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Without additional funding, child care costs are likely to rise, providers say in survey

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  • Child care programs have been receiving federal stabilization funds since November 2021. All of that funding is set to run out in December of this year.
  • Almost nine in 10 programs used the compensation portion of the funds to increase staff wages, according to results of a new survey. Almost half of family child care providers established salaries for themselves for the first time.
  • For lead teachers in centers, wages increased by 21% after the grants, from a median hourly wage of $11.50 to $13.92.
  • Most providers said they will not be able to maintain increased wages and bonuses or said they are unsure they will.
  • When asked how the end of the funding will affect their programs, respondents said it probably will be difficult to hire staff with comparable education and experience, and they probably will have to increase parent fees.

Child care programs across North Carolina have used grants from federal stabilization funds to boost their teacher compensation since November 2021. Most of that funding has run out, and all of it will be gone at the end of this year, leaving questions about what will happen without more funding.

In an interview with EdNC in December 2022, Director Ariel Ford of the Division of Child Development and Early Education (DCDEE) predicted that teachers would leave, parent fees would rise, and quality would suffer.

“And so what we’ll see is that child care is unattainable for most working families across North Carolina,” Ford said.

Results of a new survey of child care providers by the North Carolina Child Care Resource & Referral (NC CCR&R) Council offer context on the difference the federal funds made — and what the end of those funds might mean for children, families, teachers, and businesses.

Without continued funding, respondents said, they’ll almost certainly have to increase parent tuition rates — rating the likelihood at an average of 3.91 on a scale of 1 to 5.

“When these funds end, and if these funds are not replaced, we think it’s going to be a much more difficult environment for child care, which means it’ll be a more difficult environment for all those families who rely on affordable, quality child care,” said Janet Singerman, president and CEO of Child Care Resources, Inc.

Advocates during this year’s legislative session have pushed for the state to step in — one bill with bipartisan sponsorship would allocate $300 million to continue these supports for two years. But that funding did not make it into the House budget proposal.

Almost nine in ten of the 2,518 providers who responded to the survey said they used the compensation portion of the funds to increase staff wages. Eighty percent of centers said they will not be able to maintain increased wages to lead teachers or are unsure they will, while 90% of home-based providers responded that way.

When asked about the impacts of the end of the stabilization funding, the most common response was that they would struggle to hire and retain teachers with comparable experience and education.

The NC CCR&R Council contracted with Well World Solutions to conduct the survey, to which 1,493 child care centers responded, 901 family child care homes responded, and 69 responded who represented other provider types, such as Head Start and school-based pre-K programs.

Out of 5,499 total licensed child care programs, 4,371 received an email in March with the survey link . Ninety-seven percent of centers who responded and 95% of homes received the compensation portion of the stabilization funds.

Since only 69 programs represented other types of providers, the analysis of the results focused on centers and home-based programs. On average, centers had received $245,347 in stabilization funds, and homes received $44,063.

Increased pay and benefits

Programs used the funds to increase staff wages and provide bonuses. Most programs either said they wouldn’t be able to maintain those wages or aren’t sure they would.

Eighty-nine percent of programs increased salaries with the funds. Almost half of family child care providers (46%) gave themselves salaries for the first time.

For lead teachers in centers, pay increased by 21% after the grants, from a median hourly wage of $11.50 to $13.92, which equates to a $5,033.60 annual pay bump. Family child care providers’ median hourly rates increased by 26%, from $12.00 to $15.07, or $6,385 annually. Center directors’ wages increased by 19%, from $16 to $19 an hour, or $6,240 annually.

Eighty percent of centers said they either won’t be able to maintain increased salary levels of lead teachers (41%) or don’t know if they can (39%). Ninety percent of family child care homes said they will not be able to (59%) or are unsure (31%).

Providers also used the funds for bonuses. Center staff received an average of five to six bonuses, totaling $2,000 to $3,000. Family child care providers received an average of four bonuses, totaling $3,500. Ninety percent of all providers said they were very unlikely, somewhat unlikely, or unsure whether they could continue bonuses once the funds run out.

Some providers used the funds to add benefits for staff. The share of programs providing mental health supports rose 14% (from 13% to 26%), and the share of programs providing health insurance went from 24% to 34% of respondents. Seventy-six percent of providers said it was very unlikely, somewhat unlikely, or uncertain they could continue the increased level of benefits after funds dry up.

Hiring and retaining staff

Sixty-one percent of respondents used the funds to hire additional staff. These hires were often to replace pandemic staff losses, according to the survey report.

Forty-one percent of providers said the funds made it easier to hire new staff, while 43% said their ability to hire was about the same as before. Almost half (48%) of providers said the funds made it easier to retain staff, while 41% said retainment was about the same.

Centers were asked about the quality of hires during the grant period compared with hires beforehand. Results were mixed: 30% of respondents said individuals were less educated and 35% said they were less experienced, while 30% said staff members were more educated and 26% said they had more experience.

The survey report’s conclusion said programs “would find it more difficult to hire comparably educated and experienced staff and would have to increase parents’ fees when the funding ends. They were unsure whether they would be able to retain their current staff.”

Programs reported having an average of 25 waitlisted children (37 on average for centers and five on average for homes).

What’s next?

The Senate probably will release its budget proposal in May. It is unclear how much funding, if any, will make it in the final budget to extend the compensation grants.

The current proposal from early childhood caucus chairs would allocate another one-time investment.

Other states have established long-term, public early childhood funding sources, like land grant funds in New Mexico, tobacco settlements in multiple states like Connecticut and Missouri, and sports betting and gambling in Louisiana and Maryland. In Michigan, the state is expanding a tri-share model, which splits the cost of child care between businesses, employers, and employees. North Carolina’s House budget includes a three-county, three-year pilot to try out a similar model.

Liz Bell

Liz Bell is the early childhood reporter for EducationNC.