Emergency federal funding will fall short of covering major financial gaps in the Massachusetts child care sector, prompting an industry group to warn state lawmakers that they will need to triage limited resources with a wave of closures on the horizon.
Legislators are weighing tens of millions of dollars in additional spending, plus another $45 million in stimulus money through the CARES Act, to support child care after forced shutdowns amid the pandemic upended the finances and operations of many in the industry.
However, the Baker administration estimates that the industry — a large portion of which relies on parents paying to send their children — has lost about $250 million per month since the COVID-19 outbreak prompted widespread closures in mid-March, creating a deficit that far outstrips available relief.
William Eddy, executive director of the Massachusetts Association of Early Education and Care, told legislators Wednesday that the early education system has a "very rocky road" ahead of it and that the scale of the problem cannot be fully resolved without additional federal investment.
"I have great empathy for our private programs — no business can sustain 14 weeks with no revenue and not feel it," Eddy said at an Education Commission hearing on the state of the early education field. "These programs are hurting, and we are going to lose a significant portion of them."
If the $250 million per month loss estimate Baker officials offered at the same Wednesday hearing is correct, Eddy said, "it is not something that state government can solve."
Early Education Commissioner Samantha Aigner-Treworgy stopped short of explicitly requesting further federal action during her testimony Wednesday, but she cautioned that the CARES Act stimulus will not be enough to cover the hundreds of millions of dollars in losses.
"The business model, which really is reliant on per-child, per-day funding at this point to sustain operations, will be a challenge for many child care providers throughout the recovery," she told lawmakers. "While the investment in the Child Care Development Block Grant in the CARES Act will certainly help mitigate the impact on providers, we know that this critical infrastructure will actually require solutions that we have yet to come up with for the year ahead."
The demand for child care remains unclear, which in turn creates further financial clouds for providers who rely on a per-child, per-day funding model.
With many parents still working from home and uncomfortable returning their children to day care, other states have seen parental demand for care fall by 40 percent to 60 percent, Aigner-Treworgy said.
"It will likely take many months before enrollment returns to pre-COVID levels," Education Secretary Jim Peyser told the committee. "The path ahead is not entirely clear or straight, and we cannot yet see the light at the end of the tunnel."
Most providers closed as the outbreak surged this spring in Massachusetts, leaving parents to thread a sometimes-impossible needle between work and managing daytime child care themselves.
The Baker administration launched an emergency child care system to help essential employees who still had to report for shifts and vulnerable children, though it was a smaller scale at about 7 percent of pre-pandemic capacity.
The department also continued to pay about $160 million total to roughly half of providers to maintain subsidies for children that were enrolled in March, according to Aigner-Treworgy.
Even before the crisis, Aigner-Treworgy said, Massachusetts faced a "supply and demand challenge" with about 750,000 early education-aged children and capacity for only 250,000, about 55,000 slots of which are subsidized by the Early Education Commission.
Because of that gap, many providers rely on parents who are able to pay tuition.
Amy O'Leary, director of the Early Education for All campaign, argued at Wednesday's hearing that the pandemic uncovered and exacerbated significant problems with the state's model.
"We need to change funding models," she said. "It is not sustainable to fund based on enrollment per-day, per-child. Imagine if we tried to run a public transportation system based on the per-rider fare alone. It doesn't work. We need cost-based financing."
Last week, the left-leaning Massachusetts Budget and Policy Center estimated that early education and family day care homes will need $690 million over the next five months to successfully reopen, cautioning that child care is a key foundation for virtually all other economic sectors because it enables parents to work.
Exacerbating the industry's needs is a bleak economic outlook for Massachusetts. Tax revenues have plunged, and economic experts say that fiscal year 2021 receipts could fall as much as $6 billion short of earlier estimates.
Eddy urged the Legislature to intervene and keep paying pandemic-era subsidies through the end of the year to stave off further layoffs and program closures.
Lawmakers are looking to direct additional money toward the field at the state level. An information technology bond bill due for a Senate vote on Thursday includes $25 million in grants for child care centers, while a COVID-19 supplemental budget appropriates about $81 million in spending on early education that the Baker administration says will be reimbursed by the federal government.
U.S. Rep. Katherine Clark, D-Malden, filed legislation, included in a broader infrastructure package U.S. House Democrats are pursuing, that would create a $10 billion grant fund aimed at supporting both subsidized and private-pay facilities.
Amid the budget strain, Eddy said, state lawmakers must make difficult decisions about how to support early education with limited resources.
"Is it the role of legislators to subsidize parents who can pay private means to subsidize our tuitions when we have 20,000 children who are from low-income families sitting on waitlists for subsidized care?" Eddy said. "In the interim, with state funding, there's got to be a prioritization and a value system of where do we first put our dollars."