Child Care Funding Cliff at One Year

The Century Foundation has released a new report examining how five states are navigating the expiration of the child care federal stabilization from September 2023. As anticipated, child care costs are rising, supply is stagnant, programs are closing, and many families are struggling to find affordable options. 

This ongoing issue stems from a long-standing lack of investment in child care and early learning, which the COVID-19 pandemic exacerbated. While pandemic relief funding alleviated some of these challenges and highlighted the importance of public investment, states are now working to maintain stability and, in some cases, are making more significant investments that show promise.

Although the report focuses on five states, the same circumstances are occurring across the U.S. Here are the key takeaways:

1. Rising Costs: Child care prices are increasing faster than overall inflation. Economists at KPMG found that between 1991 and 2024, the costs for child care and preschool rose at nearly twice the pace of overall inflation.
2. Child Care Prices Exceed the High Cost of Housing: In forty-five states plus Washington, D.C., the average annual price of child care for two children in a center exceeded annual mortgage payments, and in all fifty states plus D.C., it exceeded average annual rent payments. 
3. Shrinking Supply: The number of child care programs is flat or declining, and many child care programs have shut down due to financial pressures. The result is that child care waitlists are growing as providers fight to stay open.
4. Employment Decline: The child care sector has experienced a significant drop in employment levels amid stagnant low wages. Child care employment is below pre-pandemic levels.
5. Economic Impact: The lack of investment in child care has broader economic implications, affecting parents’ ability to work and contributing to economic instability.
6. Need for Public Investment: The report emphasizes the necessity of public investment to stabilize and improve the child care sector. States that have invested state funds or repurposed federal dollars, like Wisconsin, are faring better.

The overall message is clear: without sustained public investment, the child care crisis will continue to worsen, impacting families, children, and the economy.

Check out the full report here: https://tcf.org/content/report/child-care-funding-cliff-at-one-year/?mc_cid=40ec023eb0&mc_eid=00217732b3

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