- [David] Emergency funding is on the way to help keep childcare centers open in North Carolina.

We break down how we got here, what's next, and what it all means for you.

This is "State Lines."

- [Narrator] Quality public television is made possible through the financial contributions of viewers like you who invite you to join them in supporting PBS NC.

[gentle music] ♪ - Welcome to "State Lines."

I'm David Hurst.

Joining me today is Candace Witherspoon with the North Carolina Department of Health and Human Services, Ioma Eruka with the UNC Gilling School of Global Public Health, and Anna Gasman Pines with the Duke Sanford School of Public Policy.

Welcome to you all.

Happy fourth of July week.

- Thank you.

- Thanks.

- Good to see you.

- Lots of fireworks on this topic, childcare.

The federal government gave states billions of dollars in pandemic relief funds to help stabilize the childcare industry.

As of July 1st, that federal funding is gone, leaving North Carolina facing what's been called a childcare funding cliff.

But just last week, state lawmakers approved $67 million in stop gap funding, preventing us at least temporarily from falling off that cliff.

We'll chat about the impact of that funding, but first, Candace, bring us up to speed.

What happened last week at the General Assembly with this funding?

- So we were happy to see that the General Assembly agreed on the $67.5 million to kind of carry us through the first two quarters of the year.

Next, we'll have to send that to the governor's office for him to approve and sign that into law.

Although this is not a hundred percent of what our current childcare centers and programs are have been receiving this past year, it is a wonderful acknowledgement of the crisis that we're in.

And we are hoping to see much more action from our general assembly to help us stabilize our industry.

- [David] And this funding will go towards childcare stabilization grants.

What do those do?

Help us understand where this funding will go to.

- Absolutely.

So the goal is to help with compensation.

Currently in North Carolina, our teachers, our early childhood, early childhood care teachers are making an average of $14 an hour.

A third of our childcare teachers are also on federal assistance because $14 an hour is not really a living wage and 2024 with inflation and everything else that is happening.

And so this will help us to keep teachers in the profession.

We are seeing teachers leave in droves for jobs that are making upwards of $20 an hour, whether it's at Costco or Target or Starbucks.

And so this hope will retain and recruit teachers to the field so that we can help stabilize childcare to be able to even offer it.

We know that childcare is so important to keep parents working so that our businesses can keep running and we can continue to build the economy of North Carolina, but also just to make sure that our students and our kids are getting that early, that early strong foundation so that they can be successful in the future 'cause we know the importance of the trajectory of their life.

- And we'll dive deeper into all those different topics in just a minute.

But Iheoma, help us understand a little bit more about the investment, the importance of early education.

- Yeah, you know, the first years of life whether we're talking about infants and toddlers or preschool age, right?

That's the time that leads a foundation for children's learning, brain development happens, how to engage with peers happens.

So it's such an important time for children's development and we know that that particular time sets them up for school, but also for life, right?

A lot of our evidence to date indicates that when children have the sort of best quality of care, which includes well paid, well compensated, and well-trained workforce in a high quality, safe environment with enriching opportunities for learning with adults and peers, that that really sets them up really for what is bound to be a great school and academic life, but also later on in life.

So it has an important place to play.

And so while we attend to parents working, 'cause we know that's important, we also also attend to sort of children having what they need to also thrive as they go through their own life.

- And Anna, help us understand what was at stake.

Why was this childcare funding cliff so daunting?

What would've happened if this went unaddressed?

- So what's really important to keep in mind about early care and education is there are a lot of fixed costs and there aren't a lot of ways for these really crucially important care providers to cut costs and continue to provide the same kind of high quality, enriching experiences that really make a difference for children and provide stable support for families.

So these grants have been helping centers pay their workers fairly, to be able to compensate them for the important work they're doing in investing in young children in our state.

And without that support, it was gonna be really difficult for childcare centers to just meet their basic costs.

And a lot of folks have been saying that without this funding, they weren't gonna be able to continue staying open.

- And we'll dive more into that later.

But you had mentioned the idea of support for families.

Let's hear from one of those families 'cause even with the support of federal funds, accessing childcare can be a challenge.

Let's hear from one parent out in Western North Carolina who relies on early care education.

This clip is from an upcoming short documentary called "Take Care."

- At the end of 2023 was when we realized like, wow, this is an issue.

Multiple centers in our county closed down.

Our school board was willing to step in at least temporarily and keep our center at our school open.

Had they said no, I would have had to call the other two centers and get on a waiting list.

That I'm sure is a mile long because two centers alone in a county can't take everyone's kids.

So if there's no childcare, you travel to find childcare or you stay at home or you move, you move to somewhere that does offer childcare.

- And I saw you nodding during that clip.

How common are stories like that?

- I mean, I think that there have been stories like this around our state, where parents are working, you know, trying to do right by their family, make sure they have enough to meet their children's needs, to meet their family's needs.

And one of the key pieces of that puzzle for so many families is childcare that is available, reliable, and something that parents can use so that they can support their families.

- And Candace, that was a rural mother.

What are the additional obstacles, challenges, for families in rural communities?

- So our rural communities often have, they experience childcare deserts is what we like to say and call it.

And that is simply, there are not enough options for childcare.

There are fewer centers or programs offered in rural counties sometimes, and there are more children that need the services than there are slots or spaces for those children.

Additionally, I think what we're finding is a lot of our numbers and calculations underestimate the cost of rural care because they think it is a massive difference in the numbers between rural and urban.

But when you break down the cost of operations and income and all of those different things, the gap is really not that big.

- And what's driving that, do you think?

- You know, I really don't know.

I don't know if it's a perception that because, you know, it's not a big metropolitan area, that the cost of living is so much lower that we can drastically cut those numbers.

I believe it's probably a combination of a little bit of all of those things.

And if you got, ladies have anything to add to that.

- It's a, if you think about it, it's a supply and demand issue in many ways, right?

So we have seen sort of a drop, particularly in home-based childcare, which is, and one of the ways of offering high quality care in particularly rural communities, is some of the sort of home-based childcare.

And they've seen a significant drop say, compared to our centers in schools or centers, at least at the minimum.

And so when you have fewer sloths available, then the, you know, you're having to sort of make some decisions.

And I think it's really even to the workforce issue.

Don't forget that the $14 an hour that the educators are making now in childcare is more of a recent phenomenon where a lot of 'em were making $11, $10.

So we're only coming up to almost sort of, you know, livable wage in more recent times.

And so there's almost a cost issue that they're having to sort of, we have to catch up with in many ways.

And a lot of those operators will actually operate on the negative side of things in many ways.

And that has actually stretched a lot of families, particularly in the rural communities in many ways.

It's stretched the providers, it's stretched sort of the families and all those folks.

So I think in many ways we're coming to bear with some of the decades of underfunding in childcare.

And that's really the issue even today.

- And what other communities or populations may be at risk as well?

- I mean, so I mean, so I would say there's, so I would say infants and toddlers, right?

We have seen, I mean the thing about it is that people try to, I hate to use the word, but subsidize sort of preschool age, right?

You need older kids, right?

To almost pay for infants and toddlers.

So we have really a low number of infant toddler care, which is really important for children with disabilities, right?

They have sort of specific and specialized needs.

May not be as available or educators in workforce who may have those specialties in many ways.

And so there are subgroups of children who don't have access, even our children living in low income.

So think about it, at least in North Carolina and also in other places, if you're lower income, your access, your affordability is an issue, right?

So if you are a provider, you're likely to take sort of the slot for those who can afford it.

And if you can't afford it, you take what's available or you sort of cobble together the options you can have, right?

So we do know that certain groups of families are likely to have less access to care, but I also wanna stress it's not just about having access to care, it's about having high quality access to care 'cause low quality does not do families well because you're gonna be worrying.

It doesn't do children well either or our system of care at large.

So we think about also quality as we think about the access issues and affordability issues.

- And the theme of quality childcare centers has come up.

The employees, the turnover rate has come up.

Let's hear from a childcare center director 'cause many of these childcare centers, they rely on subsidies to keep things affordable for parents.

Here's Carolyn Slade.

She's the director of childcare center in Rocky Mount.

Take a listen.

- When we did not have the support and the financial support from the state on the stabilization level, and we were just getting funded off of what we were doing, it was a struggle because you depend on children, numbers, how many kids you have enrolled.

But if we have that backing, that cushion, that financial support, that there is funding for teachers to be adequately paid because we'll lose and have lost a lot of our teachers to the school system.

And not only to school system, to Cummins, Pfizer, we can't match the pay with the reimbursement that we are getting from the state.

- And Anna, we've talked about a little bit teacher turnover.

Ms. Slade just mentioned it right there.

Why is it so difficult to attract and retain teachers in the early childhood space?

- Yeah, I mean, I think it comes down to wages is the biggest thing.

We, you know, as Iheoma mentioned this is, it's only recently that early childhood educators have even been paid something getting a little bit close to maybe a livable hourly wage.

But for a long time, the wages were so low, that early childhood teachers, many of whom are parents themselves, you know, weren't even making enough in those jobs to be able to support their own families.

And so I think that's one of the really most crucial issues for us all to be thinking about is what are the steps we can take to try to continue to increase wages for these really important educators?

- And Candace, one of the goals of this stop gap funding is to supplement, increase the teacher pay.

How far will that 67 million go?

- So right now, that 67 million is only gonna give them 75% of their current rate that they're getting.

So we are still going to see some of the effects of not fully funding the childcare gap that will result in childcare centers closing, programs closing, and which will further increase the gap in parents having options and availability of high quality care.

So those childcare deserts that we've seen will only exacerbate it a little bit more to see more of them as other centers are struggling to, you know, make ends meet from month to month and would be forced to close.

- And I was just gonna just quickly say too is that, you know, our childcare educators and workforce, they want to be there, right?

So the issue of retention is not that they don't want to be, many of them are there for decades at a time, are part of the community.

They really bring everybody together.

So they're, they really wanna be there, but you cannot be there if you're not, if you're literally not able to sort of pay for your own basic needs, as Candace said already.

A third are on public assistance, right?

And a lot of them are also dealing with mental health challenges of themselves, their children, right?

So now you're asking 'em to do even more work with really what is probably still inequitable pay in many ways.

So I think we have to really think through, you know, think through what can we do to ensure that they actually come to the workforce and stay, right?

So it's a recruitment and retention issue, but also make sure that the environment, right?

The condition of the work itself is that they're being valued as professionals, right?

A lot of times you treat them as babysitters and they're more than that.

Imagine you are an educator who is caring for and teaching young children, and you have what, eight to 10 children per, you know, per professional.

And so that's a lot of work and a lot of decisions being made.

And so I think that if you really value who they are, pay them, compensate them, give them benefits, right?

And protect their actual jobs, than just try to treat 'em sort of babysitters who are just easy to replace.

They're not easy to replace at all.

- And if I could just build on that as well.

I mean, you know, if you think about a center director who's sitting with their books and trying to figure out how to make this work, I mean, you think about Ms. Slade who we just heard from, right?

She has a limited set of choices without this additional grant support, right?

So she could cut teacher pay, but if she does that, then you know, there's gonna be a cascade of problems that we've been already talking about.

Another option would be to increase fees that she charges to the families that are using that care.

And that feels untenable in a lot of ways as well, right?

So the, a lot of families that are using childcare to support their work and to invest in their children's education are also struggling to make ends meet themselves.

And so simply passing along those costs to the families is gonna be a hardship for those families, possibly lead to them leaving, you know, that center and now a director's left, you know, with a gap anyway, right?

So, you know, there's not a lot of wiggle room for kind of solving this problem without this additional funding.

- And we'll touch on the workforce concerns in just a minute.

But Iheoma, I wanted to circle back to what you were talking about earlier, alluding to kind of the business model of childcare centers.

Why are they so dependent on these government subsidies in order to operate efficiently?

- I mean, so I think the point is that we actually don't pay for the full cost of care.

So in many ways, right, even if you look at the subsidy dollars, they don't pay for the full cost it takes that, I think Anna mentioned, right?

Even just the workforce is your biggest, sort of the biggest sort of cost in many ways.

And then on top of that, parents are paying as much as they can, right?

We know that the federal government tried to sort of say you shouldn't pay more than 7% of your take home, right, to childcare.

But we know a lot of families are paying a lot more than that, close to 25% in some instances of their take home pay.

So a lot of is really just is the economic of skill that we haven't fully, actually fully invested in the structure of early education.

So in many ways you have childcare, which is funded through, you know, CCDBG, Childcare Development Block Grants, and then you also have your pre-K which is funded through state dollars for the most part.

Or you'll have like Head Start, which is federal.

So we actually have sort of, what I will say is a bifurcated system of care where parents are having to sort of put a bunch of them together, but they have different funding streams, different sort of workforce expectations, different standards.

You have to meet curriculum standards, you have to meet teacher standards.

So there's a lot of, so for childcare, there's a lot of standards to be met and each of those standards have a cost associated with them.

And in many ways, our subsidy and other sort of dollars don't actually fully compensate for all the expectations of having a high quality sort of safe childcare.

And they're operating more than 24 hours.

Some of them are 24 hours a day, right?

So some of them are working more than 12 hours, right?

So to me it's really that we're actually asking the providers, the operators, to actually pay for a lot of the infrastructure that really should be part of what states and federal government actually build.

- It's a complicated system.

- And there aren't really a lot of ways for centers to be more efficient, right?

So they can't change their staffing ratio.

None of us would want an infant care provider to double the number of infants that one adult is looking after.

None of us in the state of North Carolina would be happy with that.

It wouldn't be safe for those babies.

It wouldn't invest in their development, and it would be an incredible strain on that provider.

So, you know, again, with meeting all of these health and safety standards, quality standards, curriculum standards, you know, there aren't a lot of ways that these providers can adjust their business model to cut costs.

- I like to just kind of expand on the topic of increasing those rates for parents as well.

North Carolina is one of 33 states and DC where the cost of infant care is more expensive than the cost of in-state college tuition by 28.9%.

And the difference is parents have 18 years to save up for college, whereas parents that are paying for infant care are often very early in their career and they have not had that time to save up that money.

And so because of that, we are seeing a lot more parents leaving the workforce, which is having a huge impact on North Carolina's economy.

- And perfect segue, Candace.

Just like we drew it up.

Let's hear from one of those workforce leaders.

We chatted with David Ferris.

He is the CEO and president of the Rocky Mount Chamber of Commerce.

Take a listen to what he has to say about the topic.

- If we're bringing in, let's say a Pfizer or a Cummings or a Poppy's or something like that to Rocky Mount, we've gotta be able to attract the workforce here.

And when they come, we've got to be prepared like any other community, to help them.

But if a person can't come into a hospital and work, or a clinic or a restaurant or anywhere, it does affect us.

So we've gotta deal with it.

We've gotta be creative in finding solutions.

- So Candace, since you teed things up, I'll give you the first shot at it.

How does the business community and the state economy as a whole benefit when more parents are involved in the workforce?

- So recently the Chamber just released some new information that North Carolina is losing 5.65%, of $5.65 billion in economic growth.

And that is because we are at a labor shortage.

We don't have the number of people to match the vacancies that we currently have.

Before the pandemic, North Carolina had about 88 candidates or people for every 100 job vacancies.

More recently, we're seeing about 55 people for every 100 job vacancies.

And I can only imagine that that number will grow.

Part of that research that the Chamber did also indicated that 35% of parents have said they've had to leave work or have disruptions in work because of a lack of childcare.

And of those 15% of parents are indicating that they are going to leave the workforce in the next 12 months.

Of that 15%, 13% of those are men, 18% of are women.

And I think that's important because as we see parents leaving the workforce, we're only gonna see businesses that are gonna continue to have these vacancies and struggle to have a full staff.

And I think that that is super important in North Carolina because we are a very popular state.

A lot of different companies all over the world are looking to come here.

When we are trying to attract Apple and Google and all of these other big name companies, it is very important that they're gonna be able to have a sustainable workforce here and that their employees will be able to find care so that they can come to work and so that they can fill these positions.

And it's not just a empty building.

- I'm so excited to see Business Chamber of Commerce here at the table in North Carolina when it comes to childcare.

We're seeing even the federal government, for example, the Department of Commerce is doing its first ever I think National Summit on childcare, right?

And where they're even saying for you to get $150 million or more from the department, you have to have a plan for childcare.

Like to me, the issue of business development, economic development, is that if you don't have childcare, there's no way you can attract people, right?

Because you have young families who need childcare, not just any, but high quality childcare.

So to me it's almost like all hands are on, needs to be on deck, right?

And I think the business community, because you benefit, they benefit on the short term, right?

In terms of their workers productivity, being able to come to work, but also in the long term, this is your future workforce.

And so if they don't have the high quality care early in life, your future sort of workforce is probably at risk, right?

So to me, the business community has to be in many ways front and center.

And so I think it's important that the state continues to sort of push the business community to say, you know, what is your plan?

Or what is our plan collectively to sort of make sure we have plans for bringing business in?

But also think about the childcare situation because the more you have people come in, they're gonna need childcare in many ways.

And with many women having disruptions, and they are obviously an important part of the economic fabric of the state and obviously the country, we need to make sure that their needs are met and as primary, usually the primary caregiver, they need to have childcare available and not have to worry about should I either stay at work or stay in my job or position or leave?

I don't think that is a decision that many women want to make at this point in time.

And it has reverberated effects later on if we don't take care of it.

- And a lot of those businesses are starting to open childcare centers, which is sort of unprecedented, right?

- That's right.

- That is, that is correct.

I mean, the thing is that we are happy to see them, you know, create those sort of childcare in their businesses, but we wanna see more of sort of a more holistic approach, right?

Because you can create it for your workers at that moment, but in the end of it, you want your whole entire community to have it.

We do continue to see inequities in sort of childcare, right, in terms of childcare opportunities.

In the west part of the state, we have challenges.

In the northeast part of the state, we have challenges.

So while we are strengthened that businesses understand that you have to be part of the solution, it is also important that they're part of the policy, right?

That they engage policy makers, engage early care education advocates and professionals.

So there's much more of a holistic response as opposed to isolated, discreet business to business response.

Again, we're gonna need everybody to kind of, I really, I think really be on the same path to sort of having a stronger infrastructure for childcare no matter whether it's through one company or really through sort of the whole entire sort of business apparatus.

- And if you think about, kind of just to, just to build on that really important point, you know, if you think about economic development for the state, I mean, it's wonderful for the folks who are able to work at those businesses that are, you know, connecting childcare to their business.

But there are so many other workers across the state that are, you know, being productive, that are helping drive the economy of the state, who don't have access to those, you know, onsite centers.

And if we want to continue the kind of growth we've seen and have workers who are able to be at work regularly, to be productive, then we've gotta have much more than just, you know, some lucky few who get access to childcare and some who don't.

- And we've got about 90 seconds left.

So I wanna end on a positive note.

We kind of talked a little bit about solutions.

So each of you take about 30 seconds to share with me a solution or an innovation or something that's working well or something that you think may work well in our state to increase access to childcare in North Carolina.

- So I'll start, like I said earlier, we are thrilled that the General Assembly has acknowledged that this is a crisis and we are just hopeful that they will continue to come back and work on helping us to cover the gap so that we can keep childcare programs open, we can keep parents in the workforce, and we can keep businesses running.

- And I'll just say that we are seeing some innovation, I think, and North Carolina's actually testing one of them out, which is sort of the three way where basically you have businesses pay for some of it, the cost is state and parents, right?

But we wanna make sure that the cost for parents is still really at the 7% or lower in terms of their income.

And so we are seeing much more of this sort of cross partnership happening that I think is really important.

The others, we have to continue to make sure that people are able to make livable wages in many ways.

In the end of it, we need more income coming into families and into businesses in order for them to thrive.

- Yeah, and I think I'll just add to both of those excellent points that it seems like maybe we're at a moment where there is more cross sector collaboration and thinking together about why it's a smart investment to put more dollars into childcare.

It's because it's both investing in parents' ability to work and be productive workers in our state, but also it's investing in children's development and education, which is gonna have long-term benefits for all of us.

- Well, thank you all for joining us and thank you at home for watching.

We'll see you next time.

[gentle music] ♪ - [Narrator] Quality public television is made possible through the financial contributions of viewers like you who invite you to join them in supporting PBS NC.

[gentle music]