Stuck between high fees and low wages, how much money will it take to fix PA child care staffing crisis?

This story originally appeared on Spotlight PA.

Holli Zelinsky often thinks about selling or even closing the Doodle Bug.

She opened the preschool and child care center in rural Schuylkill County in 2007, and making the finances work has always been a challenge.

But after the coronavirus pandemic upended the child care industry over four years ago, finding and keeping workers became even harder.

Short staffing led her to shut down one of her baby rooms and reduce enrollment for other ages. Zelinsky said she went from having 55 children a day to 37. She worries about having to close more rooms.

“I’m not a quitter,” Zelinsky told Spotlight PA. “I keep thinking something’s going to be better.”

Since the coronavirus pandemic began, about $1.8 billion in federal stimulus funds have been targeted at stabilizing Pennsylvania’s child care industry, according to figures from an advocacy organization and the state Department of Human Services. But providers say they are still desperately struggling to stay afloat and keep workers, issues that have created problems for families and employers.

Democratic Gov. Josh Shapiro’s proposal includes additional state funding for various early learning, early intervention, and child care programs. A Spotlight PA review of six such line items shows a proposed boost of about $100 million in state money.

But advocates say the proposal doesn’t do enough for what they see as a critical issue: child care teacher recruitment and retention. They’re asking for $284 million in new and recurring state funding for an initiative dedicated to that purpose. Those funds could pay for wage increases, hiring and retention bonuses, and benefit packages.

The governor’s administration has declined to say whether it supports the recruitment and retention proposal, and the measure faces an uncertain fate in the legislature.

“I’d love to support that,” state Sen. Pat Stefano (R., Fayette), co-chair of the legislature’s Early Childhood Education Caucus, told Spotlight PA. “Now if I could just find the money.”

The state has a large budget surplus, estimated to reach roughly $14 billion by the end of June. But Shapiro and the legislature are divided on what to do with it.

Democrats have a narrow majority in the state House. Republicans who control the state Senate have called the governor’s spending plan “reckless” and “unsustainable” and argued it would create financial hardships in future years. The Shapiro administration has said the state would still have an $11 billion surplus in 2025 even if every initiative in the governor’s budget proposal goes through.

Amid the larger debate, child care advocates are pressing for support.

“We are still in crisis mode in the industry,” said Jen DeBell, executive director of the Pennsylvania Association for the Education of Young Children. “Programs are having a really hard time both recruiting and retaining staff.”

That’s the case for Leah Spangler, president and CEO of the Learning Lamp, a nonprofit based in the Johnstown area that serves about 900 children a year in child care and preschool programs across multiple counties.

In March, she had about 100 job openings and about 550 children on the waiting list for care. With better pay for workers, her organization could serve many more children, she said.

She urged lawmakers to take action and invest in the industry, which she said can’t compete with convenience store chains and other businesses that start workers at $15 an hour and higher.

“I don’t have a beer cave. I can’t sell lottery tickets. I can’t sell tobacco,” Spangler said during a legislative agency hearing in March. “How am I going to be able to raise my wages?”

For the same hearing, Gina Cappel of Jerusalem Child Care and Learning Center in Schuylkill County submitted written testimony urging state leaders to take action. She included a resignation letter from one of her employees, who described how she couldn’t support herself on $13 an hour.

“It’s just a terrible, honest fact that people like her we cannot keep. … The fact is they must go and earn a living that will sustain them,” Cappel, director of the center, told Spotlight PA afterward.

Why the industry is still struggling

Child care industry leaders and advocates say they work with a fundamentally broken business model: The fees are too high for families, but the wages are too low for workers.

The coronavirus pandemic changed the labor market, forcing employers across industries to raise wages, said Elliot Haspel, a national child care policy expert. But he said child care employers have less financial flexibility than retailers, fast food chains, and similar businesses.

“When you can’t keep yourself staffed up, you can’t serve that many kids, you have to shut down classrooms,” Haspel said, “which means you’re bringing in less revenue, which can actually put you into a real budgetary sort of death spiral.”

There are many ways to measure the struggle the child care industry faces in Pennsylvania.

There are about 6,400 certified child care centers or home-based programs in the state — nearly 9% less than before the pandemic, according to figures from advocates who have been tracking closures and openings.

Participation in the state’s subsidized child care program was down by about 13,000 kids in February, compared to before the pandemic, a Spotlight PA review of state data shows.

Jobs in the industry have rebounded more slowly than those in the rest of the state’s economy. As of February, there were fewer employees working in child care services in Pennsylvania than before the pandemic, according to data from the U.S. Bureau of Labor Statistics.

These child care industry struggles create problems for other businesses, according to leaders of the Schuylkill Chamber of Commerce.

The chamber in January surveyed families and received more than 150 responses. Some respondents described the ways their child benefited from early intervention services such as speech therapy; one person wrote that child care providers “love my kids like they are their own.” More than three dozen respondents described facing wait lists of a year or more.

Samantha Chivinski, executive vice president of the chamber, said the price of child care can force families to make difficult choices as they try to juggle grocery bills, the cost of gas to get to work, and other expenses.

“People leave the workforce because … it doesn’t make sense,” she said.

In December, Pennsylvania’s legislature and governor approved changes in state law to help address the cost burden of child care for families.

They expanded the state child and dependent care tax credit, increasing the maximum annual credit for one child from $315 to $1,050. For two or more children, the maximum annual credit increased from $630 to $2,100.

In budget documents, the administration estimated almost 219,000 tax returns would benefit.

Diane Barber, executive director of the Pennsylvania Child Care Association, called the expanded tax credit “a wonderful thing for families.” But she and other child care advocates and experts said it doesn’t fix the staffing issues providers face.

“While we can reduce the costs for families, it only helps if they can actually find some place for their children to go,” Barber told Spotlight PA.

What the governor is proposing

State funding for two major child care line items has already increased, partially making up for a decline in federal revenue, according to a March report from the state’s Independent Fiscal Office. But overall funding is still down from the height it reached during the pandemic.

And the report noted uncertainties remain for the industry, including whether providers can maintain the wages they increased during the pandemic.

Shapiro’s administration has highlighted how one relatively small increase in his budget proposal — $96,000 in state funds — would allow the state to leverage $62 million in federal funds to increase reimbursement rates for providers in the state’s subsidized child care program. The new rates would be at a federally recommended benchmark, the administration has said.

“We’re very hopeful that this is something that is included in the final budget,” Secretary of Human Services Valerie Arkoosh said during a state Senate budget hearing in March. “It will be extremely important to these child care providers. It will allow them to increase salaries if they wish. It will put more money in their budgets and money they can count on.”

But child care advocates say the proposed higher rates aren’t enough. Barber of the Pennsylvania Child Care Association told Spotlight PA the money for higher reimbursement rates will help providers keep their “lights on, but it’s not going to be able to empower programs to increase staff salaries substantially or to provide benefits.”

The administration has declined to say whether it supports the $284 million proposal from advocates. Department of Human Services spokesperson Brandon Cwalina told Spotlight PA the administration is “happy to work with the General Assembly to review and consider specific proposals that invest in child care.”

But he said the administration anticipates raising reimbursement rates “will create a more stable business environment for child care providers and ensure equal access to child care services,” and that both reimbursement rates and child care worker pay have increased in recent years.

Child care workers would also benefit from the governor’s proposed minimum wage increase to $15 an hour, Arkoosh told lawmakers. And she said the budget plan includes additional funding to help child care providers reach that level should lawmakers raise the minimum wage.

Representatives for the party caucuses in the state legislature expressed support for child care. But they did not commit to a specific funding level.

Stefano, of the Early Childhood Education Caucus, said he wants to see more investment in child care and early education beyond what the governor has proposed. But he said there are unknowns, including how much money lawmakers will decide to spend on K-12 education.

Another co-chair of the caucus, state Sen. Judy Schwank (D., Berks), said she supports the $284 million proposal from advocates.

“Will we get all of it? I’m not so sure,” Schwank told Spotlight PA. “But I’d sure like to see something.”

So would Zelinsky at the Doodle Bug.

“If there was something that would take a little bit of stress off of me, it would be different because I can’t imagine my life doing anything else,” she said. “I would take every one of these kids home with me. That’s what makes me stay.”

Spotlight PA is an independent, nonpartisan, and nonprofit newsroom producing investigative and public-service journalism that holds the powerful to account and drives positive change in Pennsylvania.