As Child Care Crisis Looms, How States Can Bolster State Agencies to Be Better Prepared to Aid Families in 2024

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A $24 billion infusion from the American Rescue Plan has helped child care providers pay teachers and purchase much-needed supplies, easing the burden on both families and providers during the tumult of the COVID-19 pandemic. But things are about to change as those funds — distributed by the states as grants — are set to expire in just a few short months, leading to likely layoffs, higher tuition, and provider closures as we head into 2024. 

How bad could the problem get? A new Century Foundation report finds that care for nearly 3 million children could soon be disrupted. That’s one-third of all children currently in the American child care system. As that stark reality has left state leaders scrambling for answers, one potential solution could be found in enhancing the capacity and efficiency at key state agencies. 

Child care is an important economic driver, as access to high-quality, affordable early learning and child care is key to better educational, social, and economic outcomes for children — and to greater flexibility for parents aiming to participate in the workforce. Affordability, though, remains the critical missing link; according to a new report from the Annie E. Casey Foundation, the average annual cost of child care is over $10,000 per year, and more than one in ten families with children have had caretakers step away from jobs to care for children as a result.

Congress’s legislative attempts to address the child care crisis were short-term efforts that failed to take into consideration two significant issues: the fractured infrastructure of state agencies and their inability to effectively administer additional funding to implement meaningful change across the system.

During the pandemic, state officials were allocated five to six times their original operating budget and then asked to distribute that money very quickly, all during an unprecedented global crisis. Prior to the pandemic, from 2018 to 2019, states were only given an average child care budget of $3.2 billion from the Child Care and Development Fund. Nowhere near enough to prop up a fragile child care system with an underpaid workforce and lack of high-quality programs. But suddenly amid the pandemic, that amount increased exponentially to $8.2 billion dollars, and states were given a two-year timeline to spend that money — or risk losing it.

Those able to use the funds in a timely manner allocated much of it to expand eligibility for subsidies and increase the amount of money families received. However, now that these pandemic-era subsidies are gone, many families no longer qualify for child care assistance, or will receive reduced amounts. If state agencies were given the time to improve capacity and infrastructure, the increased funding could have been managed more efficiently and invested in long-term solutions.

States are the critical intermediary in the child care process — reaching both parents and providers. They license facilities and workers, administer funding and subsidies, and receive federal government funding that in turn trickles to parents, child care providers, local governments, and beyond. But the process, at best, is fractured. Moving forward, the child care system needs to be modernized to make it more parent centric and provider-friendly, which can be achieved by first increasing capacity and support for state agencies. 

This translates to two possible paths for states: they can either find the funds to hire more state workers or find ways to increase efficiency with current personnel.

In many state agencies, there is more work than the agency has time and resources to complete. That’s what I mean when I point to a lack of capacity — and it can slow down, or bring to a standstill, licensing or zoning approvals for potential child care providers or workers. In Nevada, for instance, there is a backlog of nearly 10,000 background check applications. If agencies gain capacity (better systems, streamlined processes, more staff), they could more efficiently process child care providers’ licensing paperwork, giving parents more available options. 

To simplify and modernize the child care system, states should also look to other successful service delivery programs — like health insurance enrollment platforms. Under the Affordable Care Act, many states have created their own custom state-based health insurance exchanges, providing residents with easy-to-shop-for insurance, while also effectively servicing health insurers. Software as a Service (SaaS) solutions have empowered this process, enabling consumers to search for and enroll in health plans, and to apply for subsidies, while creating efficiencies for agency personnel. 

By embracing technology, those same benefits could extend to other agencies, leading to more efficient and effective delivery of not only child care programs, but also Medicaid, SNAP, and TANF. 

Looking at the bigger picture, states need to assess their social infrastructure, evaluate what it should look like in the future, and consider what services can be used to increase capacity long-term. This planning is crucial given that the Child Care Stabilization Subgrant Program will expire in months and expanded Child Care and Development Block Grant (CCDBG) funding will also need to be reauthorized by Congress in the near future. 

The tenuous nature of this funding could lead to more providers shutting their doors, and states being even further behind in solving the problem. Or states could reorient their priorities and processes towards creating a system that moves centers and providers more easily through the licensing process, helps them reopen their doors and provides parents with easier means of finding and affording care. 

It’s no small task – but it’s a first step towards confronting a looming crisis.

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