New Child Care Network Aims To Support Businesses Upended By The Pandemic

the Minnesota Reformer

By Rilyn Eischens

December 15, 2020

A new collaboration is aiming to help child care providers across 12 states survive the pandemic and improve access for years to come.

The Early Care and Education Business Collaboratory is a program of First Children’s Finance, a Minneapolis-based nonprofit that provides financial assistance to child care businesses. First Children’s Finance also works with communities to increase child care supply and with state and federal agencies involved in regulating and funding child care.

Child care in Minnesota is expensive and hard to find. The average yearly cost of infant care is $16,341, and the average cost of care for a 4-year-old is $12,252, according to the Economic Policy Institute, although costs vary widely based on geography and type of child care.

In 2018, 26% of Minnesotans lived in a child care desert — meaning there were no providers in their area, or at least three times as many children as there were spots in licensed child care facilities, according to the left-leaning Center for American Progress.

The pandemic has further strained the industry, sparking concerns that child care providers will close their businesses amid the economic downturn. This would make it even more difficult for families to find affordable child care in the future.

Heidi Hagel-Braid, chief program officer of First Children’s Finance, talked with the Reformer about how the Collaboratory got started, the pandemic’s effects on Minnesota’s child care industry and the industry’s outlook.

This interview has been edited for length and clarity.

What is the Collaboratory?

The Collaboratory came out of the idea that child care and early childhood education differs from K-12 education in that there is not one system, like there is for K-12 education.

When we talk about early care and education, it’s shards of a system. Child care is spread out across all kinds of different places, as well as the state and federal government. What we call “the ecosystem” — the child care business ecosystem — has 11 components at the business, community and systems levels. With the Collaboratory, states can map out their investments in these 11 different areas.

It’s a way for states to first and foremost start to understand, across multiple state agencies, what they’re spending on child care, what they’re funding and where the money is coming from. We usually start with the departments of human services and departments of education. But child care is a business, so we also encourage them to branch out to departments of economic development, employment and labor.

We’re hoping that states get a full picture of what they’re investing in, how to make additional investments and what amount is needed. We also want to focus on the innovations that are happening — because there are so many smart, cool things happening across the country — and how they can be replicated across states.

How was Minnesota’s child care industry doing before the pandemic?

Before the pandemic, we knew that there were shortages of child care across the state, but particularly in rural communities. We have also seen a decline in the number of family child care programs that have started up.

I think there was not a state in the union that did not have a child care desert before the pandemic — meaning there are at least three children for every one spot in a child care program. We also know that there’s not enough culturally, linguistically relevant care. The status of businesses before the pandemic was that they were struggling. The business model of childcare has a very slim margin, and they struggle amid a good economy.

How has the pandemic affected the industry here?

Child care has been in operation throughout the pandemic, but the demand for child care has really changed dramatically, and continues to be lower than average. We’re very concerned about the viability of child care businesses and their ability to survive the economic downturn.

We’re not anywhere close to recovery — we’re still in an emergency, and that’s not boding well for the cash flow of these very small businesses that rely on the demand for child care to be able to make a very bad business model work.

We have seen investments from the state and the federal government, and we know that more money is going to be needed. That’s going to be a really difficult challenge, since every industry has been impacted and we don’t know what state spending will look like in the future. The federal government needs to step up with additional investment. There has been a child care bailout package sitting on the shelf in front of Congress for months.

I don’t think that Minnesota is quite at this level, but there are many states that are predicting losing about 40% or more of their child care supply due to limited demand.

What does this mean for the future of child care in Minnesota, and what could be done to support the industry?

We started this pandemic with a supply shortage in Minnesota, and we will come out of it with a deeper shortage.

Child care is not like you can flip a switch and turn it back on — it is highly regulated for good reason, and it is not overly profitable. So the number of people coming into this industry is not huge. As we talk about the economic recovery, if people start to work outside their homes again, child care will be critical — absolutely critical — to the recovery of Minnesota’s economy.

What each of the 12 states involved in the Collaboratory are doing right now is mapping out their investments across agencies. The Minnesota team is mapping out all their investments, initiatives and activities, and then assessing where the gaps are as we speak, so we don’t have specific information about next steps for Minnesota quite yet. We’re excited to share what we’ve learned as we map these things across states.

The Minnesota Reformer is an independent, nonprofit news organization dedicated to keeping Minnesotans informed and unearthing stories other outlets can’t or won’t tell..