Democrats call for action ahead of child care ‘funding cliff’

Billions in federal subsidies for child care providers are set to run out in September, leading top Democrats and those in the industry to warn of a “child care cliff.”

The $40 billion program was part of the American Rescue Plan, passed to relieve the economic burden of the COVID-19 pandemic in 2021. It allowed struggling child care facilities to raise wages, lower tuition and expand services, advocates say.

With the program ending Sept. 30, an estimated 3.2 million children could lose access to child care, according to research by The Century Foundation. 

The foundation estimates that one-third of the child care facilities that receive the funding will close, costing the U.S. economy more than $10 billion per year and costing families $9 billion annually in lost earnings. The Century Foundation study also estimated that half of all child care facilities in states like Arkansas, Utah and Virginia will close and nearly 250,000 people will lose their jobs.

That has Democrats scrambling to push for efforts to extend the programs.

“Failing to invest in child care means failing to invest in our economy — it means worsening an already serious workforce shortage,” Sen. Patty Murray (D-Wash.) said in a statement last month. 

“This isn’t rocket science — businesses are struggling to hire the workers they need, parents need quality child care to get to work, child care workers need a living wage if we want them to take care of our children, and kids deserve a safe place to grow up and learn,” she added.

But attempts by the Biden administration to expand the funding were halted by Sen. Joe Manchin (D-W.Va.) last year, citing its price tag. With Republicans taking a hard line on government spending, any extension is now unlikely.

The average child care cost is more than $10,000 per year, and losing federal support will only drive that number up through raised tuition, the study’s authors wrote.

“When the federal funds expire in September, this progress toward a better-resourced child care sector that can provide the quantity and quality of care that America needs will be reversed, and the long-felt stresses of insufficient supply and unaffordable prices of child care will not only return, but will grow exponentially,” they wrote.

Impacts would be unequal. New York is slated to lose more than 5,000 child care facilities serving about 250,000 children, according to the research. Texas is estimated to lose child care for more than 300,000 children.

“Today, most parents work, and so they need affordable, high-quality child care and early learning options for their children … Parents need safe, nurturing care options for their children. As families lose access to child care, many parents will need to leave employment or reduce their hours to fill the gap, losing earnings and jobs,” the research states.