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NC lawmakers passed emergency child care funding. Is it enough to keep centers open?

A girl and boy play at a table with a child care worker at a daycare center.
Liz Schlemmer
Students play at the Community School for People Under Six in Carrboro, a child care center that has received federal COVID-19 relief stabilization grants.

Like child care centers nationwide, St. Stephens Loving Daycare Center in Rocky Mount used the tens of thousands of dollars of federal COVID-19 relief funding it received during the pandemic for far more than cleaning supplies and face masks.

Director Carolyn Slade said first she used the quarterly relief checks to cover the tuition of families who struggled to pay during the pandemic. Then she put the funding toward playground upgrades, necessary building renovations, and pay raises for staff.

“I was able to give my staff a raise all the way across the board,” Slade said. “And we were able to retain all 28 of our employees.”

Many North Carolina child care centers used the federally-funded “stabilization grants” to raise pay to retain staff in a tight labor market. The state’s Division of Child Development and Early Education encouraged child care providers to use the funds to raise pay for teachers.

Slade gave her employees a $2 an hour raise over their pre-pandemic pay.

“What we told them was as long as we have funding from the stabilization program, we would be able to keep them at that rate,” Slade said.

Now that the federal relief ended in June, Slade dreads having to cut her employees’ pay and worries about the long term effects.

“We've been able to stay open, thank God, and not close like some facilities that had to close their doors – but we've been able to stay open because of the funding,” Slade said.

The child care funding cliff is here, but it may be more of a “slope”

Advocates for early childhood education have long warned of a looming funding cliff as federal COVID-19 relief to the child care industry expired in June. Without any aid, experts predicted up to a third of North Carolina childcare providers could close, based on a survey of providers.

Child care providers and advocates hoped state lawmakers would make up for the lost funds in their next budget to help child care centers maintain their payroll. Groups like the North Carolina Early Education Coalition pushed for $300 million in state funding to support child care providers in the transition away from federal relief.

The House and Senate’s opposing budget bills were in near agreement on how much funding to provide the child care industry, with the House proposing $135 million and the Senate proposing $136.5 million. But with many other budget fights still on the table, state lawmakers adjourned in late June without passing a state budget.

Instead, lawmakers passed stop gap child care funding until they return this fall to finish the budget. Before state lawmakers put their budget session on pause, they passed $67.5 million in emergency funding to the child care industry.

That funding provides less financial support than providers had received with COVID-19 relief, but it alleviates the full effects of a funding cliff, according to Angela Burch-Octetree, interim executive director of the North Carolina Early Education Coalition.

“Instead of a cliff, it'll be more like a slope. Now, it's still going downhill. It's still not great, but it's something to keep them going,” said Burch-Octetree.

The short-term funding represents a portion of the proposed funding that House and Senate lawmakers had in their respective budgets.

“They realized that they needed to make a quick decision, and that this was an actual emergency that they needed to pay attention to,” said Angela Burch-Octetree. “It's a little encouraging, but encouragement doesn't help your bottom line.”

Child care providers will receive payments that are 75% of the amount they received in quarterly payments during the last several years. That means many providers will have to raise tuition or cut staff pay.

“It is still a cut, but it's better than nothing,” said Carolyn Slade of St. Stephens Loving Daycare. “I’m deeply concerned if it’s not long term.”

DHHS warns child care center closures could still be ahead

The North Carolina Department of Health and Human Services has administered the stabilization grants to child care providers. Since that system is already in place, the new funding will likely be in the hands of child care providers in a matter of weeks.

The Department issued a statement thanking the legislature for the stop gap funding:

“We appreciate the General Assembly recognizing that access to quality and affordable child care is critical to the growth and development of North Carolina’s children and our economic prosperity. This funding will provide some immediate relief with the looming child care funding cliff,” NCDHHS spokeswoman Kandice Scarberry said in a statement.

However, the statement also warned of what might happen if the legislature doesn’t return this fall with more funding. An estimated 5%of child care centers in North Carolina closed during the pandemic.

“Without further investments there will likely be more child care closures in the future,” Scarberry wrote.

Burch-Octetree said advocates hope lawmakers will put child care at the top of their priority list for the state budget when they reconvene later this fall – and again when they begin negotiating the next state budget in January.

Liz Schlemmer is WUNC's Education Reporter, covering preschool through higher education. Email: lschlemmer@wunc.org