Since the start of July — right after the legislature approved state money to replace federal child care funding as it expired — the state has had a net loss of 69 licensed child care programs. That’s almost double the state’s net loss over the previous three months, from April to June.

The state Department of Health and Human Services (DHHS) distributed a total of $67.5 million to programs this week, covering about 75% of the federal funding. Legislators passed that funding at the end of June, days before the federal assistance ended on July 1.

That means programs had gone without any stabilization funds for more than two months. Without outside funds, providers and advocates have warned of closures, higher prices, and lower quality.

On Aug. 22, when EdNC asked DHHS about the lag in distributing the state money, a spokesperson responded: “These funds are important for our state’s child care providers. NCDHHS is working with the Office of State Budget and Management to process and distribute funds as quickly as possible. It will also be important for additional funds to be appropriated to help stabilize an industry that is critical to our state’s workforce.”

About one in five providers responding to a February survey from the North Carolina Child Care Resource & Referral (CCR&R) Council said they expected to close within a year if they got no outside funding. The loss of 69 programs represents a 1.4% decrease in the number of licensed programs from July 1 to Sept. 19, according to Linda Blanton, consumer education and referral specialist with Child Care Resources Inc.

Jason Carrow, director of the nonprofit Care-O-World Early Learning Centers in Eastern North Carolina, said his program had to deplete its savings over the last two months.

He echoed the sentiment that additional funding is essential if programs are to remain open.

“I can’t think of any industry that’s able to survive on 25% less income than they were a year or two or three ago, and that is the current situation,” Carrow said. “The income stream for us has been cut by 25%, while inflation over the past few years has been tremendous.”

Cooper calls for more

State legislators will meet two more times before the state funding runs out at the end of the year. Gov. Roy Cooper is pushing for action before that funding ends.

“North Carolina relies on high-quality early childhood education and child care to support children’s healthy development and learning, allow parents to work and keep businesses running,” Cooper said in a news release Wednesday. “But these programs are now in crisis and we need the legislature to step up and make real investments before more child care centers close, more early childhood educators quit and programs become unaffordable for too many parents.”

The legislature allocated the $67.5 million to be spread out through December after advocates had been pushing for $300 million in stabilization funds. Cooper’s budget called for $200 million.

Rep. Donny Lambeth, R-Forsyth, said in June on the House floor that the legislature would be back later in the year to pass a budget before those funds run out. In September, legislators passed a mini-budget without additional child care funding.

EdNC asked legislative leaders whether there are plans this year to allocate additional child care funding. House Speaker Tim Moore, R-Cleveland, and Senate President Pro Tempore Phil Berger, R-Guilford, had not responded at the time of publication.

Higher prices, lower quality

The last two months have been difficult, said Anna Mercer-McLean, director of Community School for People Under Six in Carrboro, a nonprofit child care program that is celebrating its 55th year this month. Although the program survived, it had to increase tuition in August to maintain teacher wages.

Mercer-McLean has been with the program for 33 years.

“Typically, for us, we would increase every three years, but this is the first time since I’ve been here that we’ve had to do an increase within one year,” she said.

Mercer-McLean said the state funding came just in time for the program to meet payroll.

“The funds that we are receiving are limited,” she said. “They’re way less than we would have previously received. But they are beneficial to the continuation of our program.”

She said the operation of her program has been a day-to-day equation. Although the loss of federal funding has exacerbated the struggles of operating a child care program, that financial equation is not new.

Because of how labor-intensive child care is, programs struggle to pay competitive wages while still keeping care affordable for most families.

“We try to make sure we’re not burdening families by our increase,” Mercer-McLean said. “We try … not to go beyond what we feel like families can afford, even though we want them to understand, the full cost of care is even more than what you’re paying.”

In the last year, Carrow said he has made other sacrifices to ensure that the loss of federal funds did not lead to closure. The program has had to increase tuition, charge families a supplies fee, and increase teacher-to-staff ratios.

“The trade-off of that is quality, of course,” he said. “They’re getting less one-on-one care. They’re getting less individualized attention.”

Cutting wages, he said, is not an option.

“It would essentially be shutting our doors if I was to say to staff, ‘We’ve got to cut your hourly wage by 10% or 15%,” he said. “And I understand that. I mean, they can go and work at Walmart or Walgreens … and make at least what they’re making now.”

‘It’s going to take a village’

Some states have replaced the federal relief dollars with state dollars. Some have created permanent public funding streams.

At the turn of the century, North Carolina was considered a leader in early childhood policy and investment. But advocates say funding here has stagnated, and longstanding problems have not been addressed.

Kristi Snuggs, president of Child Care Services Association, said public investment is needed to address those problems, as well as support from private businesses.

“I think it needs to be a combination of federal and state funds and families and businesses,” Snuggs said. “It’s sort of like the old adage that it takes a village to raise a child. It’s going to take a village to fund child care.”

As things stand, child care, especially rural child care, is less sustainable than ever, Carrow said.

“I truly think that if we don’t receive, not only this reduced funding, but receive funding on top of that, that in a year, two years — I don’t know exactly how long it will take — rural areas will have extremely limited child care,” he said.