More than two years into the COVID-19 pandemic, parents across Alaska are still struggling with long wait lists, high costs and limited capacity at child care centers.
Federal grant funds administered by the state and a child care nonprofit are helping providers cope with financial struggles and staff retention. However, the money is available only to licensed child care facilities — which Wrangell does not have.
But help may be coming later this year. The state plans to distribute federal money as community grants to help new providers start up operations, said Stephanie Berglund, CEO of thread, a 13-year-old statewide child care resource agency and referral network.
In addition, thread is planning an initiative to help start-ups get licensed, she said last week.
Even before the pandemic, child care spots across Alaska were frequently limited and costly, but COVID-19 introduced a new layer of expense and logistical struggles for providers. When schools shut down or limited on-site instruction in 2020, more parents scrambled for day care, but at the same time, care centers had to cut their capacity to allow for social distancing, wrangle with masks and other personal protective equipment, and monitor for symptoms.
What that meant was financial stress for child care centers which struggled to pay their bills without enough tuition payments. In the past year and a half, the state has been working with thread to distribute grants to help stabilize those centers and keep them from closing.
“Since the start of the pandemic, we have seen one-fifth (of licensed child care centers) close,” Berglund said. “One of our goals is to not see any more permanently close.”
Using federal pandemic relief funds, thread has been working with the Alaska Department of Health to give grants to existing licensed child care agencies to help offset some of their costs. The funds have been split into three phases, with the first awarding about $4.5 million in the fall of 2021 to 398 programs statewide. Those funds were for short-term assistance to help centers remain open.
The second round of grants, totaling about $12.2 million distributed as of June 1, went primarily for stabilizing licensed programs. Another federally funded program in between the two phases distributed about $4.4 million, targeted at retaining the workforce.
Now, thread is getting ready to issue a third round, probably this winter, which aims to disburse approximately $23 million to help stabilize the child care market in the state.
Thread has defined stabilization as access to quality child care. “What we mean by quality child care is child care licensed by the state,” Berglund said.
Thread is measuring success by factors including the number of licensed facilities and whether facilities are actually serving the number of children they are licensed to accommodate. And while many providers have remained open, they’ve had to defer enrolling new students because of severe staff shortages. While many child care centers are hiring, they are having to compete in an increasingly tight labor market in which they can’t match the rising wages.
That’s one of the ironies of the child care market, Berglund said: There’s huge demand for workers and capacity, but because tuition is already so expensive, providers don’t have much room to pay workers more.
The child care shortage and high costs predate the pandemic, according to an April report from the Alaska Department of Labor. However, the pandemic saw child care employment drop by about 12%, with average wages hovering around $12.88 per hour.
After workforce issues, affordability is the second biggest concern, Berglund said. The average Alaska family spends about 17% of their annual income on child care, or about $13,775 per year. That works out to about $1,148 per month, though there are assistance programs through the state to help with the cost.
However, there are few to no options in many of the smaller towns and villages across the state. The Department of Labor’s report estimates that about 61% of Alaskans live in areas without reasonable access to child care in 2018.
Lack of child care translates directly to impacts on the economy, as parents without options have to take time off or drop out of the labor force. A U.S. Chamber of Commerce report from 2021 on Alaska’s child care shortage estimated that the loss in productivity cost the state’s economy about $165 million per year, with most of that related to absences and turnover.
“If a parent is absent, this presents a financial cost to both the employer and the parent,” the report states. “The parent may lose wages for time missed, and the employer experiences a loss in productivity as well as the financial cost of paying overtime to other workers or even hiring and paying temporary workers to make up for the missed work.”
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