Amid looming ‘child care cliff,’ states scramble to bolster programs

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It’s Saturday, June 24, and we’d like to welcome you to the weekly State and Local Roundup. There’s plenty from this past week to keep tabs on, with a judge striking down Arkansas’ ban on gender-affirming care, CalPERS announcing it’s the latest agency to be affected by the MOVEit software hacking, and the adoption of a new (controversial) state vegetable in Oregon. But first, we’ll start with the looming “child care cliff.”

For states, it has been a whirlwind of federal pandemic-era programs and funds winding down. 

The additional Medicaid money given to states to pause disenrollments ends in December. The funds for emergency rental assistance are drying up. The program that provided free universal school meals ended this school year. And now child care stabilization funds are set to run out, which states and advocates say the loss of could have major impacts for the greater economy. 

In 2021, the American Rescue Plan Act made nearly $40 billion in emergency aid available for child care. The funds went to helping providers pay for rent, lowering tuition rates and increasing wages for workers. But that support is set to end on Sept. 30, and researchers say that when that happens, 3.2 million children could lose their daycare spots as roughly 70,000 programs are expected to close and 232,000 caregivers are expected to lose their jobs, according to a new report from the left-leaning think tank The Century Foundation. 

Researchers predict that the loss in tax and business revenue from the so-called child care cliff will likely cost states $10.6 billion annually in economic activity as millions of parents would have to reduce their hours or leave the workforce altogether to care for their children. Those parents are projected to lose a collective $9 billion annually in earnings.

A huge share of those households are living paycheck-to-paycheck, the report noted, meaning any disruption to employment caused by the loss of child care could push families into food insecurity or housing instability.

Some states will be affected more than others, according to the report. Researchers predict that the number of licensed programs could be cut in half in Arkansas, Montana, Utah, Virginia, Washington, D.C., and West Virginia. In more than a dozen other states, the number of licensed programs could drop by a third.

New York and Texas are projected to see some of the greatest losses: The report says they could lose thousands of child care programs, leaving hundreds of thousands of children without daycare. 

Even before the pandemic, the child care industry was struggling. The average annual cost of sending one kid to daycare is about $10,000, but can run as high as $20,000 in some states. For many households, that sum is more than the cost of housing. Wages for workers in the industry are stagnating, hitting an average of $13.50 an hour. The additional federal support made child care affordable to many, allowing them to join the workforce.

“When these resources swiftly and suddenly disappear,” the report noted, “this funding cliff will once again place the sector in danger, as it will be forced to contract, shedding caregivers and care slots in a cascade that will not only upend millions of families’ child care arrangements but also hurt regional economies.”

For Trina Averette, a family child care provider in Ohio, the federal support provided her with nearly $36,000. It allowed her to stay in business because she was able to pay her employees more and cover the rising costs of products. For example, disposable gloves—a critical accessory for changing diapers and cleaning—jumped from about $10 to $46 during the pandemic. 

“Prices rose quite a bit,” Averette said in a webinar with The Century Foundation Thursday. “[The federal funding] actually, literally helped so that we could continue our business.” 

Still, Averette lost one of her highly trained employees to a better paying job, a challenge child care providers are constantly navigating. Since February 2020, more than 90,000 providers have left their jobs, according to the Center for American Progress.

Given the industry’s struggles, most states were already looking for ways to bolster child care programs. The additional aid helped many of them expand access in their states. Now, they are looking for ways to continue building on that progress after the federal aid ends in September.

Michigan, for instance, launched its Caring for MI Future initiative last year, using Child Care and Development Block Grants to support existing providers and help new providers get their start. Over the last year, the initiative has created hundreds of new programs and expanded nearly 2,000 existing programs.

In Montana, Gov. Greg Gianforte signed into law a measure that will provide a $7 million annual boost to a program that helps low-income families pay for child care. State Democrats have touted the law as “the most significant investment in child care in the state’s history.” Earlier this year, Minnesota approved a $750 million investment to help child care workers attract and retain employees, expand program openings and lower the cost of tuition for families. 

Some states are getting particularly creative in their search for revenue to support child care. In New Mexico, for instance, voters approved a constitutional amendment making child care a constitutional right. To fund the effort, the state takes a percentage of money from oil and gas leases. Louisiana, Maryland and Missouri, meanwhile, have opted to fund early childhood education by taking funds raised through sports betting. 

Not all states are replacing the loss of federal funds, though. In Wisconsin, for example, the GOP-controlled state legislature voted last week to end funding for a child care subsidy program that provided about $600 million to nearly 5,000 child care providers during the pandemic. Democratic Gov. Tony Evers had proposed using more than $300 million in state money to make the program permanent. With state funding slashed, The Century Foundation expects Wisconsin will lose more than 2,000 child care programs, impacting about 87,000 children.

But even where states are making major investments, it won’t be enough to replace the historic funding from the American Rescue Plan Act, the report noted. Some lawmakers in Congress want to change that and are pushing to increase support at the federal level.

The Child Care for Working Families Act, reintroduced by Democratic senators Tim Kaine of Virginia and Patty Murray of Washington, would make child care free to extremely low-income families and ensure that all families aren’t paying more than 7% of their income for child care, Kaine said during Thursday’s webinar. But following the debt deal to freeze spending earlier this month, it is unclear if the legislation will receive support.

It will take significant investments at all levels of government—as well as collaboration with nonprofits, unions and families—to avoid the disaster of a crumbling child care industry, said Julie Kashen, a senior fellow and director of women’s economic justice at The Century Foundation.

“Going over the cliff is not inevitable,” she said during the webinar.

Keep reading as there’s more news to use below, and make sure to come back here for the week’s highlights. If you don’t already and would prefer to get it in your inbox, you can subscribe to this newsletter here. We’ll see you next week.

News to Use

Trends, Common Challenges, Cool Ideas, FYIs, and Notable Events

• Arkansas’ ban on gender-affirming health care struck down. A federal judge struck down Arkansas’ ban on gender-affirming medical care for transgender youth Tuesday, nearly two years after blocking it from going into effect. The ban would have prohibited physicians from providing “gender transition” treatments like hormones, puberty blockers and surgeries to those under age 18. In his 80-page ruling, U.S. District Judge James Moody wrote that “the State offered no evidence to refute the decades of clinical experience demonstrating the efficacy of gender-affirming medical care. Additionally, the State’s experts offered no evidence-based treatment alternatives.”


• Fallout from the hack of MOVEit continues as CalPERs is hit. The California Public Employees’ Retirement System reported Wednesday that hackers stole the names, social security numbers, birth dates and other confidential information of roughly 769,000 retirees and beneficiaries, taking advantage of a vulnerability in a contracted vendor’s cybersecurity system. CalPERS is the largest pension system in the nation, with more than 2 million members. CalSTRS, the nation’s second-largest, said Thursday it, too, was hacked through the same vendor, though it refused to offer specifics on who was affected. This brings the number of victims of the MOVEit hack to several million.


• Supreme Court revives Biden immigration guidelines. The Supreme Court on Friday revived immigration enforcement guidelines by the Biden administration that had set priorities for deciding which unauthorized immigrants should be arrested and detained, saying the challengers had not suffered the sort of injury that gave them standing to sue. Only Justice Samuel A. Alito Jr. dissented. The guidelines, issued in 2021, focused on “national security, public safety and border security.” But they also gave Immigration and Customs Enforcement agents substantial discretion to decide whether enforcement actions were warranted. Texas and Louisiana sued to block the guidelines, which they said allowed many immigrants with criminal records to remain free while their cases moved forward, imposing burdens on the states’ justice systems and violating a federal law that they said made detentions mandatory.


• 3M agrees to a $10.3B settlement in 'forever chemicals' lawsuits. The chemical and manufacturing giant reached a $10.3 billion settlement on Thursday with U.S. cities and towns over their claims that the company contaminated drinking water with so-called forever chemicals used in everything from firefighting foam to nonstick coatings. Under the sweeping settlement, 3M said it would pay out the money over 13 years to any cities, counties and others to test for and clean up perfluoroalkyl and polyfluoroalkyl substances, known as PFAS, in public water supplies. 3M, which is facing about 4,000 lawsuits by states and municipalities for PFAS contamination, did not admit any liability. The settlement, which requires court approval, would put an end to those lawsuits.


• Pattern of discriminatory policing found in Minneapolis. The Minneapolis Police Department routinely engages in a pattern of racist and abusive behavior that deprives people of their constitutional rights, according to the findings of a Justice Department investigation prompted by the murder of George Floyd three years ago. The 89-page report, released last Friday, outlined four core findings: The department uses excessive force, including unjustified deadly force; it unlawfully discriminates against Black and Native American people; it violates citizens' free speech rights; and officers discriminate against people with behavioral health disabilities when responding to calls, at times causing trauma or death. Now, city leaders will negotiate a court-enforceable consent decree with the Justice Department to remedy the findings.


• Tsk tsk: 3 states bar utilities from using customer dollars to pay for lobbying. The Maine Legislature passed a bill this week prohibiting investor-owned utilities from charging customers for lobbying, trade association and chambers of commerce dues, charitable contributions, and public relations expenses. The bill now heads to Democratic Gov. Janet Mills’ desk. Maine’s legislation follows similar bills passed in Connecticut and Colorado last month. Colorado’s law prohibits utilities from charging their customers for legislative lobbying. Connecticut’s law goes further by using a more expansive definition of lobbying, prohibiting utilities from charging customers for efforts to influence administrative action by executive agencies as well.


• The House GOP is picking on D.C. again. A draft federal spending bill unveiled by House Republicans on Wednesday would impose a broad slate of new and old policy restrictions on the District, from maintaining the eight-year-old ban on legalizing marijuana sales to prohibiting the city from using traffic cameras—a move that would immediately throw the city’s budget into deficit, likely requiring significant spending cuts or tax increases. The proposed policy riders were included by the House Appropriations Committee in a draft $25 billion spending bill for financial services and general government, which includes specific federal payments to the District.


• Louisiana’s anti-porn law challenged. A collective of adult entertainers, sex advice columnists and everyday internet users on Tuesday filed a federal lawsuit to block Louisiana’s law requiring age verifications for certain websites, including pornography sites. Plaintiffs argue the new laws violate free speech rights and place a huge burden on content creators, who are being tasked with gatekeeping their own material instead of leaving it up to parents of minors. The Louisiana law, which has inspired other states to propose similar legislation, requires popular sites like Pornhub to keep track of users' ages by requiring them to upload their state-issued identification, though tech-savvy users of all ages have already found multiple ways to get around it.


• Potato in, onion out. The Oregon State House on Thursday approved a resolution designating a new state vegetable—the potato. “While most may think of Idaho as the ‘potato state,’ Oregon does, in fact, put the ‘Ore’ in Ore-Ida, producing a large number of potatoes each year,” reports The Oregonian. The previous state vegetable had been the onion. Idaho, though, is the top potato producer in the country and produces around 13 billion pounds of potatoes each year.


• Maryland limits ballistics evidence used to link guns to crimes. In Maryland, firearms experts will no longer be allowed to testify that a specific gun fired a specific bullet, the state’s highest court ruled on Tuesday. The opinion imposes limits in the courtroom on the practice known as firearm “tool mark” analysis. The forensic technique postulates that machines used to make guns leave tiny imperfections on their components, and that those components imprint unique marks on ammunition when fired. Four of seven justices found that the scientific methodology is not reliable enough to allow examiners to testify that a particular gun fired a particular bullet.

Picture of the Week

As of today, based on @KFF tracking in states with available data, over 1.5 million people have been dropped from Medicaid as states unwind the pandemic continuous coverage requirement.

Many may still be eligible, but have gotten caught up in red tape.https://t.co/JxDYHATm1Z pic.twitter.com/I9z9DKIJ4n

— Larry Levitt (@larry_levitt) June 22, 2023

KFF, formerly the Kaiser Family Foundation, has been tracking the so-called Medicaid unwinding process since it started in April and released data on Thursday showing that more than 1.5 million people have been dropped from Medicaid in the states with available data. Nationwide, states are currently undertaking the herculean task of checking whether all of the nation’s roughly 93 million low-income people on Medicaid still qualify for coverage. States were barred from dropping people’s coverage during the pandemic. Congress discontinued the restriction in the $1.7 trillion omnibus spending bill it passed in December, allowing states to remove those who do not qualify from the rolls starting on April 1. To date, Florida has dropped the most people from the program—more than 300,000—followed by Arizona, South Carolina and Arkansas. Observers say that it is possible that some states are motivated to complete reenrollment quickly to avoid the impact Medicaid will almost certainly have on state coffers. 

Government in Numbers

77

The number of bills that Texas Gov. Greg Abbott has vetoed during the state’s 88th legislative session, the second most ever for a governor in one year in the state’s 178-year history. Former Texas Gov. Rick Perry holds that record with 83 during his first term as governor in 2001. Frustrated with the legislature’s inaction on property tax cuts and school vouchers, Abbott is punishing lawmakers by vetoing dozens of unrelated bills and declaring most of them nonstarters until his two priority items pass. Among the items vetoed was a bipartisan bill that would have expanded vote-by-mail access for people with disabilities—specifically people who are blind or paralyzed and need assistance marking their ballot.

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