Minnesota child care was already in crisis — before the threat of a federal freeze

A parent readies her child for drop off at Circulo de Amigos Child Care Center on Tuesday, Jan. 14, 2025, in Minneapolis, Minn. Photo by Ellen Schmidt/Minnesota Reformer.

Minnesota child care is in crisis — and that’s even before the threat of a federal freeze in funding. 

As a director of a child care center, I nurture relationships with other early childhood leaders to learn and collaborate, and this year, colleagues have repeatedly told me, “I don’t know how long I can keep my doors open anymore.” I could only respond with a sad, knowing nod. 

Child care administrators won’t be able to save the industry on our own. 

Inflationary costs, teacher burnout and higher wages at McDonald’s than in child care have made the landscape financially untenable. A freeze in federal funding would mean collapse. 

I was recently on a Zoom with 90 child care directors and administrators from across Minnesota in response to the threat of a federal funding freeze. Many shared that if Child Care Assistance — known as CCAP — funding were to stop for just a few months, they would fold. We looked to our future with tears and white knuckles. Not out of fear for our own bank accounts, but out of concern for the children in our care and the families who depend on us. 

Child care is a failed market system. Families can’t afford the true cost of care, which includes livable wages for teachers and other necessary resources for high quality care. And, as it is, most families pay far beyond the 7% of their annual income that the federal government deems “affordable.” 

Payroll accounts for 70% or more of most child care centers’ budgets. Even when teachers are paid less than what they could make at Home Depot, profit margins remain only 1% for child care centers nationally. 

A few months of financial volatility from a federal freeze would lead to countless centers closing. 

With slim profit margins, most centers do not have a sufficient rainy day fund to survive a bad quarter, despite scrupulous accounting and efficiency measures. 

You might think a three-month freeze on CCAP funding would only affect families dependent on CCAP. That’s far from the truth.  

For example, a metro-based child care center with 10 preschoolers who are CCAP eligible receives $1,593.60 per month per child. If that funding disappeared due to a federal freeze, that would be $47,808 in lost revenue in three months; far exceeding the center’s profit margins. After six months of a freeze, the rainy day fund will have dried up and the center will be preparing to close. 

It is no longer 10 children without access to care; it’s 100 children without care, and 100 families scrambling to keep their jobs, and 30 child care educators without work. Imagine how fast a center would fold if 50% or more of their families receive CCAP? All centers, everywhere, will be impacted. 

Child care workers are the workforce behind the workforce. Without them, other people can’t go to work, which is why this issue is typically bipartisan — Greater Minnesota Republicans and urban Democrats both confront this issue. 

Child care is a public good that supports the well-being of children and families. When done well, it is a great equalizer — neutralizing the achievement gap and helping children be resilient, prosocial problem solvers in kindergarten and beyond. 

A threat to CCAP is a threat to the entire early childhood industry. Every child deserves access to high quality and affordable child care. Child Care deserves protection and public financial support for the wellbeing of children and families, and in turn all of us, today and tomorrow. 

Our elected leaders need to ensure that funding for the programs that children and families rely on remains robust and safe now and into the future.