Day-care owners are fighting for survival as federal funding runs out this month

The federal government kicked in nearly $40 billion in 2021 as part of the American Rescue Plan Act (ARPA) to keep the nation’s fragile childcare system afloat during the pandemic. Now, that support is set to run out at the end of this month.

To Damaris Alvarado-Rodriguez, the director of the Children’s Playhouse early-childhood learning centers, the pandemic should have been a moment when the value of childcare was finally appreciated for its worth.

“When the pandemic first happened, the whole world shut down and then people realized, ‘Oh, we have to reopen childcare’ … So we became essential workers. We were actually recognized and we [received] this new profound respect for our profession,” she said.

But the end of the ARPA funding shows that appreciation was temporary.

“You can only bear it for so long.”

According to Diane Barber, executive director of the Pennsylvania Child Care Association (PCCA), the stimulus money “kept the childcare system from collapsing, but it didn’t fix the problems.”

“It’s like playing Jenga,” she said. “We moved things around and took pieces from the bottom, but we all know how the game is going to end. Eventually you know it’s going to collapse.”

Nearly 3,000 Pennsylvania childcare programs are expected to close, according to research from The Century Foundation. TCF estimates this will mean the loss of over 11,000 childcare jobs, and over 150,000 children will lose childcare.

“In the past two weeks I’ve heard of five programs closing, And everything had to do with staffing. They can’t find the staff [for their centers],” Barber said.

A 2023 report from Children First PA, a youth advocacy program, stated almost half of 3,429 surveyed childcare workers from across the state did not envision being with their current day-care employer in five years, primarily because their pay isn’t keeping pace with the cost of living.

» READ MORE: ‘A real crisis’: Five takeaways from a new survey on childcare worker pay in Pennsylvania

Childcare program owners said that staffing is their greatest challenge, even when they had ARPA funding. Now that they’re nearing the funding cliff, they expect it to be even more difficult to hire enough high-quality, college-educated staff to maintain required teacher-to-child ratios.

“You can make $18 an hour at Costco versus working $18 an hour in a room with 10 kids, half of them are having behavior problems,” said Joanne Drinkard, the owner of Aardvark Child Care for nearly 40 years.

Drinkard was forced to close one of Aardvark’s two Delaware County locations largely because of the ARPA funding cliff. She said before the pandemic, Aardvark’s location in Primos had a staff of 33 employees. When it closed last month, it was down to just three.

“That’s the only way I stayed afloat,” she said about the ARPA funding. Drinkard explained that staffing challenges go beyond pay. More and more children in her programs have behavioral issues that they developed because of the pandemic, making the job even more challenging and less desirable.

“It’s just not fair and especially [to] low-income families that can’t afford to hire a nanny.”

“The most difficult thing is we need more money to pay the teachers. We absolutely need more money, but you can only raise the tuition so high,” she said. “Everything is so much more expensive. So here we are trying to keep our rates the same because our parents can’t pay more.”

Lisa Smith, who owns six local day-care centers, agreed.

“Chick-fil-A is paying $17 a hour. Without the fiscal support, we don’t have the ability to pay competitive wages,” Smith said, explaining how day-care owners are forced to compete for workers with retail outlets like Target and Walmart, and fast-food chains.

“You can only bear it for so long,” she said. “If you are not making any money, you can’t afford to make payroll. Owners will give it up, people who have had childcare centers for 20 or 30 years.”

If the childcare sector continues to weaken, it will launch an economic crisis. Without centers, parents — many of whom are single working mothers — will have to scramble to find alternative care for their children. “They’ll find that the center is further away or doesn’t offer the hours or is not the same caliber of care that every parent wants,“ Smith said.

Many frustrated parents will drop out of the workforce. And without working parents, it will be hard to continue to move the needle on the city’s high poverty rate.

» READ MORE: Philadelphia’s poverty rate is improving, but it remains the poorest big city in America

Despite an abrupt end to funding, Mary Graham, executive director of Children’s Village, in Center City, said the impact won’t be felt immediately on Oct. 1. “It will take time to realize the effect,” she said.

Staffers, for example, received up to $4,000 in bonus payments as a supplement to their wages under the ARPA funding. But because it wasn’t a direct pay raise that is now gone, and Graham said it will take time to realize that the bonus is gone and they are making less than last year. “Your paycheck hasn’t changed.”

“I have 100 staff. I don’t have $400,000 to supplement their pay,” Graham said.

Without government support, the annual cost of infant care can average over $13,000 per child in Pennsylvania. But according to the U.S. Department of Health and Human Services, affordable childcare should take up no more than 7% of a family’s income.

“The emphasis has to be put on finding a permanent solution or day-care centers will be closing down slowly,” Smith said.

» READ MORE: Congress must act to avert the looming childcare crisis | Editorial

Alvarado-Rodriguez is in a unique position in the Pennsylvania childcare space; she’s one of the few providers who are expanding. The Children’s Playhouse is currently in the process of opening a third location in North Philly.

Still, costs and staffing are significant issues, even with a heightened demand for childcare. Alvarado-Rodriguez is considering whether to open the new location with teachers who don’t have advanced degrees so she can find enough staff.

If she goes the traditional hiring route, Alvarado-Rodriguez will have to continue turning down families who want to send their children.

“Just the other day, I saw a child and [they were] outside with a relative [or] neighbor and the child was sleeping on the floor, outside in the cement,” she said. “Children are being left alone at home or being left with complete strangers that are unregulated and that’s very dangerous.”

She worries that the lack of appropriate childcare will leave untold numbers of children unprepared for school and the crucial years of early education. “It’s just not fair and especially [to] low-income families that can’t afford to hire a nanny,” she said.

“We are actually moving backwards.”