With cuts to child-care grants looming, providers worry about future of program

Originally Appeared in the Boston Globe
By Samantha J. Gross

April 7, 2024

Jennifer Simpson was floored last month when she learned that the monthly check she gets from the state to help run her home child-care business was going to drop drastically.

“I am in panic mode,” she said.

Come May, the $1,100 check that Simpson receives every month from the Commonwealth Cares for Children program — known among providers as “C3″ grants — will plummet to as low as $290 until the end of June, a nearly 74 percent drop.

“I could go elsewhere and make more than $20 an hour,” she said in an interview from her Southbridge home, where she has operated her eight-seat child-care business since 2014. “It’s hard because I love what I do.”

State officials say the drastic reductions in grants are being driven by “greater than expected growth” in the C3 program in recent months from providers that has stretched the existing pot of money too thin. While the overall funding for the grant program has not changed, the payouts to individual providers will be reduced through the end of the fiscal year, which ends June 30, in order to make the funding last.

Given the strain on the C3 grant and the prospect of belt-tightening in the next fiscal year budget amid uncertain financial times, some worry about the future of the pandemic-era program.

“C3 has been a lifeline for our sector,” said Lauren Cook, who runs Ellis Early Learning, which cares for 250 children in three Boston centers.

“You get what you pay for,” Cook said. “If a budget is a statement of values, we need our government to demonstrate the value of early education and care to the Commonwealth through their investments. [Cuts] could be no less than catastrophic.”

The C3 grant program was created by Congress in the federal American Rescue Act to help stabilize the child-care sector during the pandemic. It was designed for all providers — both those who serve poor children receiving financial assistance and those like Simpson that serve families paying full tuition — and allowed states to come up with their own formulas for disbursing the money.

In Massachusetts, the formula took into account staffing levels, community demographics, and an equity adjustment to ensure the majority of funding went to providers who served lower-income families.

The payments were monthly and based on fixed costs, which gave providers such as Simpson predictability and allowed them to boost pay, provide benefits, and offer professional development to staff. The grant payments also helped cover supplies, rent or mortgage payments, utilities, or other improvements to their classrooms.

When federal dollars for the program ended in 2024, the state committed to funding the program at the same level — $475 million per year — to help keep early educators afloat, using money from its general fund and a trust fund specifically set aside for early education and care. Massachusetts is one of the only states in the country to do so.

The program has become wildly popular. More than 90 percent of all child-care providers in the state receive monthly C3 grant funding. The infusion helped Massachusetts child-care providers expand, and the state now boasts more seats for kids than before the pandemic started. Collectively, providers added more than 8,193 slots this year alone.

In a way, it has become a victim of its own success. All that demand has essentially over-extended the program, and without making cuts to some payouts, the C3 program will run out of money before the end of the year. At its current rate of spending, the grant program would distribute $25 million more than it has, according to a recent report from the Massachusetts Taxpayers Foundation.

“Because the program has been so successful, more and more [child-care providers] are participating. And as programs open new classrooms or bring on more teachers, they become eligible for more money in their grant,” said Lauren Kennedy, cofounder of the early-education advocacy nonprofit Neighborhood Villages.

The increase in demand shows “that this program should cost more than $475 million,” she said.

Jeff Rubin picked up his son, Jackson, at Jennifer Simpson's home child-care center. SUZANNE KREITER/GLOBE STAFF

The cuts, based on a tiered system, will hit hardest for providers such as Simpson who do not serve children receiving state subsidies. Those who serve at least one child on a voucher or who operate in a region deemed “socially vulnerable” will keep a little more than half the funding, compared to just 25 percent for providers such as Simpson.

Child-care providers whose enrollment serves more than one-third of poor children receiving state vouchers won’t see changes to their funding at all.

“This was a very difficult decision; we did have to make some difficult choices,” state Early Education and Care Commissioner Amy Kershaw told the Globe. “We intentionally took an equity lens on how to implement the changes to ensure we were continuing to invest greater resources in programs serving low- and moderate-income families.”

Even still, providers such as Cook in Boston who serve mainly children receiving financial assistance still worry for the sector at large, and predict the looming cuts to C3 grants will “undoubtedly” result in shuttered child-care centers and a decline in quality care.

“We feel so fortunate to operate in Massachusetts,” Cook said. “But the thought of eliminated or permanently restricted C3 funding is anxiety-provoking and would be a catastrophic step back.”

The governor’s budget proposal for the fiscal year that begins in July would fund C3 at its existing level, using the same pots of money plus some dollars from the so-called millionaire’s tax.

But both branches of the Legislature are still working on their versions of a state budget for the next fiscal year, which requires a closer eye on spending. Lower-than-expected revenues prompted Governor Maura Healey to slash $375 million from programs in the current fiscal cycle and to adjust estimated collections this fiscal year downward by $1 billion. She also recently announced a hiring freeze for portions of state government.

“Honestly I am concerned about many areas in the state budget as we work for fiscal 2025,” said state Senator Jason Lewis, Democrat of Winchester and co-chairperson of the joint education committee. “The fiscal picture is a lot tighter than has been the case for the last few years. It is certainly requiring some difficult decisions.”

Simpson, who has used the $1,100 to offset inflated food and gas prices and subsidize her income, said she would rather close her center than raise rates for parents.

Other providers like Simpson who run small child-care businesses on tight margins — and don’t take children receiving state subsidies — share her worry. In emails to the Globe, eight providers facing steep cuts to their grant funding detailed their concerns, saying they will have to raise rates, temporarily lay off assistant teachers, buy lower-quality snacks, or consider closing all together.

Higher tuition, providers said, will come at a cost to parents, including teachers, police officers, nurses, and first responders, who are not poor enough to receive subsidized care for their children but still struggle to find affordable child care in Massachusetts, which has some of the highest such costs in the United States.

“People can’t work if they don’t have a place for their children to go,” Simpson said.