The state’s child care centers, like Friendship House, are a critical economic piece that much of the state’s workforce depends on. But they are now threatened by the end of $1.3 billion in federal subsidies to Georgia.
“There is no rainy day fund — We had to spend the money when it came in,” said Mary Thelma Norris, director of the Friendship House, which has a staff of 21 caring for 73 children. “We are not surprised, but we are devastated.”
Like a row of dominos, the end of payments could tip hundreds of centers into failure, throw thousands of low-wage workers into unemployment, send tens of thousands of children back to their families during the day and force their parents to find alternative care.
Or stop working.
That would be devastating for newly single mother Maria Watson, whose 1-year-old son goes to Child Prophesies, a small Decatur daycare center that also provides after-school care for her two older children as she drives for a ride-hailing company.
“I don’t know what I’d do if they closed,” she said.
And there’s reason to worry, said Lisa James, the center’s owner and now sole teacher, who was forced to lay off her other two teachers when the federal subsidies ended.
“We used most of the grant money to subsidize low-income parents and raise teacher pay,” James said. “Right now, I don’t know what we are going to do.”
About 75,000 people work in the state’s child care sector, said Ellen Reynolds, chief executive of the Georgia Child Care Association.
“They make it possible for 300,000 families to get into the workforce. We are the industry that makes it possible for all the other industries to be adequately staffed.”
An estimated 335,000 children are in licensed child care, according to the state Department of Early Care and Learning (DECAL). Many thousands of others are in neighborhood, family or “underground” centers.
The child care sector has coped with staffing shortages, staff turnover and low profit margins for years. But when the pandemic threatened to shut it down completely, federal programs were created to keep it alive. Georgia received $605 million in “stabilization” funds from the American Rescue Plan Act (ARPA) and $403.6 million from the Coronavirus Response and Relief Supplemental Appropriations Act.
But Congress declined to extend that funding and it ended Sept. 30.
Most of the state’s child care centers had grants, according to DECAL, which administered the money in monthly increments. With the end of the program in sight, officials hoped centers were saving up to handle the crisis.
“This definitely creates some concern for child care providers, families in Georgia and the economy as a whole,” said Rian Ringsrud, DECAL’s deputy commissioner.
But even knowing what was coming, some centers — especially the smaller, independent ones — had continual needs and could not create a cushion.
The federal money helped keep the lights on and pay rent, but staffing accounts for the lion’s share of costs. Child care workers are notoriously low-paid, which fuels rapid turnover, but with federal money, centers raised wages.
Center workers at Friendship House in Dalton are now paid about $15 an hour, said Norris. “Before the pandemic, we had paid $10 or $10.50 an hour.”
Losing federal help not only squeezes an already-thin margin for many centers but it threatens to spur an exodus of staff when there’s already a shortage.
Regulations require centers to keep a certain number of teachers for each child, a ratio dependent on the children’s age. So if a center loses teachers — or lays them off — it must also reduce the number of children cared for.
The sector still lags the overall recovery, said economist Jackie Benson of Wells Fargo. “The U.S. has still yet to fully regain its pre-pandemic child care workforce.”
Worse for providers, wages have risen for many blue-collar workers, so child care workers have many better-paying options.
So, to keep staff — and keep the lights on — centers face having to raise rates that already challenge many working families.
Erica Brantley Gwyn, who runs the Seven Oaks Academy in Lilburn, has already warned parents of 40 children that they could see a painful spike in tuition.
Even with more money, she’s worried that she won’t find enough teachers.
“The focus of that (ARPA) grant … was for us to increase salaries” and hire more teachers, she said. “So, we’ve done that, but now we’ve been left to hang dry.”
Atlanta-based Quality Care for Children, which supports child care providers and their families, surveyed area centers before the subsidy ended. Ellyn Cochran, the group’s president and CEO, said more than 80% of the area’s centers would probably raise rates — if only to keep their staffs now that many big employers have upped the ante on pay, she said. “You can’t go back to paying folks $12 an hour.”
The fear is that staff cuts and loss of child capacity will be amplified in coming months across the sector in centers small and large, as the loss of federal help nudges many centers off what advocates call “a child care cliff.” Since the economics of child care have always been precarious, even the optimists predict closures.
The most-cited — and most pessimistic — prediction is from The Century Foundation, which predicts closure nationwide of more than 70,000 centers affecting 3.2 million children. In Georgia, it projects 944 closures affecting more than 81,000 children.
Critics say that’s inflated.
However steep the closures, Quality Care for Children’s Cochran said any loss of centers will still mean fewer choices for parents — and more expense. “And when supply diminishes, where are families going to find care?”