The federal stabilization payments for child care – dedicated to wages and fixed expenses – funded through the American Rescue Plan have all been dispersed. This month, the Cabinet for Health and Family Services and the Beshear Administration will issue one final stabilization payment to child care providers. Beginning in 2024, all the additional American Rescue Plan (ARP) funds will focus on projects like the Child Care Assistance Program, start-up grants for family child care homes, or increased scholarships for child care providers. Each of these projects have been a huge support to parents and child care programs, but they also have a strict deadline of ending by September 30th, 2024. 

With the next Kentucky budget beginning on July 1, 2024, it is essential for legislative members to act on behalf of child care during this legislative session.

One of the most beneficial programs to come from the ARP funding was allowing child care providers to have an income exclusion in the Child Care Assistance Program. This means that even if the provider’s total household income is above the requirement for typical child care subsidy, the child care employee can still receive child care assistance as long as the parent works a minimum of 20 hours per week in the center or family child care home. 

This program has been a saving grace for child care programs across Kentucky to increase staffing numbers. If the average starting wage for Kentucky child care providers is $9.76 per hour, then it only seems reasonable that child care providers are leaving the field to work in higher paid sectors, such as retail and hospitality. Unfortunately, a lack of child care providers means that working parents throughout the state may need to consider giving up their jobs when child care is not available. This income exclusion program is a way to encourage child care providers to stay in a field they love and still meet the needs of their own families. 

Waiving a child care provider’s own child care costs can make their salary stretch farther than a salary in some other fields. Plus, it is essential to look at the return on this investment for other Kentucky families. If one child care provider can care for five infants or up to fourteen 4-year-olds, then we can estimate that for every one child care provider that comes back to the field of early childhood education, approximately eight more working families can find child care for their children. As of December 1st, 2023, the Cabinet for Health and Family Services shows that 3,572 child care employees are using this benefit. Those employees are potentially serving 28,576 additional children, or more. That is the type of number that Kentucky needs to see when so many different fields are experiencing significant workforce shortages.

Another factor to consider is that the stabilization payments funded through the federal government were the primary source of wage increases for child care programs throughout the nation. Now that those payments have ended, child care providers are trying to determine their next steps. They could reduce wages and move back towards minimum wage, but that is not what retail and hospitality franchises are doing. The other option is to dramatically increase tuition in order to continue to pay staff members closer to the $10-$13 an hour that some providers have been receiving for the past few years. 

Unfortunately, significant tuition increases will cause parents not to be able to pay for child care at all. This means that families will have to choose between child care costs and having a parent stay at home with the children, and the issue is even more complicated for single parent families. Most programs will look at a combination of tuition increases and lower wages, or they may have to close their doors permanently. 

These dire consequences are why Kentucky must decide to make a historic contribution to child care for the benefit of both child care providers and the families of young children. Increased access to the Child Care Assistance Program will allow more families to afford child care as tuition continues to increase. It also is a consistent source of income for child care providers that need to make sure that staff are paid and fixed expenses are covered. 

As the legislative session begins, Kentucky’s child care advocates are asking legislators to provide funding for essential programs that can help stabilize the child care field including:  

  • Maintain CCAP eligibility at 85% of State Median Income and the federally-recommended reimbursement rate. 
  • Base program reimbursement payments on enrollment rather than attendance, to align with new federal guidance. 
  • Protect CCAP access for all child care center employees to ensure a stable child care workforce. 
  • Implement a limited co-pay structure paired with maintaining a six-month transition period so that families can retain more income and still access benefits as they receive slight wage increases. 
  • Support early childhood educators by maintaining scholarships, continuing to cover costs of mandatory background checks, and persisting with the successful Family Child Care Home grant program. 
  • Establish the Employee Child Care Assistance Partnership (ECCAP) permanently. 
  • Propose amendments to child care zoning regulations to boost access to family child care homes.

These essential requests can ensure that more Kentucky children have high-quality child care and more Kentucky families are able to participate in our state’s economic growth.

Learn more about the Blueprint for Kentucky’s Children priority in which Kentucky can ensure high-quality child care environments to support working families and early childhood learning.