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Maryland child care advocates told the comptroller’s workgroup examining pandemic stimulus spending that although the additional money has been critical in stabilizing their industry, they are still operating “razor-thin margins,” struggling to find qualified workers and want to receive aid faster.
Comptroller Peter V.R. Franchot (D) called the state’s child care shortage and ongoing struggle to stay open the “worst example of government failure.”
“Child care is something that is connected to the overall economic prosperity of the state…we have to have child care,” he said.
Since the pandemic hit the state in March 2020, Maryland has lost 751 child care providers. And child care centers continue to close due to decreased enrollment, increased expenses and staffing shortages, Christina Peusch, executive director of Maryland State Childcare Association, told the workgroup.
Almost half of child care centers that have reopened are operating at 50 percent capacity, Peusch said. The average child care center teacher earns $26,000 a year while a child care center director makes an average of $41,000, salaries that make it difficult to attract new workers, Peusch said
Franchot established the Workgroup on Pandemic Spending last spring after the General Assembly required his office to track all stimulus funding. The workgroup will determine if the funds went to intended recipients and populations most in need, examine any disparities in stimulus distribution and detect potential fraud.
Peusch detailed a rocky rollout of stimulus support of child care providers at the start of the pandemic. Maryland used federal CARES Act funding to pay child care costs for Maryland essential workers, but providers did not get that money for nearly six weeks and some were not able to pay their staff, Peusch said.
Second, child care providers also received grants from the federal COVID Relief Package, but grant applications were so cumbersome that only half of the providers applied, Peusch continued.
Finally, child care providers also received $500 million in support from the American Rescue Act, including $300 million in direct payments. The Maryland State Department of Education was able to distribute funding to more than 5,100 providers that applied, but delivered the funds later than expected, Peusch said.
“The emergency federal relief funds have provided critical support for stabilizing child care programs and preventing more widespread permanent program closures, but they do not address the systemic challenges that have plagued our childcare market…for decades,” Peusch said.
Since 2003, Ruthie Claytor has owned a child care center called Grannie Annie’s Child Care in and Learning Center in Anne Arundel County. In the beginning of 2020, she went from her highest enrollment of 75 children down to 14 children in just two months. Her monthly revenue plummeted from $42,000 a month to $16,000 a month.
Claytor said she received a total of $307,800 in loans and stimulus grants, but if her enrollment does not increase soon, she only has enough money to stay open through the end of 2022.
“Child care is not like other businesses…we can’t manufacture something and sell more to get more income,” she said. “We have thresholds — I’m only allowed to have a certain number of kids based on our square footage.”
Peusch added that the majority of child care expenses are fixed and that the businesses can’t curtail expenses by working remotely.
Child care is also unique in that it is a private business that is providing a public good, Peusch said.
Providers at Wednesday’s hearing also lamented slow disbursement of funds from the Maryland State Department of Education; child care providers were supposed to receive American Rescue Plan grants by Sept. 30, but MSDE was not able to meet that deadline, Peusch said.
Grant applications were also very difficult to navigate for child care providers because they are tailored towards public schools and not business owners, Peusch said. Claytor said she had to use $20,000 of her savings to sustain her business because she did not know when or how much money would come in after she submitted her “very confusing application” for federal stimulus funds.
“We were really struck by the lack of urgency from the State Department of Education,” Peusch said. “If you’re trying to stay open, you need to know when that money is coming because it is rescue and it is stabilization funds — that’s what it’s supposed to be for.”
“We’re constantly screaming, we are constantly raising our voices to be heard because there is not a clearly recognized place for us within K through 12,” Claytor said.
But MSDE said they distributed funds as fast as they could.
“Understanding that the federal ARP funds could not be released into the hands of our providers fast enough, MSDE expedited the grant application and approval process — disbursing over $150 million to more than 5,000 child care providers,” Lora Rakowski, spokesperson for MSDE said in a written statement. “Adhering to an aggressive schedule, Maryland was one of the first States to distribute funds within days of meeting our preliminary target and well ahead of the U.S. Department of Health and Human Services deadline.”
When asked what the state could do to get qualified workers to fill vacancies in the child care industry, Peusch said easing some of the requirements to be a lead teacher at a child care center would be helpful. Currently, a teacher has to complete a 90-hour certification program and have at least a year of experience, but that year of experience could be waived because the industry is facing a critical shortage, Peusch said.
Increasing compensation and benefits for child care workers would also help attract new workers, Peusch said. For the next legislative session, child care advocates are pushing for bills that offer retention and recruitment bonus for child care workers to address the critical workforce shortages, Peusch said.
The most helpful thing the state could do for the child care industry is to provide a plan on how and when they are going to dole out the rest of the American Rescue Act funding, Peusch said. This way, child care providers can budget and plan much more effectively, she said. “We’re sort of operating without knowing what comes next,” she said.
Franchot apologized on the behalf of the state for its slow response to child care providers during the pandemic. “We’re going to fix this problem,” Franchot said. “This needs to be significantly and immediately redeemed.”