From Kit Cramer, President & CEO of Asheville Area Chamber of Commerce.
There is a big barrier standing in the way of North Carolina’s economic recovery from COVID-19: the lack of childcare. The lack of quality care impacts our desperately needed workers, and therefore, our businesses.
We need to treat childcare as essential infrastructure for our economic recovery and sustainability. A key way to sustain childcare programs now and for the future is to raise the childcare subsidy reimbursement rates that providers receive, as proposed in HB 574.
The state’s elected leaders deserve credit for having taken measures to shore up centers during the pandemic using federal relief dollars. However, so far this year those funds were not allowed to be used for additional compensation for teachers through bonuses – a critical cost for businesses, especially when workers were putting themselves at risk. Other essential workers were seeing bonuses of this nature. Most importantly, the pandemic relief funds are non-recurring.
For the long-term strength of the childcare system in this state, what’s missing is the correction to a fundamental flaw in the subsidy formula, as well as additional on-going investment in childcare.
Child care is expensive, especially for infants, costing more than annual college tuition at a state institution. Many lower-wage North Carolina workers rely on subsidies to allow them to get care so they can go to work. Already over 100,000 children in our state have the costs of care partially subsidized each year, with more than 20,000 on a waiting list for this kind of support.
Child care providers in NC are reimbursed according to rates set by the NCGA. These rates are based on county-specific market rates, determined from a statewide survey. The rates vary based on the county, the age of children served and other factors, which creates major geographic inequities. Child care providers in low-income and rural counties can receive thousands of dollars less per month because of the structure of subsidy rates. And childcare is an industry with very thin margins.
To compound the problems, current NC rates are still based on 2015 data, even though the most recent survey was conducted in 2018, more than two years ago.
While relief funding has been helpful in keeping childcare centers open during the pandemic, long-term changes are needed to build a more sustainable, resilient system upon which working parents—and, therefore, businesses—can depend.
HB 574 would do several things with the two most prominent being:
The total investment that would be needed to implement HB 574 is $146 million for the next two years. That is a comparative drop in the over $50 billion budget bucket for NC proposed for the next two years.
Under this proposal, 98 counties would see increased investment. Buncombe County 5-star child care centers would see an approximate increase of $300 per infant monthly if HB 574 were passed, a huge difference for the small businesses and non-profits that run daycare programs in WNC.
An increased subsidy rate would allow providers to improve quality and availability for families. At a time when there is extreme competition for workers, it would allow for increased teacher pay and benefits and professional development, providing the tools to expand workforce and therefore, childcare slots.
Parents rely on childcare every day to make working possible. Business owners rely on childcare to make hiring and retaining high-quality employees possible. Our state’s elected officials should invest in the sustainability of North Carolina’s child care system—if not, we put our state’s economic recovery at stake.
We encourage you to take action in support of our critical childcare infrastructure.