Federal Relief Funds For Child Care Are Done. What Does That Mean For California?

California received $5 billion in federal relief money to help childcares from having to shut their doors during the pandemic, but that funding expired Sept. 30.

One estimate predicted the ending of federal relief dollars, or the “childcare cliff,” would lead to more than 13,000 childcares closing in the state.

But experts say California might be able to stave off the worst of the cliff, at least in the short-term, because of state-level measures in this fiscal year’s budget.

“It's hard to say what we can expect, there are some stopgap measures California has put into place,” said Erik Saucedo, senior policy analyst at the California Budget and Policy Center.

What’s being extended?

States had discretion in how to use federal relief money. In California, the relief funds were used to provide temporary stipends to childcare providers, waive fees for families who receive subsidized child-care, and provide reimbursements based on enrollment — rather than attendance — for childcare providers who care for children from low-income families.

“To the credit of the Newsom administration, they were very prudent about, as much as possible, treating those dollars as one-time resources,” said Donna Sneeringer, chief strategy officer at the Child Care Resource Center, an organization that helps families with childcare resources in Los Angeles and San Bernardino Counties.

And while the last of the stipends will go out by the end of the year, California has extended the pandemic-era policies like waiving family fees for many families. Before the pandemic, low-income families who received subsidies for childcare paid up to $600 a month in fees. Now, the most they can pay is about $60, and for families making below 75% of the state’s median income, they’ll be paying $0 in co-payments.

“This really was a huge step,” Sneeringer said. “The fees that had been in place prior to the pandemic were not affordable, and often families would fall behind, end up owing programs money for late family fees, delinquent family fees, and then end up dropping out of the program, so they couldn't even afford the subsidy program.”

The state will also continue to base reimbursements on enrollment, rather than attendance.

What else is being done in California?

In addition to changing the family fee structure, childcare providers who receive state reimbursements to care for low-income children will see a 20% rate increase starting in January, under a new state contract negotiated with the Child Care Providers United, which represents about 40,000 home childcare providers in the state.

The contract also creates a first-ever retirement fund for childcare workers.

A child makes art at Little Sprouts Language Immersion Preschool in L.A. The owner of the home childcare said federal relief funds helped keep her doors from closing.

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Courtesy of Cristian Corona

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“That is why California feels like it might be able to withstand [the ending of relief funds] better,” said Max Arias, executive director at SEIU Local 99 and chair of Child Care Providers United. But he says, still, the reality is that there’s going to be less federal money going into childcare.

“It’s important to remember that even though it's a good example of what we can achieve if we organize… I want to be careful not to say, ‘Hey, we're OK.’ Because we're not OK. Our members are still struggling,” he said.

Why has relief been important?

Cristian Corona opened up her home childcare business, Little Sprouts Language Immersion Preschool, in Mid-City Los Angeles just a month and a half before the pandemic. She had enrolled about 10 students, but then COVID hit.

“It was very, very hurtful. I went down to only one student during that time and keeping up with rent … it was really hard to get all the bills paid,” Corona said.

Stipends from federal relief dollars helped. She was able to pay incentives for her employee, and pay off a loan she took to spruce up her backyard with toys and childcare supplies.

“[The stipends] helped a lot of providers to stay open,” she said, but because the help is gone, she said she, like others she knows, are reconsidering their careers. “I have to think about if I really wanted to stay in this industry.”

Corona, a member of Child Care Providers United, said the contract, which included higher reimbursement rates, was a big win. “To be honest, if we wouldn't have that contract coming, maybe a lot of more providers will have already quit,” she said.

But she said that money will just go to help offset other rising costs. “Everything else is going up – food, the rent, the insurances we have to pay,” she said. “Thinking about all of the expenses that we have, you know, the money is not enough.”