56,000 Michigan kids could lose child care as federal COVID funding ends

• Michigan received more than $1 billion in federal pandemic funds to provide financial relief for child care providers and families 
• That funding is about to end, likely forcing many providers to close 
• Child care providers already face worker shortages

Thousands of Michigan families are expected to face a child care crisis beginning this weekend as federal funds for child care during the pandemic end on Saturday. 

More than 1,200 child care providers in the state are expected to close and 56,000 children could be left without child care services, according to one estimate. 

Related:

• Michigan is ‘improving outcomes’ for early childhood health and education, report says
• Childcare is a critical job, with a critical worker shortage in Michigan
• How a federal government shutdown would impact Michigan

The loss of federal funds will have national implications for families that are already finding it difficult to afford quality child care and for the businesses that take care of young children, which operate on thin financial margins and have a difficult time finding workers. 

It’s not just families and providers that will pay the price. Loss of reliable child care will likely mean more working parents will have to exit the job market, at least temporarily, impacting a broad range of businesses and the larger economy.  

“We're in a crisis, it's a struggle,” said Abbey Nimer, owner of Abbey’s Daycare in Ypsilanti. “These parents are dealing with a lot. It's a lot. It's a lot to get up and just put gas in your car.” 

The federal funding came from the $1.9-trillion American Rescue Plan (ARP) Act signed by President Biden in March 2021. 

Michigan received $1.4 billion in child care funding from that package and the Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA). These funds could be used to help providers offer better staff pay, purchase COVID-19 supplies and support families on child care subsidies.

As federal funding dries out, child care providers will have to decide whether to make up the loss by charging parents more, lowering operating costs or absorbing the costs themselves. 

The state has attempted to soften the loss in federal funds by allocating more money in the state budget to child care providers. Still, there is less to go around. 

Michigan facilities are reimbursed based on the type of facility, a child’s age and how many hours they attend the center’s quality level.

For example, from October 2021 to April 2022, a Michigan group home provider with a three out of five rating would receive $7.30 an hour from the state for caring for a three-year-old. Since April 2022, that rate dropped to $6.80 and then $6.85 and starting Sept. 24, the rate is $5.35 per hour for that child. 

The costs add up. 

“The work is still the same, the hours are still the same,” said Nimer, the Ypsilanti provider. “Making sure your maintenance is still the same. Paperwork is still the same. So we're still doing all the work, but it's just less pay. Our pays are literally being cut.” 

But Nimer is hesitant to ask parents for money, as many can already barely afford the cost.  

“There's no way I could do it,” said Amanda Denson, the mother of a 3-year-old who attends Nimer’s business. “I would have to give something up and it would probably be my job because I'll be working for nothing. I can barely pay my bills now.”

Families qualify for the state subsidy if they make at or less than 200 percent of the federal poverty line. There are roughly 31,000 children ages eight and younger who attend child care using a state subsidy. 

Elisabeth Tobia, a consultant with the W.E. Upjohn Institute for Employment Research and former child care director, said families receiving state subsidies could “feel a change in what they are currently paying.” 

Lisa Brewer Walraven, director of Office of Child Development and Care within the state Department of Education, said other pandemic-era changes are staying that should provide “more consistency and stability for providers.” 

Since October 2021, providers can bill the state for a student’s enrollment instead of attendance. That change stays. Since October 2022, the state has guaranteed a funding amount for full-time child care children rather than having child care providers bill per hour. That change stays, too. 

Still, some providers and parents are concerned. 

“A lot of the providers that we've spoken to, they're facing either having to cut pay increases for their staff and risk losing staff members or charge families higher amounts, which families can't afford,” said Annette Sobocinski, executive director of Child Care Network, a nonprofit that helps families find affordable child care in Southeast Michigan. 

The state has been transparent about the rate changes, Sobocinski said, but she said she thinks some people were hoping the state will figure out a way to keep reimbursement rates at previous levels. 

National advocates have called for the federal government to step in as states run out of federal funds, warning the nation is facing a child care funding “cliff.” 

The Century Foundation, a progressive think tank, estimates that nationally, 3.2 million children could lose their child care spots if the federal government doesn’t step in to provide more funding, that includes 56,648 Michigan children. The group estimates 1,261 providers in the state will close. 

Federal pandemic child care funds helped, said Katie Sloan, an early childhood researcher and instructor at Central Michigan University. But “in some ways, people have barely been hanging on for a really long time.

“And so you can imagine with some financial intervention, I think some of the burden was alleviated. I think that looks different to different people. The work continues to be really difficult and people are still experiencing enormous amounts of struggle.” 

Carneice Henry-Washington has four children in child care in the Lansing area and said she expects to find out soon how much she will have to pay for care.

“I feel like it’s money that goes toward the care of my children, so I feel good about it,” she said.

She makes about $36,000 a year and said she believes paying $200 a month for her children to be cared for feels fair.

Government reimbursement rates are just one challenge in the industry. Providers must  pay workers enough, keep costs reasonable for parents and provide high-quality care.

Tobia, the Upjohn consultant, said figuring out what it costs to provide child care is “part art and part science.” 

“Of course in the past three years, as this has become a bigger issue, the whole idea (of) wages being dangerously low and workforce issues in this field, I think there is an awareness that the costs of providing care are really high.”

It’s a balancing act: If a provider charges too much, a parent can’t afford to send their child to daycare. That parent may have to quit their job or rely on family members to care for their children. But if a provider charges too little, they aren’t able to retain their staff, pay bills or pay themselves. 

Alicia Marsee, a fourth-grade teacher in Oakland County, uses the state child care subsidy to help pay for her three-year-old to attend day care about 42.5 hours per week. She has known for about a month that she will have to start paying $52 a week soon. 

She said she is “feeling a bit of stress and pressure” and anticipates she’ll have to make adjustments to how much she spends on groceries and family activities.

“I understand why it was meant to just be a temporary form of assistance,” Marsee said. “But obviously, having that assistance alleviated some of the financial pressure that myself and I'm sure many other families are facing.” 

Nimer, the Ypsilanti provider, said she has not yet calculated how much she stands to lose as reimbursements rates go down. But she worries she may have to cut hours of staff members and reduce the number of children she serves to accommodate the staffing cut. 

A 2018 study of the state’s early care and education workforce surveyed administrators, teachers, assistant teachers and family care providers. 

Researchers found that 93 percent of child care worker respondents received at least one public subsidy such as Medicaid, food benefits or housing assistance. 

Kim Spivey, owner of Kim’s Kiddie Korner in Battle Creek, runs a group daycare where she and her husband care for babies through four-year-olds during the day and two school-aged children before and after school. 

Spivey said she plans to sit down with parents to explain the changes in reimbursement rates before making any decisions on changes in fees. 

“Raising my fees is going to be like the absolute last resort because I know it can be a struggle,” she said. 

Before raising any fees, she said, she would try to find more free community resources to offset costs. She already taps into local groups that supply free diapers and wipes and a different program to provide fresh food to students.

“That’s the goal, to not have to raise (fees for families) because times are hard for everybody.” 

Brewer Walraven said the state is focused on supporting child care providers with professional development and training around business sustainability plans.

Tobia, the child care consultant, said having available child care is part of the strategy of attracting more workers to the state and that there may be specific actions employers, municipalities and the state can take to attract more providers.

Ultimately, she said, she hopes Michigan and the country moves toward seeing early childhood care and education as a public good, and help fund it accordingly.