State’s child care industry struggles, officials say, but shows resilience during pandemic

The Minnesota child care industry has fared better than most states in the number of programs and providers that continued operating during the COVID-19 pandemic, the House Early Childhood Finance and Policy Committee heard during its first meeting of the 2021 legislative session.

“I really wanted to make sure we started this term diving right into this situation to understand what’s going on right now, to understand the status during the pandemic, the status of the state and federal responses to the concerns and then looking at a number of options going forward,” said Rep. Dave Pinto (DFL-St. Paul), the committee chair.

The percentage of family child care and child care center licenses operating dropped at the beginning of the pandemic but has returned to nearly 100 percent. This capacity is needed because many programs are running with smaller group sizes and other changes, according to Erin Bailey, assistant commissioner with Minnesota Management and Budget and executive director of the governor's children’s cabinet.

Financial support provided in phases by the state and federal governments as well as private and non-profit partners has provided a critical lifeline, Bailey indicated.

At the onset of the pandemic, the Legislature provided $30 million in industry support, bolstered by $10 million in federal CARES Act Child Care and Development Block Grant funds for the Peacetime Emergency Child Care Grants. Additional federal COVID-19 Public Health Support Funds of $56.6 million and $53.3 million were distributed to providers from July through December.

Despite the industry remaining stable, it still faces a precarious situation, according to the National Association for the Education of Young Children’s November Pandemic Provider Survey. Key findings from Minnesota respondents reported:

• 48% of child care center and family child care respondents said they are currently losing money by remaining open; and
• 45% are confronting so much uncertainty that they are unable to say how much longer they will be able to stay open.

The industry will be receiving additional financial support through the enactment of the federal Consolidated Appropriations Act of 2021 that was signed into law last month.

It provides an additional $10 billion for child care, with Minnesota receiving an anticipated $137 million of that to be used for the Child Care Assistance Program and to help support child care providers, according to Cindi Yang, child care services director of the Department of Human Services. However, Yang indicated it could be at least two weeks before provider stabilization funds will be available for distribution.