A three-pronged COVID-19 response strategy is required to guarantee high-quality child care and other early education programs can readily support parents returning to work:

1. The Commonwealth must continue to pay child care subsidies and contract payments to Pre-K Counts and Head Start Supplemental Assistance Programs for the duration of the crisis (no cost current fiscal year).
2. The Commonwealth must provide funding to compensate for the share of revenues that would otherwise have been collected by providers in the Child Care Works program as co-payments until child care services are restored to normal. Because it costs more to provide high quality child care,  funds should be prioritized for STAR 2, 3 and 4 programs (two months of lost co-payments = $17 million in 2016-17).
3. The Commonwealth must cover a portion of lost revenues for uncollected private pay tuition through the crisis period. Grants to child care providers would be consistent with the rates and total amount paid by the Child Care Works program. Funding should be prioritized to programs also serving subsidized children that have attained STAR 2, 3 or 4 ratings and then those that have been unable to access funds through the Paycheck Protection Program (two months of lost revenue = $100 million in 2016-17).

TAKING THIS APPROACH WILL:

Conserve Unemployment Funds

While states have been given additional unemployment compensation resources from the federal government, the demands on unemployment compensation funds will far outstrip the supply. Thus, to conserve those funds, we urge the Commonwealth to continue to deploy the funds already appropriated for the early childhood education and care providers as if they are operational so the staff of more of these programs continue to get paid directly from their employer. These payments should be released to all providers, including home-based providers, who pre-emptively close to protect the public health, but are not covered by the Governor’s Emergency Declaration.

Ready Child Care Programs for All Families to Return to Work

To ensure that programs are ready to open once work restrictions are lifted, programs must continue to be in a direct employment relationship with their staff, to the extent that funds are available to do so. Otherwise, the Commonwealth runs the risk of a lag in ramping up child care availability and a staffing crisis in the sector that could result in a slow return to work for all employers. In order to continue this employer/employee relationship, Pennsylvania can use federal funds to cover the lost parental co-payment revenues. Doing so will enable more child care programs to meet some of their financial obligations including full or partial paying of salaries. Failure to do so ignores the fact that more than 14% of payments to child care providers are covered by co-payments collected from parents receiving subsidies from the state. 

Ensure Sufficient Supply of High-Quality Child Care Providers

Although the state and federal government are significant investors in the early childhood sector, public resources cover the costs of far less than most children enrolled in child care programs. An estimated 75% of the capacity of the child care system is supported by payments made directly from parents, not the government. The requirement to temporarily halt operations of all child care centers and the protective closures by home-based providers, with the exception of those operating under a waiver, while appropriate to meet the public health care needs of the citizens, imperils the financial viability of the entire child care system. Further, because it costs more to provide a high quality program for children, high quality providers must have access to grants to cover some basic costs and loans through the period of closure or there is strong likelihood that a significant share of these high quality providers will not be able to re-open when the closure orders are lifted.