How One State Plans to Use Federal Relief Money to Shore Up Child Care Options

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Montana will leverage more than $31 million to establish grants for child care centers to increase pay, expand capacity and offset tuition rates.

Montana will spend more than $31 million in federal coronavirus relief money to expand access to child care across the state by establishing grants to offset tuition rates and raise employee wages, among other things.

The recommendations, made last month by a state health advisory commission, were approved by Gov. Greg Gianforte. Funding for the proposal will come from more than $68 million of Montana’s share of American Rescue Plan Act, a pot of money that’s earmarked for “child care stabilization,” according to documents from the Montana Department of Public Health and Human Services.

Per federal guidelines, 90% of that funding must be used to establish “subgrants” for child-care providers “to support the stability” of the industry in the wake of the Covid-19 pandemic. The remaining 10% “may be set aside for administration, supply-building, and technical assistance,” Adam Meier, the department’s director, wrote in a memo to the commission.

Affordable Child Care a Long-Term Problem

Access to affordable child care had been an issue in Montana before the pandemic, according to a survey of businesses conducted in early 2020 by the state Department of Labor & Industry. The results, released in November, found that roughly 6% of the state’s workforce relies on a child care arrangement to continue working.

“However, Montana’s licensed child care capacity meets only about 47% of the estimated demand,” the report said. “The impacts of the child care shortage are widespread. Over half of businesses in every region of the state reported a lack of affordable child care and stated increasing access to child care should be a priority in their community.”

The situation worsened as the pandemic ramped up. In his memo to the commission, Meier noted that 171 child care programs had closed since the beginning of 2020, leaving a “73% supply gap across the state—meaning there is only capacity to serve 27% of children under the age of six in licensed/regulated child care.”

“This gap is even more pronounced in rural areas at 85 percent,” he wrote. “Child care businesses have reported difficulty in recruiting and retaining a stable workforce, compounded by the pandemic.”

According to the May 2020 Occupational Employment Statistics database, the median income for child care workers is $12.24 per hour, or $25,460 per year.

The low pay, along with rising tuition and high rates of employee turnover, have been issues for maintaining child care capacity, Meier told the commission. As recommended by the commission and approved by the governor, the state will attempt to address those problems by administering up to $31.24 million in subgrants, along with $6.8 million in administrative costs, including $3.4 million for help with applications and “business professional development.”

The subgrants can be used for a variety of purposes, including enhanced payments to providers that expand their hours or capacity, and those that “serve unique populations such as children with disabilities, infants and toddlers, and low-income families.” Grant awards will also “require child care businesses to dedicate a higher percentage of their subgrant to personnel to support recruitment and retention bonuses.”

Both operating child care providers and those that closed during the pandemic will be eligible for the funding, which must be disbursed by the end of September 2023. 

A second pot of federal funding, which could be used to establish new child care facilities, will be  discussed by the commission at a meeting later this month.

Kate Elizabeth Queram is a senior reporter for Route Fifty and is based in Washington, D.C.

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