Child care in Kentucky is at risk of collapse as federal pandemic funding runs out

by Dustin Pugel, Kentucky Lantern

High quality, affordable child care is essential for kids to learn, parents to work and the economy to prosper. But for years, families have struggled to find and afford care, which can cost more than college tuition, even as the industry’s largely female workforce subsists on extremely low wages.

Recent influxes of federal pandemic funding have eased many of those pressures — but that money is about to run out, leaving the entire child care industry and the families that rely on it at risk.

Fortunately, the state has the money to avert the coming crisis. When lawmakers pass a new two-year budget next year, they can use our record revenues and the billions saved in the state’s so-called rainy day fund to ensure kids keep learning and parents keep working.

If they don’t, we know the catastrophe that’s coming. By one estimate, the more than $1 billion in federal funding that flowed into Kentucky’s child-care industry since 2020 prevented half of our centers from closing and saved nearly 80,000 child care spots.

Already, half of Kentucky’s kids live in a child care desert, an area with no available spots for children who need care or more than three kids per available spot. This has only gotten worse over the past 10 years as Kentucky has lost 1,759 child care providers — a 46% drop. Now, there are 159,000 child care spots for Kentucky’s 316,000 kids ages 0-5.

If they’re fortunate enough to find care, that doesn’t mean they can afford it. Kentucky families pay an average of $7,640 per-year per-child. That’s nearly 14% of the state median income — though likely much higher than the typical income of a family needing child care, as parents of young children are often early in their careers and near the lowest point in the trajectory of their earnings. High-quality centers in the state’s biggest cities can cost upward of $13,000 a year. By comparison, the average tuition for a full year at Eastern Kentucky University at $9,544.

An expensive and inaccessible child-care industry makes life hard on working Kentuckians. Over half of working adults in Kentucky are parents, and over a third of those are parents of young children. When parents are forced out of the workforce because they lack child care, the effects fall largely on mothers.

The workforce participation rate of moms of young kids is 65% compared to 93% for dads of young kids.

This costs Kentucky an estimated $1.2 billion annually in lost economic activity.

Even while child care is too expensive for many Kentucky families, child care workers are severely underpaid, earning an average of $25,770 a year. This apparent contradiction is because centers are rightfully required to maintain low teacher-to-student ratios and maximum class sizes for safety reasons.

But it means that centers are constantly in a tug-of-war between the need to provide adequate compensation for the workforce while not pushing families out with higher tuition. It’s a classic market failure.

This fragile, but essential industry would have collapsed during the pandemic were it not for hundreds of millions of federal dollars that kept doors open at centers across Kentucky. These funds have helped increase subsidies for families with low incomes, kept tuition down, allowed centers to make building improvements, and resulted in necessary raises for child-care workers in a highly competitive job market.

In next year’s budget session, the General Assembly can prevent child care from collapsing by replacing the $300 million in annual funding the federal government has provided in recent years. Otherwise, centers will have to make impossible choices like cutting staff pay, significantly raising tuition, closing classrooms or closing entirely. Child care is the industry that supports all other industries, and the springboard for Kentucky’s children —it’s worth the investment.

Kentucky Lantern is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Kentucky Lantern maintains editorial independence. Contact Editor Jamie Lucke for questions: Follow Kentucky Lantern on Facebook and Twitter.

Image: Adobe Stock