California faces a growing deficit, but child care providers say they can't wait for more pay

The parents come at all hours of the day and night.

A nurse drops off her kids before starting a 12-hour day at the hospital. A father picks his kids up in the dead of night, after his warehouse shift ends at 1 a.m. Another mom sometimes needs childcare at 4 a.m. so she can make it to work.

Whatever the time, Leidy Bernasconi's child care in Palmdale is open.

In an area considered a child care desert, Bernasconi said she feels obligated to keep her home-based business running for families in the neighborhood. But lately the cost of operating weighs on her. Her Costco bill has almost doubled due to inflation, and she had to sell the van she used to take kids to and from school.

" Gas is going so high," she said. "We keep cutting the transportation service because I cannot afford it."

As Bernasconi battles her checkbook every month, a bigger fight has been playing out in Sacramento. Child care providers and their union want the state to significantly boost the subsidy rates it pays them for caring for low-income children. Facing a growing deficit, Gov. Gavin Newsom has not included higher pay for them in the state budget.

" Currently, the rates that we have only cover half of what it costs to cover for the children," said Max Arias, the head of Child Care Providers United. "We're saying we need the full cost of care now."

The union's contract expires at the end of the month, and Arias said some of the gains made since providers unionized in 2020 are under threat. The state and home child care providers have yet to make a deal. A spokesperson for Newsom's office declined to comment on ongoing bargaining, but his office has been adamant that California needs to "tighten its belt."

Where do negotiations stand?

The heart of the conflict between California and home child care providers is the rates the state pays in subsidies for low-income families.

Historically, those payments have been determined by market rates in the county where a child care provider operates. Market rates are low because child care work is chronically underpaid and families typically can't pay the true cost of caring for their children.

The state has agreed to transition to a new, single rate system and to develop a new methodology to determine the cost of childcare. But the governor's May revise of the budget does not include rate increases for providers.

According to the governor's office, the number of providers receiving subsidies grew significantly from 2020 to 2024 — by more than 50%. Child care slots have grown, too.

The need for affordable child care is still gaping. According to the California Budget & Policy Center, most families eligible for subsidized care in the state weren’t receiving it as of 2022.

What does a child care provider budget look like?

While negotiations over the state's budget continue, Leidy Bernasconi poured over her own expenses this week with tears in her eyes.

She said she brings in an average of $20,000 a month for serving 22 children. That's mainly from state subsidies that pay for most of the families she serves.

That money goes quickly, and most of it goes back into her small business. She pays four employees between $19 and $25 an hour. After childcare expenses, her mortgage, and her family’s health insurance, she said she had around $2,500 leftover most months to provide for a family of four. Her husband used to help with the business, but had to look for new work to supplement their income.

" I don't know for how long I can be in business," she said. "I believe if I go and I work as a teacher, I will be able to get paid better."

She has her eye on July 1. That's when the contract with the state is up.