the permanent closure rate to below 6%. Further, new programs have opened since the spring of 2020."

The federal dollars have netted nine providers more than $1 million each, with the highest award reaching $2.8 million.

More help is coming

Another $29 million in federal funds have yet to be distributed, earmarked for longer-term industry stability, according to DHHS.

"These are to be investments that are sustainable and build a stronger, more resilient sector," Leon said.

There are an estimated 600 job openings in child care across the state, according to Leon.

DHHS got recommendations from more than 700 child care providers, staff, families and others before convening a working group that prioritized their ideas.

"(A)s childcare programs need more staff due to workforce shortages, families need more financial assistance and better access to programs, and programs and staff need more support for professional development activities, quality enhancement, and recruitment/retention efforts tied to workforce shortages," Leon said in an email.

Providers have three years to use these discretionary funds "to invest wisely and focus on strengthening their programs, enhancing quality and access, and fostering sustainability," Leon said.

The federal tally doesn't count $23 million in state and federal funds used last fiscal year to provide scholarships for child care tuition, a program that pre-dated the pandemic.

Long-term outlook

At Ready Set Grow, Tremblay has seen enrollment in its Claremont center drop from nearly 90 before the pandemic to 26 recently.

"That 26 is not for a lack of people needing child care," Tremblay said. "We're at capacity based on the staff that we have."

She would need to hire a dozen workers to staff for its licensed 125-child capacity.

And she questions the center's future.

"It's definitely on the top of our minds right now. Will there be a Ready Set Grow in six months?" Tremblay said. "I hope the answer would be yes.

"The way it's looking is if we continue having 25, 26 kids, paying overhead on that, you can't sustain it," she said.

Tremblay said the federal funds helped cover some expenses, including rent.

"There is nothing else for stability," she said.

"I would love to say more funding and things like that," Tremblay said, but, "Say they (state funding) want to pay operating expenses for a whole year. My thought and theory is once you raise that pay, you can't go back. You can't go back and take it away."

The math doesn't work

Today's economics don't work for child care providers, according to Amy Brooks, executive director of Early Care and Education Association.

"It's just not in their budget to lower tuition because their staff already don't make much money," Brooks said. "The biggest issue for most of our centers is they are operating with less staff, which makes it so they have less children, so they have less income, so they're not at their break-even. They're still operating at a loss due to a lack of staffing."

Nationwide, child care workers make an average of $24,230 a year, landing more than 15% of them below the poverty line in 41 states, according to a U.S.Treasury report last month.

The report said most for-profit child care facilities "operate on razor-thin profit margins" of less than 1%.

The industry needs a recalculation, according to Krista Olson, research & policy associate at the Center for the Study of Child Care Employment at the University of California, Berkeley.

"Beyond short-term pandemic recovery efforts, a functioning early care and education system will require significant increases in public funding and should be based on cost estimates of what it takes to run a high-quality program, including appropriate wages and benefits for staff," she said in an email.

The latest $42 million in federal stabilization grants for New Hampshire can be used for a variety of purposes.

"While these funds cannot be used for direct tuition payment, they can support the program's daily expenses and therefore will allow the providers to freeze tuition rates, increase staff wages along with offsetting the cost of operating the program," Leon said.

Even if it sounds like a lot of money, "it's not covering all of the losses," Cowell said. "Even after all this money."

Longer-term solutions are needed to solve the worker shortage.

"The magic wand would be maybe to pay for some recruitment, make community college free," Tremblay said.

Poaching workers

Today, child care centers poach workers from one another, and workers jump to providers offering more money, Tremblay said.

Schroder said a child care center that plans to close contacted her about taking on new kids. She didn't have open slots for that age group but asked whether any of her staffers were looking for a new job.

"Especially if they have experience," Schroder said. "If they come in and they have credentials, credits, yeah, we're going to take them."

Schroder didn't get any referrals.

"COVID has really put a spotlight on what's going on in day cares," Schroder said.

Other states are dedicating federal funds for child care workers.

According to Olson, "Minnesota requires that providers use 70 percent of their (federal) stabilization grant for compensation and benefits for early educator staff, such as increased wages, health and retirement benefits, and bonus payments."

Arizona, meanwhile, has established a dedicated retention grant that must be used for wage increases, premium pay and/or benefits for early child care workers, Olson said.

Currently, child care providers rely on tuition to pay their workers.

In New Hampshire, the average tuition for an infant is $260 a week. Older school-age kids average more than $200 a week, according to DHHS.

"I think if there were more federal funding, it'd be better for facilities to have staff and pay these staff to be here," said parent Kelly Steadman, whose 17-month-old son, Carter, attends Alpha-Bits. "They're underpaid, and they work really hard. That's where I'd see funding to be most beneficial."

Cowell said the economics of child care need to change.

"It's just going to have to be a different model than in the past," Cowell said.

"It can't be so dependent on parents' ability to pay child care. That's why it's in the state it's in."

Nick Brattan would love to provide subsidized day care, but his company, New England Document Systems in Manchester, can't afford it.

Some "employees are juggling having to work a second shift, so the other parent can watch the children because they can't afford the day care," said Brattan, its president.

The 85-employee company provides flexibility with schedules.

"I would love to see some assistance for child care," Brattan said. "It's exorbitant. It really is. It prevents a lot of people from even working. They're spending their entire check for day care."

What's Working, a series exploring solutions for New Hampshire's workforce needs, is sponsored by the New Hampshire Solutions Journalism Lab at the Nackey S. Loeb School of Communications and is funded by Eversource, the New Hampshire Charitable Foundation, Dartmouth-Hitchcock Medical Center, the New Hampshire College & University Council, Northeast Delta Dental and the New Hampshire Coalition for Business and Education.

Contact reporter Michael Cousineau at mcousineau@unionleader.com. To read stories in the series, visit unionleader.com/whatsworking.

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