New study says Pennsylvania’s child care industry needs millions more in aid to survive

The Penn State study found federal aid has kept the sector afloat during COVID-19, but without more funding, hundreds of providers could close for good.

A group of children walk with their caregivers on Vine Street. (Emma Lee/WHYY)

A group of children walk with their caregivers on Vine Street. (Emma Lee/WHYY)

A new study of Pennsylvania’s child care industry finds that federal aid has largely kept the sector afloat during the crisis — but without more funding, hundreds of providers could close for good in the coming months.

Out of the more than 7,000 child care businesses operating in Pennsylvania before the pandemic, only about 200 have closed permanently. Still, another thousand could close without more support, said Department of Human Services Secretary Teresa Miller.

“If the pandemic was over today, and our economy was back to where it was pre-pandemic, we would probably be in a pretty good place,” Miller said. “I think the concern really comes in when we look at the future.”

The study, conducted by Penn State Harrisburg’s Institute for State and Regional Affairs, surveyed hundreds of child care providers from April to June across Pennsylvania. Its findings will be used to guide state officials’ distribution of $116 million of federal stimulus money to child care providers. The state has already distributed about $104 million of grant money to the industry since June.

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Providers surveyed said they are struggling to pay bills, institute costly COVID-19 safety measures, and find the cash to rehire staff — all with enrollment levels far lower than pre-pandemic levels. More than a quarter of providers reported dipping into personal savings to pay expenses, and nearly a fifth said they have been putting bills on their credit cards.

The study estimates that from March until Labor day, providers will incur about $325 million in pandemic-related costs. Pennsylvania officials hope to begin distributing the state’s remaining federal child care funding by the beginning of September. But that grant money will ultimately only cover about two-thirds of the need highlighted by the study — and won’t cover any of the costs incurred after the study period ends.

“We will continue to lobby the federal government to try and get additional support,” Miller said. “This crisis is not over.”

Despite the financial crunch, industry experts are predicting that demand will soon rise for child care, as decisions in Philadelphia, Pittsburgh and other school districts across the state to begin the school year all-online have left parents scrambling for options.

“Things will take some time to sort through,” said Philip Sirinides, Director of the Institute of State and Regional Affairs. “Getting providers to remain open and employ staff [while enrollment remains low] is going to be critical.”

The light at the end of the tunnel remains dim for Aishah Holiday, who runs Al Madinah Learning Center in South Philadelphia. Holiday says she reopened to the general public in June, but with only half as many children as she had pre-pandemic.

About a quarter of those families are too nervous about COVID-19 to send their kids back to care, while the other half lost their jobs and so can no longer afford to pay for it.

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“This has definitely made a big change in our industry,” Holiday said. “And I don’t think this is something that is going to go away, unfortunately.”

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