Child care and early education childhood industry asks for bailout from the state

"This threatens the very life of our industry." William Penn Foundation and Vanguard give $7 million for an emergency fund.

This article was originally published in The Notebook. In August 2020, The Notebook became Chalkbeat Philadelphia.

Updated 3/30 2 p.m

Child care and early childhood centers are asking the governor and legislature for “swift, limited and critical action” to save the state and city’s “rapidly fraying early childhood education infrastructure.”

The coalitions Start Strong PA and Pre-K for PA want the Commonwealth to continue to pay child care subsidies even though the centers are closed under orders from Gov. Wolf. They also are asking for nearly $200 million in state funds to shore up the industry and help centers to open as soon as the shutdown order is lifted.

They want $100 million from the state to make up for two-months’ tuition not being collected from private-pay clients. They also as asking for $17 million that they are losing in co-payments from families subsidized by the state’s Child Care Works program. While the state is continuing to send subsidies to the centers, it is so far not replacing the lost money from families.

The package amounts to “a state bailout of child care,” said Ann O’Brien, executive director of Wonderspring, which operates child care centers in Montgomery County and Philadelphia. The funds will allow the centers to continue to pay their employees as if the centers were still operational. This will ultimately save unemployment dollars, but it also assures that the centers will be able to open as soon as the crisis is over without having to staff up in an industry that has both high requirements and high turnover.

“This threatens the very life of our industry, and our teachers are already living on the edge,” O’Brien said. “This is a very scary time for us.”

The providers are also seeking $50 million to extend early childhood programs through the summer to stem learning loss among children unable to attend their centers now. And the coalition wants legislation, as well as a $10 million fund, to protect centers from tort liability and insurance rate hikes that could arise out of the coronavirus shutdown.

Finally, they propose a requirement funded by $10 million in state dollars to provide free training for all providers “on the practices needed to sanitize all spaces in which children and staff are working before programs can be re-opened.”

UPDATE On Monday, the William Penn Foundation announced it was launching a new Philadelphia Emergency Fund for Stabilization of Early Education with its own 5 million grant and $2 million from Vanguard’s Strong Start for Kids Program™, which will be administered by The Reinvestment Fund.

Grants will be awarded on a weekly basis. Licensed childcare, family childcare, pre-k, and home visiting programs in Philadelphia are eligible to apply for assistance for basic expenses, new methods to support families during this closure, and needs relating to reopening.

“We can’t let these important learning opportunities for children disappear as a result of this crisis,” said a statement from the foundation, which noted that over the past five years the city has increased its capacity to 10,000 more families for quality early learning. END UPDATE

Gov. Wolf has ordered child care centers and some home-based providers to close, with exceptions for those centers that care for children of first responders or that offer off-hours care. In a statement, the child care groups said that while the closures are clearly necessary to preserve public health, “the requirement to temporarily halt operations…imperils the financial viability of the entire child care system.”

Without ways to cover basic costs and loans through the crisis, they write, “there is strong likelihood that a significant share of providers will not be able to re-open when the closure orders are lifted.”

The $2 trillion federal stimulus legislation enacted by Congress and signed by President Trump last week includes $5.3 billion for direct payments to child care centers, and about $100 million of that will come to Pennsylvania. However, there is as yet no clarity on how that money will be distributed and for what specifically it will be designated. In the past, the state has made it a practice to use federal dollars to replace, rather than supplement, the state investment.

The groups made their announcement early last week.

Since the shutdown, individual providers have had to make decisions around whether to continue to pay their teachers and other workers, many of whom already make barely more than minimum wage in an industry that operates at very low margins.

Wonderspring, O’Brien said, is continuing to pay its teachers through the shutdown, although not all providers are in that position. Many teachers, from there and elsewhere, are continuing to work remotely, contacting their families through online platforms and trying as best they can to engage children in activities.

Deciding to pay staff “was a $500,000 decision for us,” O’Brien said, but necessary “as both a business decision and a moral one.

“If the governor says we’re opening on a Monday, I want to say to teachers, ‘report to work on Monday,”’ she said. “I also would have them know we are an employer who did that for them, that’s what we’re what able to do, and what we want to do. But the decision is not without financial pain.”

She said that right now, the state and city are continuing to pay subsidies for the Pre-K Counts and PHLpreK programs — as long as teachers are kept on the payroll — based on enrollment as of March 13. But they are not covering any of the costs that come from parents themselves. The state and city have committed to paying through April 30.

The groups estimate that 75% of the capacity of the child care system is supported by payments made directly from parents rather than by the government. Most of that amount comes from families who pay full tuition, but 14% is in the form of co-payments from parents who receive subsidies from the state through the Child Care Works program.

As part of its effort to stay viable, Wonderspring has told its families who pay their own way that they will not refund any part of March’s tuition, even though the centers closed in the middle of the month. The organization got very little pushback, O’Brien said. For April, they will prorate the cost depending on what days they are actually open – if any.

Wonderspring, until recently called the Montgomery Early Learning Center, is doing everything it can to weather this.

“We are negotiating with every vendor and landlord asking for forgiveness or deferral of payment,” O’Brien said. “We have asked families able to pay tuition to please consider doing so and several have. We launched a fundraising campaign on Friday as well. We will revisit our plan for May as we better understand what public revenues may continue and what relief may be provided.”

She suggested that regulations assuring quality of care in the wake of the pandemic – such as one-to-one infant to caregiver ratio and more requirements around sanitation – are likely to “look different when we go back,” adding further to cost pressures.

She added: “It’s a terrifying ride.”

The Notebook’s coverage of early childhood education is funded by the William Penn Foundation.