Child care closures renew worries around the economics of early learning
Sophie Kerman’s first thought when she heard about the University of St. Catherine closing its early childhood center was “not again.”
After going through two child care closures the past two years, Kerman and her husband were excited to send their 2 1/2-year old daughter to St. Kate’s in January. A few weeks into February, they were told it was closing.
Anger turned into anxiety. “It’s like a child care closure PTSD bomb goes off,” said Kerman. “A lot of outrage … the kind of systemic outrage of how do we live in a country that doesn’t invest in child care? This is insane.”
Minnesota’s pumped more than $1 billion into child care in recent years to raise wages and boost affordability for low income and middle class families. But challenges around staffing and wages continue to outrun the new money as demand for child care continues to rise.
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A cost modeling analysis from the Minnesota Department of Human Services and the national nonprofit First Children’s Finance found the majority of child care centers aren’t making a profit, yet the cost of child care remains too expensive for most families.
Kerman and her husband have already started touring new centers for their daughter but they say it’s disheartening.
“She will have been in three different child care centers in three years,” Kerman said of her young daughter. “It’s a huge upheaval as far as like my own routines, but also like, I don’t know what that does to child development.”
‘We can’t do this’
St. Kate’s did not respond to requests for comment on the decision to close the center, which opened in 1931 as a lab school to educate women in teaching young children. Kerman said the university’s decision was especially confusing because it had invested in a new playground and was already starting to enroll children for summer programs.
In an email to families, the university cited the growth of free public pre-K programs, changes in state grant funding and staffing challenges as reasons for closing despite its 93-year history and seemingly healthy program.
A legislative change last year also altered the economic landscape.
During the pandemic, 70 percent of awarded child care money had to go toward staff wages and the other 30 percent could be used at the center’s discretion. While lawmakers last session agreed to continue the funding, they required 100 percent go to increase staff wages, leaving no wiggle room for other costs.
While new money is welcome, it can also take time for it to take effect, said Suzanne Pearl, the state director of First Children’s Finance, which provides loans and business development help to child care operations serving low and moderate-income families.
“So if your center was just on the edge, maybe, in July, it’s not a lot of time to make up between now and then to really get the benefits of all of these investments,” Pearl said.
It’s also not unusual in Minnesota for centers that lease from an institution to sometimes be the first to go when facing budget cuts, she added.
“We’ve seen that happen, certainly in greater Minnesota,” Pearl said. “School-run programs, school districts that have started programs, and then after a few years or even a longer amount of time say, ‘We can’t do this. We just can’t operate it.’”
When First Children's Finance and the Federal Reserve Bank of Minneapolis surveyed child care providers last year they found a mixed financial outlook.
While financial stresses had eased following the COVID-19 pandemic, more than 70 percent of the child care and family care operations responding said they were unsure if they could remain in business indefinitely. Nearly 60 percent of family child care operators reported not having enough cash on hand to handle all their expenses.
Overall, the Minneapolis Fed analysis found providers struggling with a changing business model: Hiring challenges were hurting their ability to enroll more kids; they couldn’t hike tuition beyond what parents could afford; and the demand for child care was shifting toward younger children, “who are often unprofitable for providers.”
Much of the economics of early child care and education still depend on the pockets of parents, but people need to think about funding child care the same way they think about paying for public schools, Pearl said.
“When you look at it that way, we think about schools, public schools, there’s a reason those are public,” she said. “They would not make a profit either if all of the costs to run a school were put solely on the families.”
‘Ripples for decades’
Observers say it’s crucial communities see child care as vital to their long-term prosperity.
“What I will tell you is in order for child care centers to no longer close, people have to care about them staying open as much as the people working in them, if not more,” said Jamie Bonczyk, program officer with Greater Twin Cities United Way.
Bonczyk is the former executive director of Hopkins Early Learning Center that had to close because of changes in their lease agreement with the public school district. She said it was not only devastating for her employees but also the families.
“Right now, early childhood education and care is really seen as a family sole responsibility,” Bonczyk said. “So if I’m just a general person in the community, I’m really thinking that will only affect those 100 or 150 families when quite honestly, the closing of a high quality child care center will have ripples for decades.”
It affects the workforce and working families especially hard.
Claire Ripp’s 4-year-old daughter attends St. Kate’s early childhood center, which Ripp herself attended in the 90s. She’s disappointed a program that’s served two generations of her family is closing, but she’s more concerned about what her family will do for child care in the summer.
Her daughter’s on a wait list for public pre-K in St. Paul, and it’s possible she might be able to enter kindergarten early if Ripp can’t find a high quality child care with openings.
“We’re already kind of scrambling,” she added. “I just don’t know if she doesn’t get into public pre-K, I’m not quite sure what our options are.”
For families like hers where both parents work, “random abrupt shifts like this are a huge, huge hurdle to be tackling and dropping everything to respond to,” she said.
“This is like a really important time in kids' lives where stability means everything,” she added, “and having the right fit in where they spend their time and start their academic journey means everything.”