The Looming “Child Care Cliff” – Is Maryland Close to the Edge?

This article is part of MACo’s Deep Dive series, where expert analysts explore and explain the top county issues of the day. A new article is added each week – read all of MACo’s Deep Dives. 

The Blueprint for Maryland’s Future (“The Blueprint”) prioritizes early childhood education as its first pillar, including the gradual but eventual universal access to prekindergarten for 3- and 4-year-old children. Doing so is a monumental undertaking proving to offer both challenges and opportunities.

One potential consequence causing concern for many stakeholders is the impact of pre-K expansion on the child care industry. The Blueprint envisions a collaborative system of public-private partnerships for expanded pre-K. With more 3- and 4-year-olds moving on from child care facilities to pre-K — and with child care facilities entering the pre-K arena to help meet Blueprint goals — some stakeholders are concerned that there might not be enough providers (or seats) for natal-3-year-old child care. A recent Maryland Matters report highlighted this concern:

‘The state has previously relied heavily on a network of private child care providers. Maryland has about 4,000 family child care providers that can enroll up to eight children…’ However, moving private providers into pre-K services, other child care services may suffer from a lack of providers: ‘If more children ages 3 and 4 attend prekindergarten in a public school, that could decrease enrollment at child care centers and family child care providers.’

The looming “child care cliff”

Maryland’s concerns are on top of the child care industry’s existing significant issues, which some experts are already calling the “child care cliff.” The COVID-19 pandemic exacerbated existing challenges in early childhood education — a shortage of quality, safe institutions, and industry professionals. In fact, according to ChildCare Aware of America, 9% of licensed child care centers closed between December 2019 and March 2021.

The American Rescue Plan Act (ARPA) provided almost $40 billion in federal emergency aid for child care nationwide. The funds went to helping child care providers pay for rent, lowering tuition rates for families, and increasing wages for industry workers. That aid is scheduled to end on September 30 of this year. Researchers predict that when that happens, “3.2 million children could lose their daycare spots as roughly 70,000 programs are expected to close, and 232,000 caregivers are expected to lose their jobs.”

Furthermore, the loss in tax and business revenue is predicted to cost states $10.6 billion annually in economic activity as millions of parents will have to reduce their hours or leave the workforce to care for children no longer in child care. According to Route Fifty:

Those parents are projected to lose a collective $9 billion annually in earnings.

A huge share of those households are living paycheck-to-paycheck, the report noted, meaning any disruption to employment caused by the loss of child care could push families into food insecurity or housing instability.

While the “child care cliff” is of universal concern, states are predicted to vary in impact, according to the Century Foundation.

Researchers predict that the number of licensed programs could be cut in half in Arkansas, Montana, Utah, Virginia, Washington, D.C., and West Virginia. In more than a dozen other states, the number of licensed programs could drop by a third.

New York and Texas are projected to see some of the greatest losses: The report says they could lose thousands of child care programs, leaving hundreds of thousands of children without daycare.

The Century Foundation predicts that Maryland will see the following impacts of the September 30 expiration of ARPA child care aid without intervention:

  • 69,044 Maryland children are expected to lose child care;
  • 2.384 child care programs/providers are expected to close; and
  • 4,633 child care jobs are expected to be lost.

How some states are addressing child care

Reporting from Route Fifty notes that many states started to address issues in the child care sector long before the COVID-19 pandemic and are now doubling down ahead of the end of federal aid:

Given the industry’s struggles, most states were already looking for ways to bolster child care programs. The additional aid helped many of them expand access in their states. Now, they are looking for ways to continue building on that progress after the federal aid ends in September.

Here are some examples of what states are doing, as reported by Route Fifty:

  • Michigan launched its Caring for MI Future initiative last year using Child Care and Development Block Grants to support existing providers and help new providers get their start. Over the last year, the initiative has created hundreds of new programs and expanded nearly 2,000 existing programs.
  • Minnesota approved a $750 million investment to help child care workers attract and retain employees, expand program openings and lower the cost of tuition for families.
  • Montana enacted a law that will provide a $7 million annual boost to a program that helps low-income families pay for child care.
  • New Mexico voters approved a constitutional amendment making child care a constitutional right. To fund the effort, the state takes a percentage of money from oil and gas leases.

What Maryland is doing

Maryland has enacted substantial measures to stabilize the child care industry post-pandemic and ahead of Blueprint pre-K expansion. During the 2022 legislative session, MACo supported a child care stabilization package (which ultimately became law) that included measures like:

  • Providing financial aid for existing licensed child care providers and grants to incentivize new providers to come into the market; and
  • Providing new hire and retention bonuses for child care providers and employees.

The Maryland State Department of Education (MSDE) has administered two rounds of stabilization grants totaling $285 million of federal funding. Federal funds are now exhausted; however, the State extended its Child Care Stabilization Grant Program and added $50 million in additional funds to provide additional relief to licensed child care providers.

Furthermore, Maryland — like Louisiana and Missouri — is also funding early childhood education through the state’s revenue from sports betting.

Read the full Route Fifty article.

Access the Century Foundation report.

County leaders will dive into early childhood education at the 2023 MACo Summer Conference

The 2023 MACo Summer Conference general session, Embracing Without Spacing: Pre-K Expansion and Early Childhood Education,” will examine the capital challenges and opportunities of Pre-K expansion, including facility space and funding.
The 2023 MACo Summer Conference will be held at the Roland Powell Convention Center in Ocean City, MD, from August 16-19. This year’s theme is “Where the Rubber Meets the Road” More information can be found on our conference website.