The Wisconsin Early Childhood Association warns the state’s childcare industry will face widespread shutdowns and pared-back services without sustained government support.
The group on Friday released a report analyzing the impact of pandemic-era stabilization funding running dry this summer, following several years of federal help for the struggling industry. That funding has included the COVID-19 Emergency Payment Program, then Child Care Counts and the more recent Child Care Bridge payments, with funding slated to end after June, the report shows.
Childcare providers in Wisconsin were hit especially hard during the pandemic. Their revenues dropped 36% in 2020, compared to the 9% decline across all service sectors, according to WECA. At the same time, employment in the childcare sector fell by 31%, more than twice the 14% impact across other industries.
“These losses added to existing challenges in a low-margin, labor-intensive field,” authors wrote. “Together, these factors show how deeply the pandemic disrupted Wisconsin’s child care system and pushed an already strained sector into crisis.”
But federal stabilization funds helped offset the impact, the report shows, boosting the early childcare workforce in group programs by about 17%. Authors note growth was closely linked to funding levels for the industry.
The pandemic disruption followed an earlier decline — the number of childcare programs had fallen by an estimated 30% from 2013 to 2020, while the period since then has seen “modest” growth of about 4% despite the impacts on revenue and employment.
Now, as funding is set to wind down in about five weeks, the association is sounding the alarm as providers signal their concern about the support going away. Referencing a state-level survey from the UW-Madison Institute for Research on Poverty, the report shows childcare programs are eyeing tuition increases, cutting jobs and even shutting down in some cases.
About three-quarters of surveyed providers said they would need to raise tuition, including 21% who said they expect to raise rates by at least $25 per child and 17% expecting to raise rates by $50 or more per child. That amounts to an increase of up to $2,600 per year for families, according to the report.
Meanwhile, a fourth of surveyed providers said they’re “somewhat, very or extremely likely” to close their programs if stabilization payments end.
“Risk of closure was especially high among small and family based providers and in communities with limited alternative care options,” authors wrote, noting others say they’ll be driven to cut staff hours or entire jobs, freeze hiring and get rid of benefits and bonuses.
As a potential model solution, the association notes other states including Minnesota and Massachusetts have transitioned their stabilization funding into permanent or sustained state-funded programs.
“Without sustained funding, Wisconsin risks reopening an [early childhood education] gap that took 11 years — and extraordinary effort from educators — to shrink,” authors wrote.
