NC child care model "unsustainable," approaching fiscal cliff, leaders caution

Child care in North Carolina, already hard to find, is likely to be become even scarcer later this year without state and federal action, state health leaders say.

The problem, they say, is an "unsustainable" business model, coupled with the end of federal pandemic funding that helped to prop it up.

During the COVID-19 pandemic, Congress funneled billions of dollars to states to help child care providers keep their doors open. North Carolina's share was about $1.3 billion dollars. However, that extra funding will end October 1, and federal child care funding for NC is expected to return to its pre-pandemic levels of about $400 million.

Meantime, the cost to provide that care has increased substantially, and the state isn't paying enough to cover the costs,

Ariel Ford is state director of child development and early education, told the legislative panel overseeing health and human services that early childhood teachers make only about $14 an hour on average, which isn't enough to cover basic needs. Meantime, the state subsidy only covers about half the actual cost of delivering the service, and most parents cannot afford to make up the difference.

For the past few years, the federal funding and some state funding has covered the gap and allowed slightly higher pay for teachers, Ford said, keeping North Carolina's child care workforce relatively stable. But "that money is running out, and we all need to come together and figure out a solution," she said.

"We've been trying to figure out what is the right way to finance this system," Ford told lawmakers. "We know that it has to be innovative. We know that it has to be fair, and we know that we have to deal with the differences between urban and rural communities."

If parents can't find child care, they can't work, which limits the state's future economic growth, Ford said. That's already a problem in some rural areas and other so-called child care "deserts."

A $20 million pilot program meant to bring more child care to those areas showed that many businesses are interested in solving the problem if some help is available, Ford said.

"We had over 3,000 applications. We were only able to award 200," Ford said. "There were over $700 million dollars in requests for that $20 million."

Oversight committee chairman Donnie Lambeth acknowledged that the state "has a real problem" that lawmakers will have to address, but he called what he's hearing "concerning."

"Sometimes I want to put on my fiscal conservative hat," Lambeth, R-Forsyth, said, "and I'm like, 'Well, why the heck are we subsidizing childcare in North Carolina? Why is that a taxpayer's responsibility?'

"'We have this fiscal cliff we're gonna fall off of, and you guys have got to put in tens of millions of more dollars,'" Lambeth continued. "That's not the answer, quite frankly."

Ford responded that Congress is likely to take some action to address the issue, but it may not happen before the funding runs out, so the state may need to help provide a bridge.

She said many states are seeking a large expansion of the federal Child Care Development Block Grant.

"Every state in the country is headed for this same cliff, so we're in good company. All 50 states, all territories and all tribes are are headed over this cliff together," Ford said. "I agree that there will not be a solution before early November. But my hope is that they come back and they are ready to help make sure that the country's economy stays strong."