By Lindsey Banks
The North Carolina budget that passed last month brought disappointment for child care providers and advocates who were hoping that lawmakers would extend a state child care grant that kept child care centers afloat during the pandemic.
A $300 million extension was proposed through June 2025 for the portion of the North Carolina Child Care Stabilization Grant that helps child care centers pay their staff and offer benefits and bonuses. Business leaders, including the Charlotte Regional Business Alliance, had advocated for the extension.
Instead, the state budget calls for the child care sector to use the remainder of 2021 federal COVID-19 funds to extend the compensation grants from December 2023 to June 2024 — essentially ending the grants one year earlier than child care advocates had hoped.
During the pandemic, the federal government invested $1.3 billion in the North Carolina child care system to keep facilities open. The stabilization grant was funded by the 2021 federal American Rescue Plan and focused on tuition assistance for families as well as higher salaries and benefits for child care workers.
The fact that no new funds were added to the 2023-24 state budget to extend the child care stabilization grant puts North Carolina’s economy at risk, said Ariel Ford, director of the Division of Child Development and Early Education for the N.C. Department of Health and Human Services.
“It’s not a complicated message,” Ford told The Ledger. “We need to invest in [child care] so that children can get access to great environments during the day or while their families are at work, families can go to work, and businesses have the workforce they need to thrive in North Carolina.”
One top lawmaker, however, believes other child care-related allocations that were included in the budget will help the industry long-term, including raising the subsidy rates that child care centers receive from the government for serving families in need. (Current rates are based on 2018 data, although the most recent child care market survey was completed in 2021.)
A spokesman for Republican N.C. Senate leader Phil Berger said there are “better options” than extending the federal allocations that are in the budget that give the government and child care industry more time to figure out a long-term solution to the child care crisis.
Touch choices coming, advocates say
Ford said child care providers have told her that an extension of the child care stabilization grant would allow families with children in child care centers to see their tuition increase slowly over time instead of one large jump when the extension ends.
“A concern that the department has — what I have — is that as tuition rises, working-class and middle-class families will start to get squeezed out of being able to afford child care and will have to make decisions about whether or not those parents work,” Ford said.
Without the $300 million extension, many child care centers will be forced to cut their teachers’ salaries — which now average about $12 an hour — or raise tuition if they want to stay open, said Janet Singerman, president and CEO of Child Care Resources Inc.
A tuition increase isn’t an option for facilities that primarily serve low-income families, Singerman said.
“We’re very disappointed in the state budget, and I think what’s left is to try and weave together some public- and private-sector strategies to begin to better address the inadequate financing of child care,” Singerman said.
Child Care Resources Inc. is a local nonprofit that administers child care subsidies to families in Mecklenburg, Cabarrus, Union, Rowan and Stanly counties. There are 433 total licensed child care centers in Mecklenburg County — 402 of which receive star ratings from the state, according to recent data from Child Care Resources.
Child care was a fragile system before the pandemic, Singerman said, but now, the industry is barely hanging on. Without adequate salaries or benefits, there isn’t an incentive for teachers to stay in the industry, she said.
Singerman said she expects child care classrooms and entire programs to close because of staffing shortages. The child care crisis extends beyond teachers and families; it affects the state economy, Singerman added.
“Employers have a need to recruit workers and induce more people into the workforce, and for people who have young children, child care is a barrier to workforce participation,” Singerman said.
State lawmaker responds
The state budget included other allocations to help families cover the cost of child care, including:
- A $900,000 allotment for implementing a “tri-share” pilot program in three counties that splits the cost of child care between the state government, businesses and employees. It’s aimed at families who work at participating businesses and make too much money to qualify for subsidized child care, yet struggle to pay their day care bills.
- $1.2 million in annual funding for grants to help community college students afford child care.
- $75 million across the next two years to raise the market rates of government child care subsidies to 2021 levels.
- $525,000 each year for two years to sustain existing in-home child care programs and launch new ones.
Randy Brechbiel, a spokesman for N.C. Senate leader Phil Berger, sent a statement to The Ledger explaining why the stabilization grant funds weren’t extended:
“State lawmakers felt there are better options than to extend federal funding levels originally issued in response to Covid-19,” Brechbiel wrote. “Both the compensation grant funding and the child care subsidy 2021 market rate increases give the Division of Child Development and Early Education, the child care commission and child care center business owners time to put together a plan that aims to reduce unnecessary regulations and educational credentials that contribute to staffing shortages across licensed child care centers. In fact, Senate Bill 291 (now SL 2023-40) specifically directs the N.C. Child Care Commission to come up with a plan to address regulatory reforms in the child care industry space before the start of the 2024-25 fiscal year.”
But Singerman said it’s not the long-term solution that the sector needs to end the crisis.
“During the pandemic, the costs to deliver child care escalated, the cost of staffing escalated, making it an even more fragile economic equation. That’s why these compensation grants and stabilization grants were so critical to the stability of the industry throughout the pandemic,” Singerman said. “Costs are still high, and we’ve come out of the pandemic with a workforce shortage and with wage inflation, and these costs can’t continue to be passed on to parents.”