A new report is sounding the alarm that many families may be facing the loss of child care services in the next year. The report titled "The Child Care Cliff: What's at Stake for Families, Businesses, and State Economies" highlights the impending drop-off in federal child care investment starting September 30, 2023, and the dire consequences it will have if no action is taken. The analysis by The Century Foundation examines the potential impact of the funding cutoff on children, families, and state economies across all fifty states and the District of Columbia.

The report predicts that more than 70,000 child care programs, about one-third of those supported by the American Rescue Plan (ARP) stabilization funding, will likely close nationwide, resulting in approximately 3.2 million children losing their child care spots. In Arizona alone, 1,149 child care programs are projected to close, leading to 99,691 children losing access to child care.

The loss of child care programs will have a significant economic impact, with states estimated to lose $10.6 billion in economic activity annually. Millions of parents will be affected, potentially leaving the workforce or reducing their work hours, resulting in a loss of $9 billion in annual earnings for families. The child care workforce, which has been slow to recover from the pandemic, is also expected to lose 232,000 jobs.

The report emphasizes the urgent need for immediate funding and comprehensive long-term solutions at the federal level to provide safe, nurturing, and affordable child care options for every family. It highlights the high cost of child care, which exceeds $10,000 per year for one child on average and can reach as high as $15,000 to $20,000 in some states. The low wages in the child care sector make it increasingly challenging to attract and retain qualified and passionate early educators.

The COVID-19 pandemic exacerbated the existing challenges in the child care sector, leading to the closure of an estimated 20,000 child care programs in the first two years of the pandemic. The ARP stabilization funds provided temporary relief, but their expiration in September 2023 will create a funding cliff, risking further contraction of the child care sector.

The report underscores the far-reaching implications of the child care cliff, including the impact on children's well-being, family economic security, racial and gender equity, and local and state economies. It calls for increased investment in child care and early learning to ensure affordable and high-quality options for families and support parents' workforce participation.

Read full report here.

Arizona ranks 39^th in child well-being, according to the 2023 KIDS COUNT® Data Book, a 50-state report of recent household data developed by the Annie E. Casey Foundation analyzing how children and families are faring. However, our country’s lack of affordable and accessible child care short-changes children and causes parents in Arizona to frequently miss work or even quit their jobs, while those who can find care are paying dearly for it. These child care challenges cost the American economy billions of dollars a year and stymie women professionally.

The Data Book reports that too many parents cannot secure child care that is compatible with work schedules and commutes. The Data Book reports that in 2020–21, 16% of Arizona children under 6 had a family member who quit, changed, or refused a job because of problems with child care. And women are five to eight times more likely than men to experience negative employment consequences related to caregiving.

Nationwide, children birth to five of color are disproportionately affected as family members are forced to make job changes because of child care at higher rates: Black children (17%), Latino children (16%), and Asian and Pacific Islander children (14%); compared to the national average of 13% of children.

“Child care is an essential service like health care and education,” said Interim President and CEO of Children’s Action Alliance (CAA), Kelley Murphy.  CAA is the Arizona member of the KIDS COUNT network. “That is why it must be affordable and accessible for parents to make a decent living to care for the children, and to build a stronger economy.”

Even if parents can find an opening at child care near their home, they often can’t pay for it. Arizona’s      average cost of center-based child care for a toddler was $10,883, 11% of the median income of a married couple, and 31% of a single mother’s income in the state.

While the cost of care burdens families, child care workers are paid worse than 98% of professions. Median national pay for child care workers was $28,520 per year or $13.71 an hour in 2022, less than the wage for retail ($14.26) and customer service ($18.16) workers.

The failings of the child care market also affect the current and future health of the American economy, costing $122 billion a year in lost earnings, productivity and tax revenue, according to one study. All these challenges put parents under tremendous stress to meet the dual responsibilities of providing for their families and ensuring their children are safe and nurtured.

“A good child care system is essential for kids to thrive and our economy to prosper.  But our current approach fails kids, parents, and child care workers by every measure,” said Lisa Hamilton, president and CEO of the Annie E. Casey Foundation.  “Without safe child care they can afford and get to, working parents face impossible choices, affecting not only their families, but their employers as well.”

Each year, the Data Book ranks the states according to how children are faring, presenting national and state data from 16 indicators in four domains — economic well-being (Arizona ranked 33rd), education (45th), health (32nd), and family and community (40th). Arizona’s overall rank of 39th reflects both some areas of strength and many ways the state can bolster its policies that support child well-being.

Transitioning from a faltering child care system to creating a flourishing one will take new thinking and investing at the local, state, and national levels. An executive order issued by President Biden in April is aimed at expanding access, lowering costs, and raising wages. It could prove to be a helpful framework, but more is needed:

• Federal, state, and local governments should invest more in child care. State and local governments should maximize remaining pandemic recovery act dollars to fund needed child care services and capacity. Congress should reauthorize and strengthen the Child Care and Development Block Grant Act, and increase funding for public pre-kindergarten and Head Start.
• Public and private leaders should work together to improve the infrastructure for home-based child care, beginning by lowering the barriers to entry for potential providers by increasing access to start-up and expansion capital.
• To help young parents, Congress should expand the federal Child Care Access Means Parents in School (CCAMPIS) program, which serves student parents.

2023 National Kids Count Report

On Friday, March 24th, the Department of Economic Security (DES) shared a message with early childhood educators throughout Arizona announcing new, exciting updates for the early childhood system statewide. 

These improvements are important to continue to strengthen Arizona's early childhood system. The updates include DES provider rate adjustments, an education workforce scholarship program, and targeted childcare provider grants. These improvements will facilitate greater access to high-quality childcare, supports for the early childhood workforce including providers, and incentives for new providers to contract with DES or become a DES Certified Family Child Care provider.  

Effective April 1, 2023, the DES Division of Child Care will implement a rate increase for all DES childcare providers through June 30, 2024. The reimbursement rate for infants will increase to the 75th percentile of the 2022 Market Rate Survey, and district rates will change to one statewide rate for each age group by care setting. These changes will bring most rates to the cost of providing care at the minimum health and safety standards, and to the cost of high-quality care when including the enhanced quality reimbursement rate of 50 percent.

Historically, childcare reimbursement rates have usually been calculated by geography and age, resulting in rural providers receiving reimbursement at devastatingly low rates. This adjustment will create a level playing field throughout the state, with potential triple reimbursement rates for providers in rural and underserved communities. 

We would like to give special thanks to the Arizona Early Childhood Alliance (AZECA) Leadership team for their collaboration with DES in reviewing and making priority recommendations on how Arizona could most effectively distribute the remaining CCDF relief funding. These changes will serve as mechanisms to sustain the Arizona early childhood system and strengthen Arizona families statewide.