Minnesota's child-care providers await federal COVID relief funds as they fight to stay open

Everything at Kim Mueller's in-home child-care business is different these days.

At naptime, cots are cloaked in tents to limit the spread of droplets. Partitions separate children from close interactions when they play at a table. An air purifier purrs softly, and boxes of disposable gloves and alcohol wipes are always within reach.

At night, Mueller fills every room of her Coon Rapids home with a disinfectant fog.

"We don't have a safe space we can go home to at the end of the day," she said. "If we aren't super vigilant, COVID could walk through our front door at any time."

The number of children in Mueller's care has dropped by two-thirds since the coronavirus hit last spring, as parents became fearful of the spread of disease, were laid off or turned to other family members for care. Meanwhile she has spent close to $10,000 on safety equipment and cleaning supplies.

Mueller kept her doors open with the aid of a federal Paycheck Protection Program (PPP) grant and $1,200 monthly payments that the state made available to every licensed in-home provider starting in April. Larger child-care centers were eligible for $8,500 a month through the same program.

But those monthly payments dried up at the end of the year, and now Minnesota's 9,600 licensed and certified child-care providers are waiting for what comes next.

"I've already cut all the expenses I can cut out of my budget," said Mueller, a former 911 emergency dispatcher who became a licensed family child-care provider more than a decade ago.

If one more child drops out, she said, "some very hard choices will need to be made if no more assistance is allocated."

Congress earmarked $10 billion for states to support child care as part of its recent $900 billion COVID relief bill.

Minnesota is projected to receive about $137 million, though the money has not yet arrived.

At a legislative hearing Tuesday, state officials said they intend to spend $15 million of the federal funds over the next two years on a program that helps low-income families afford child care.

Monthly payments to child-care providers would continue in January and February, at a cost of $45 million.

Industry advocates are pushing Gov. Tim Walz and state legislators to keep the monthly payments coming well into the year.

"That stream of money and the consistency really shored up a sense of confidence and stability," said Cyndi Cunningham, a child-care provider and lobbyist for the Minnesota Child Care Provider Information Network.

The pandemic has amplified the critical role that child care plays to support public health and other essential businesses by enabling workers to do their jobs. But it also laid bare existing strains in an industry funded largely on the backs of working parents and low-income workers.

"Minnesota and the nation already were in a child-care crisis before COVID hit," said Clare Sanford of the Minnesota Child Care Association, which represents child-care centers. "Unlike every other developed nation in the world, ours does not consider child care to be a public good and fund it in the way it funds K-12 education."

While low-income families may receive some government help, the system is underfunded and reimbursements don't fully cover the cost of care. Providers get most of their revenue from parents who pay out of their pockets, devoting a huge chunk of their pay toward it even as wages haven't kept up with inflation.

Child care is expensive and labor-intensive, with staff needed up to 12 hours a day and weekends to accommodate the shifts of working parents. Child-care workers, who disproportionately are women and women of color, earn some of the lowest wages in the country. But to raise wages, providers need to collect more from families, who simply may not be able to afford it.

The pandemic has substantially increased the cost of care at a time when enrollment has dropped.

"Unlike public schools, child-care providers are businesses," Sanford said. "If they can't survive financially, they go out of business.

"We need more resources," she added. "Otherwise there will not be a child-care industry at the end of COVID to support our economic recovery."

Across the nation, state agencies have adopted a variety of approaches to try to keep child-care options available to essential workers with varying success.

Twenty-eight states have seen more than half of their child-care facilities close during the COVID-19 pandemic, according to the federal government. Minnesota has fared much better, with less than a quarter of providers shutting down.

Money from the state's general revenue fund, along with the federal aid, made the difference. Since April, when direct payments began, child-care providers in Minnesota have received $158 million in federal payments and $30 million from the state.

The new round of federal funding could land in state coffers any day.

"We're looking at this as almost like a piece of critical infrastructure to society that we just need to support," said Lisa Bayley, acting assistant commissioner for children and family services with the Minnesota Department of Human Services. "We've seen that getting those funds out quickly but fairly, so that everyone who applies gets that relief, can have a big impact."

Child-care center owners and operators seem united in the need for what they call the "monthly survival grants." Those who run larger centers would like to see the grants tied more to the size of the operation.

"We'd like to see it scaled better based on licensed capacity," Sanford said, "because $8,500 to a center that services 25 kids and $8,500 to a center that serves 200 kids is very different support."

While Mueller waits for possible financial support, the virus continues its assault.

Last week, a child tested positive for the coronavirus, forcing her business into its fourth shutdown while she and her family go into a 14-day quarantine.

"I look forward to the day when I'm fully vaccinated to market my business with confidence," she said, seeing it as the first step to reassuring reluctant parents and rebuilding enrollment.

Until then, she'll need a financial safety net.

"If the kids can't come in," she said, "we don't have a business."