More Than Three Million Child Care Spots Saved by American Rescue Plan Funding

“The grant money is the ONLY thing that has kept us from having to close our facility.”—Heather, South Carolina, works for a faith-based child care program serving approximately 200 families

“The stabilization grant is what has enabled us to stay open. We would 100% be closed now without it.”—Sarah, Wisconsin, works for a child care center serving approximately 150 families

Before the pandemic unfolded, the failure of the United States to invest in a comprehensive child care and early learning system meant that families across the country were already facing out-of-reach child care costs, child care deserts, and inhospitable workplace policies. Many early educators faced low wages that forced them to work multiple jobs or rely on public assistance programs—and these inequities disproportionately impacted women of color. And once the pandemic began, school, camp, and child care closures—and the increased costs of continued operations for those programs that were able to remain open—further exposed the vulnerabilities of the child care and early education sector.

In early 2021, Congress passed, and President Biden signed into law, the American Rescue Plan Act, which included nearly $40 billion to provide relief to families and the child care sector, on top of the previous child care relief funds from the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the Coronavirus Response and Relief Supplemental Appropriations Act (CRSSA).¹ One year later, the vast majority of states have been using these funds, and with them have mitigated much of the originally projected consequences of the catastrophe. 

Recent data from Child Care Aware of America shows that 16,000 child care programs closed over the last two years. This sample looked at thirty-seven states, and if applied to all fifty states, it is likely that more than 20,000 child care programs closed, or roughly 9–10 percent of the pre-pandemic population of child care providers. Yet, many others managed to stay open at great personal risk and expense. Child care owners went into debt, stopped paying themselves a salary, or stayed open despite losing money every day. The relief funding from Congress helped stabilize these providers, re-open others, and provide needed funding to raise wages to help mitigate staffing shortages as well. 

This follow-up analysis shows that the ARP Act saved more than 70 percent of those projected losses. And we know that this number will likely be even higher when all the data is in.

The most recent survey from the National Association for the Education of Young Children (NAEYC) showed that of those who received stabilization grants, 92 percent said it helped them stay open.² In addition, nearly half (46 percent) of providers reported using child care relief to pay off debt they took on in the course of the pandemic, including 63 percent of those in family child care homes. And while three-quarters of respondents used the funds to support compensation for educators, compensation remains far too low, and educators continue to leave their programs for jobs in other sectors where employers can pay staff more.

More than Three Million Child Care Spots Saved

This commentary presents new analysis using state-by-state NAEYC survey response data from July 2021 and Center for American Progress child care deserts data.³ This analysis shows that according to a national sample of child care administrators, the American Rescue Plan funds—building on the earlier federal COVID-19 relief funds—helped prevent nearly 75,000 permanent child care closures, saving more than 3 million spots for young children who need care and education. This is likely an underestimate, as the data does not include the three states who have been the last to release their stabilization funding; nor do the data take into account the full impact of the funds that were released after July 2021. 

At the outset of the pandemic, nearly all child care providers had to close their doors for at least a few weeks. When NAEYC surveyed their members in April 2020, about half said that they would not be able to stay solvent without rescue funds. While most of those funds would not arrive until the passage of the American Rescue Plan in March of 2021, most child care providers used every available financial tool to keep their doors open, including, as noted, going into personal or business debt, which has further strained the sector. 

That same survey in April 2020 suggested that without federal rescue funds, the entire child care sector might lose 4.5 million spots for young children. This follow-up analysis shows that the ARP Act saved more than 70 percent of those projected losses. And we know that this number will likely be even higher when all the data is in. While the child care sector continues to suffer from severe staffing shortages, limiting the ability of many providers to enroll as many children as they could, the stabilization funds in the ARP have kept the industry from collapse. 

Table 1.

Now, Build the System

The failure of the United States to invest in a comprehensive child care and early learning system before the pandemic made it much harder for the child care sector to withstand the crisis. The pandemic-related challenges also made things worse. Without the American Rescue Plan, the sector may have collapsed. It’s example proves that when America’s elected leaders act to address care needs, progress is possible. 

Yet, these measures are temporary, and have only brought the sector closer to where it was before the pandemic—a dire state in which families face extensive waiting lists, impossible commutes, and child care costs that rival college tuition; and in which the child care sector is one of the lowest paid sectors in the nation. Now it is time for Congress to build the child care and early learning system that the United States has needed for decades. The House-passed policies in the Build Back Better Act would be game-changers for children, families, and economic growth.

1. Congress included $3.5 billion for child care relief in the CARES Act and $10 billion in CRSSA.
2. Since we do not yet have access to the state-by-state data from that survey, we used earlier data from the summer. It is likely that more has happened since July, as states were on different timelines or releasing and granting funds.
3. Since not all of the funds had been fully released in July, the July data reflects the impact of the CARES and CRSSA funding and some of the ARPA funding, as well as the anticipation of securing the ARPA funding that helped many providers hold on for longer than they otherwise would have.

Tags: care economy, child care, american rescue plan