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Federal child care funding from American Rescue Plan Act ending

A total of $39 billion was allocated for child care funding under the American Rescue Plan Act, which was passed in March 2021.
Federal child care funding from American Rescue Plan Act ending
Posted at 12:47 PM, Sep 21, 2023

Pandemic-era child care funding is set to end on Sept. 30.

The $39 billion came from the American Rescue Plan Act, which was passed and signed into law in March 2021.

That money went to states which provided grants to child care facilities.

“The money that was set aside for that was actually the largest federal investment in childcare in U.S. history,” said Christina Huber, an economics professor at the Metropolitan State University of Denver. She has expertise in household economics.

So what does this mean for child care providers?

report by The Century Foundation from June found that 70,000 child care programs could close, which would leave approximately 3.2 million kids without child care spots. 

Owner of Tiny Green Trees, Kelly Belot says the funding cuts could put her out of business.  

"Every day. My husband and I, we talk about this 'what's plan b?'" said Belot. 

 At the very least she says she will be forced to write to parents to announce yet another tuition increase. 

"I've written this letter before and it's awful," she said. 

 With 70% of her revenue covering the salaries of her teachers  and with rising costs for rent, food and other essentials, she says something has to give. 

"The cost to provide quality care exceeds the income coming in," said Belot. 

SEE MORE: What does it cost to raise a child? Study shows prices have climbed

That means, many parents — especially mothers are being forced to leave the workplace. Erin Phillips waited for more than a year for her two-year-old daughter to get a spot at Tiny Green Trees. But if if becomes too expensive, she and her husband, both lawyers have already decided she would be the one to quit her job and take care of their child. 

"We really believe in what this center is doing, but we might not be able to swing it," said Phillips. 

Another daycare owner spoke of her concerns. 

“I am very scared, to be honest with you,” said Carolina Reyes, the owner and director of Arco Iris Bilingual Children’s Center in Maryland.

“Right now, I think families are not very aware,” she said. “Some of my families who are under the scholarships at the moment, I'm afraid they won't be able to continue. Some of them don't have the means to cover the tuition without assistance.”

She said last year she was able to increase salaries for teachers thanks to grant money.

“I’m very worried because that would mean I would not have money to cover nothing, and I’d have to close. That would be the next steps,” Reyes said.

The report from The Century Foundation also projects millions of parents will have to leave the workforce or reduce their hours, costing families nearly $9 billion each year in lost earnings.

“It’s still really, was just sort of a short term solution to a much longer term problem,” Huber said.

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