The Sentinel-Record

Child care’s impossible business model

- Catherine Rampell Guest column Copyright 2020, Washington Post Writers group

As Americans’ attention focuses on schools and the risks and potential rewards of reopening, a test case of sorts is playing out. With troubling results.

Thousands of child care facilities nationwide have already reopened, or tried to — and their experience­s risk destroying the country’s already weak infrastruc­ture for child care. The model is bad for everyone — parents, educators, caregivers, doctors, Republican­s, Democrats — who wants children to return to campuses as quickly and safely as possible.

Most debates over “reopening” revolve around

K-12 schools, and what measures must be in place to bring back students safely. Administra­tors and teachers have expressed frustratio­n about inconsiste­nt guidance on what kinds of adaptation­s are needed.

Rather than helping schools reconcile conflictin­g advice, the Trump administra­tion has responded with threats of funding cuts.

This is exactly the wrong response. Schools need more money, not less. The additional space, supplies, tests and other measures required to reopen will be expensive.

We know this because a significan­t share of the child care facilities that have reopened are struggling.

Some 40% of the child care providers that existed pre-pandemic expect to close permanentl­y unless they get additional public assistance soon, according to a National Associatio­n for the Education of Young Children survey of more than 5,000 child care providers released on Monday.

Why? Even in the best of times, many child care organizati­ons operate on razor-thin margins. The work, whether supervised playtime or more structured instructio­n such as pre-K, is extremely labor-intensive and is subject to strict regulation­s (such as stafferto-child ratios) that limit their ability to scale.

Now, their business model has basically become impossible. On average, child care facility enrollment is down 67%, the associatio­n survey found. The industry has seen huge layoffs but even that hasn’t sufficient­ly reduced expenses. Fixed costs — such as rent — often remain unchanged, and COVID-19 has introduced new expenses. New health and safety requiremen­ts require smaller class sizes (and so, more staffers per child). Then there are additional costs that schools also face: more cleaning supplies, personal protective equipment, thermomete­rs, disposable plates — even extra sets of toys, if possible.

“We want children to have more materials only they use,” said Mary Graham, executive director of the not-for-profit Children’s Village in Philadelph­ia, which serves children ages 13 months to

13 years. “But we can’t staff a classroom with 10 sets of blocks.” Graham said her costs have skyrockete­d even though enrollment is down. (When we spoke last week, the facility had served just 28 children the day before; summer enrollment is usually about 300.) She said her center long ago exhausted its Paycheck Protection Program loan and is rapidly depleting its fund balance. It can continue running at a loss for only a few more months. At that point, it would join the 165 licensed child care providers across Pennsylvan­ia shuttered by the pandemic that have indicated they will not reopen.

Graham’s center primarily serves low-income families. Organizati­ons that serve more affluent families are unsure they’ll be able to pass along their higher costs to parents.

“I think in two months, we’re all going to be gone, even the best of us,” said Shaun Rose, president of Rock Spring Children’s Center in Bethesda. His facility is losing $100,000 each month, he said, thanks mostly to payroll costs; it would lose “only” $45,000 a month if it re-shuttered, primarily because rent would still be due.

With state and local government­s both broke and restricted by how much they can borrow because of balanced-budget requiremen­ts, the feds need to step in.

The Cares Act provided $3.5 billion in relief for child care centers and $13.5 billion specifical­ly for K-12 schools, but this has proved woefully insufficie­nt. The child care industry alone requires at least $9.6 billion in public funding each month during the pandemic to sustain the viability of providers, the Center for Law and Social Policy estimates.

Senate Democrats have proposed a $430 billion cash infusion for schools and child care programs, but the White House has shown little interest. During a TV interview on Monday, National Economic Council director Larry Kudlow indicated that President Donald Trump is more concerned about making sure the next stimulus package has a capital-gains tax cut than funding for schools and child care.

Reopening educationa­l and care institutio­ns is necessary so parents can work; so children can meet critical educationa­l, social and developmen­tal milestones; and so families can receive many other services braided into these institutio­ns, including nutritiona­l support.

Advocates I spoke with almost uniformly expressed frustratio­n that U.S. airlines have gotten more generous assistance ($25 billion) than did the institutio­ns that care for and educate children — even though the latter are arguably a more critical part of the country’s economic infrastruc­ture.

“This is not a ‘bailout,’ ” Miriam Calderon, Oregon’s early learning system director, told me. “This is an investment that helps all the other businesses recover.”

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