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Struggling Michigan child care centers wave white flag as state invests in new facilities

December 12, 2023 Regional Updates
Image courtesy of Bottles-N-Backpacks

By Jennifer Brookland, Detroit Free Press

Deata McLemore scowled just a bit as she pulled up an email from the state, the one informing her that Bottles-N-Backpacks, the child care centers she runs in Ypsilanti, did not receive the latest grant for which she applied.

The grant that would have added a little breathing room in her center’s bare-bones budget now that federal aid had dropped off of what experts were calling a child care funding cliff.

McLemore had been looking forward to getting that grant to help pay her staff a little more — small bonuses to combat the allure of those fast food jobs she knew offered better pay than taking care of children. She knew she’d have to spend the grant money within a year; it didn’t offer even a whisper of sustainability. But she’d had a plan for it, and not getting it was disappointing.

New centers boosted; existing centers struggle

The hustle of trying to turn even a slim profit in a broken industry is nothing new for McLemore, who has worked in child care for more than two decades. “We’re used to the struggle,” she said. “We’re used to maneuvering and making things work.”

But the fact that her business, like that of many providers, has been in survival mode for so long grates at a time when Michigan is investing heavily in opening new facilities. Gov. Gretchen Whitmer’s office proudly announced last month it had opened 1,089 new child care centers since May 2022, a full year ahead of its stated goal.

Child care providers recognize the government’s massive efforts to pull them back from the brink of closure during the COVID-19 pandemic, and the ongoing investments on the part of the state to make child care more accessible to families.

But some have trouble understanding why it helped more than a thousand centers open their doors while existing providers have been waving their white flags, shouting for help.

“We need more child care; we don’t have enough spots,” said Etta Heisler, executive director of Apple Playschools, a nonprofit child care organization with two facilities in Ann Arbor. “But opening 1,000 centers, if we don’t have a long-term plan for how those staff are going to be paid, for how their wages will continue to increase and for how we’re going to keep the cost of that care accessible to the families who need it, long term is not going to make the difference we need to make.”

Xziyah Anderson, left, plays with the sand alongside her classmate Savannah Lucas during a Bottles-N-Backpacks class inside the Chapelle Business Center in Ypsilanti on Friday, Dec. 8, 2023. Credit: David Rodriguez Munoz, Detroit Free Press

Impressive growth amid urgent calls for funding

During the pandemic, Michigan issued three rounds of stabilization grants totaling $700 million to more than 6,000 providers, according to Emily Laidlaw, director of child care licensing at the newly opened Michigan Department of Lifelong Education, Advancement, and Potential. Many home and center-based programs say they couldn’t have stayed open without it.  

At the end of the fiscal year on Sept. 30, federal stabilization money that kept child care centers from collapsing during COVID-19 stopped coming, and Michigan dropped the pandemic-level rates that it reimbursed facilities for children subsidized through the Child Development and Care program.

Child care experts and advocates warned that without another massive federal investment — or complete overhaul of the industry — the loss of those funds would spell doom for up to 70,000 programs and more than 3 million children.

The Biden administration requested $16 billion in supplemental funding to sustain the child care sector, with Michigan set up to receive $443 million — the 11th highest in the country and an amount that would benefit 6,400 providers. “As ARP funds dry up, the sector urgently needs more support as parents are at serious risk of paying more or losing access to care altogether,” the White House wrote. Congress did not oblige.

Just two months later, Michigan announced its child care industry’s impressive growth.

Dividing up the resources

Laidlaw said the new facilities were launched with support from the Caring For MI Future initiative, which helped create 1,157 center and home-based facilities and expand 2,000 others.

It provided business support for new providers, including $50 million allocated for sustainability grants they could put toward minor renovations and building improvements. The program helped with staffing by providing Child Development Associates and T.E.A.C.H. scholarships. And it offered professional development and one-on-one consultation — something Laidlaw said also was made available to existing providers.

“We’ve tried to divide up the resources we had between the need for new providers — there’s just not enough care across the state — (and) the need to support current providers,” Laidlaw said.

It’s unfortunate that all that investment in the way of stabilization and facilities improvement grants came to an end at the exact same time as the expiration of American Rescue Plan dollars that lifted the subsidy rates, according to Annette Sobocinski, executive director of the Child Care Network.

“It’s sadly not great timing,” she said. “Do I want the state to invest more in the subsidy funding? Yes, I definitely do. But that takes the legislators to support allocating money to that, so it’s not anything that any one entity in the government can do on their own.”

“I don’t think it’s necessarily a priority at the moment, which it should be,” said Sobocinksi.

Rolling full force in the wrong direction

The leadership of Huntey’s Clubhouse, which has six early learning and child care centers across west central Michigan, did not raise salaries with pandemic money. They used the relief funds for bonuses, teacher training and to invest in a curriculum program and enhance facility security.

But their fiscal prescience hasn’t spared them from the huge impacts of the drop in federal subsidy rates, which around half their enrolled children use to pay for care. “With 50% of our children being subsidized, a 25% decrease off the top line with absolutely no change in our costs is incredibly painful,” said Tyler Huntey, CEO of Huntey’s Clubhouse.

Huntey’s operates in a mostly rural area of the state, where incomes are lower and options for child care are scarce. For providers in his area, the funding cliff is real.

“Rural communities are feeling this pain and it’s even more impactful because typically, you’re one of two or the only center-based provider in that community,” Huntey said. “When they say, ‘I can’t do it,’ and they have to shut their doors, the impact is huge.”

Huntey wasn’t surprised that the state opened more than 1,000 new centers. “Our governor has high aspirations, and she wants to check all the boxes that she said she was going to check,” he said. But the depressed federal subsidy rates means that for smaller, rural or inner city providers, the system is constantly on life support.

Lawmakers don’t seem to recognize that, Huntey said. “So, they’re rolling full force in potentially the wrong direction.”

Child care centers are closing at a normal rate — for now

Since the relief money ran out, no more child care facilities have closed than in any typical month, according to Laidlaw.

But some believe it’s only a matter of time.

“Programs are doing their best just like they’ve always done to kind of struggle along,” Sobocinski said. “We haven’t seen a ton of closures yet, but I don’t think that means that there’s not a big risk of people closing in the coming months because of this change.”

Groups of providers, parents, policymakers and economic development professionals have coalesced around the state to get a handle on the changing child care landscape — with funding from Caring for MI Future. One of those coalitions, in Livingston and Washtenaw counties, surveyed 250 child care providers during the summer of 2023 and found that 64% were concerned with keeping their business afloat and more than a third would consider closing if they do not receive additional staffing or funding support.

A ‘broken,’ ‘unethical’ system

Apple Playschools’ Heisler said she was in that category. She grabbed every federal dollar she could during the pandemic, increasing teacher pay by 25% or more and adding medical benefits for the first time.

Frankly, she’s wondering if that was a mistake. But it would feel wrong and counterproductive to take it away.

“As a nonprofit organization that has inclusion and equity in our mission, there’s no possible way I could do that from an ethical perspective,” Heisler said. “I don’t know how I would sleep at night.”

But she’s already not sleeping much. Apple Playschools, one of the few programs in the area that offers profit-losing infant and toddler care, may not survive another season.

One month ago, Heisler finally ran out of options and announced a massive midyear tuition hike for her families.

“It was devastating,” Heisler said. “It still is.” She and her staff have spent mornings on the phone with parents who are feeling squeezed, trying to figure out how to reduce the hours their children spend in care or finagle some kind of tuition assistance. But they can’t offer everyone a break, and Heisler feels stuck.

“In this broken system, providers are forced into an impossible choice between affordable care for families and a living existence for our staff that honors the humanity of both of those,” she said.

She won’t cut back on wages, she already raised tuition and she hasn’t been successful in getting all the grant money they’d need to acquire buildings and do the renovations to add tuition-generating spots.

“What am I going to do, just close my infant/toddler program?” Heisler said. “These families don’t have a place to go.”

In Washtenaw County, where Apple Playschools are located, data shows more than seven kids in line for every one licensed child care spot, and that at least 20% of those spots go unfilled because there aren’t enough child care workers. There are hundreds of children on Heisler’s wait list.

Heisler said child care has always relied on unpaid and underpaid labor. But in this day and age, she considers a broken system that relies on grant funding to fund the salaries of people who care for babies to be unethical. And, she said, it has been a conscious choice on the part of lawmakers to keep it that way — a decision to, as she said, “divest in the essential infrastructure that providers have spent the last several years holding together with duct tape and zip ties.”

“We feel abandoned,” she said.

Learn more about the Child Care Coalition, which aims to address childcare challenges in Livingston and Washtenaw Counties by increasing the availability of high-quality childcare here.