Missing Children

Classrooms sit empty at day-care centers despite 24 billion in federal grants

- Catarina Saraiva and Reade Pickert

A crucial source of emergency funding for US child-care providers is starting to run out, threatening to hit an already overstretched industry at one of its biggest pain points: trying to hold on to low-paid staff in a tight job market.

Much of the $24 billion handed out as part of the pandemic-era American Rescue Plan has been channeled into wage increases or bonuses for teachers, to discourage them from leaving for higher-paying jobs. With the supply of federal dollars coming to an end, providers say they'll likely have to roll back those raises or increase tuition, something that's already caused some parents to pull their kids out of care.

Although by law states have until the end of September to distribute the funds, many businesses say the money might run out much sooner: In a survey by the National Association for the Education of Young Children (Naeyc), abo 22% said they expect their payments to end in January.

"If the stabilization grant goes away, I don't know what we're going to do," says Renae LothBirch, the owner and executive director of Discover Magical Moments Daycare in Rochester, Minnesota. Teachers at the center have gotten a more than 40% pay bump over the past two years, from $14 an hour before the pandemic to $20 an hour now. Loth-Birch says the increase-funded by American Rescue Plan grants-was necessary to try to keep her staff from taking better-paid positions at places such as Target Corp. or a nearby internet provider, both of which also offer benefits.

Despite a waitlist of children that runs two pages long, four of the 14 classrooms at Discover Magical Moments sit empty. Because of a shortage of teachers, Loth-Birch can enroll only 126 students, well below the 184 that her license allows.