LOUISVILLE, Ky. (WDRB) -- Child care centers nationwide, including in Kentucky and Indiana, are about to lose out on federal funding that helped bring them back from the COVID-19 pandemic.
In 2021, the American Rescue Plan Act (ARPA) allocated around $470 million to help Kentucky child care to come back, according to the Kentucky Cabinet for Health and Family Services. The Kentucky Center for Economic Policy said, in total, it was more like $1 billion for the commonwealth.
But nearly two years since they started, the quarterly payments end in September. And the industry is in jeopardy.
"I think most directors and owners right now are a little panicked about what it means," said Bridget Yates said, executive director for Cornerstone Childcare Development Center in St. Matthews for 17 years. "It's really scary. And I do talk to lots of other directors and owners, and the conversation is the same, which is, 'What are we going to do?'"
Dustin Pugel, policy director at the Kentucky Center for Economic Policy, said the ARPA funds were split into two types, quarterly subsidies for the center to pay its workers and stay open and another batch to help improve the quality of care offered.
"That certainly had an impact here in Kentucky," Pugel said. "(The first round of payments) was a huge amount of money, on average, about $33,000 per child care center."
A study done by the Prichard Committee for Academic Excellence, centered around the way providers will be impacted once federal American Rescue Plan money runs out, found that more than 70% of child care providers will be forced to raise tuition.
The study compiled data from 500 of Kentucky's 1,698 child care providers, which came from 94 of the state's 120 counties. About 40% of child care centers said they would cut wages, while 30% said they would lay off staff. And more than 20% said they would permanently close their child care center.
The survey was conducted between Aug. 15-29, 2022, in partnership with Metro United Way, the United Way of Kentucky, Child Care Advocated of Kentucky, Appalachian Early Childhood Network and more.
"We are calling for state leaders to avoid the American Rescue Plan funding cliff for child care by stabilizing Kentucky’s early childhood sector prior to the close of the 2024 state budget session," authors of the study said. "... Without a plan to keep the child care sector from plunging off a post-American Rescue Plan funding cliff, providers again find themselves facing impossible choices."
Yates said they're faced with the choice of charging families more but said there's a cap centers can't go over or they lose families that can afford it.
"Although we knew that this would end, the real hope was that it would cause a shift in this industry, that, again, we can't have a balanced budget based on tuition alone and have high-quality child care," she said. "Just, mathematically it won't work."
The Kentucky Center for Economic policy estimates that, without the ARPA funding, there will be an annual $300 million gap for day cares across Kentucky.
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