New report: Adequate, equitable financing for high-quality child care needed to sustain N.C.’s recovery

COVID-19 has shown why equitably funding quality early child care is critical in N.C.

RALEIGH (July 28, 2020) — RALEIGH, NC — COVID-19 has made clear that the delivery of quality early child care and education to every child who needs it is challenged by a system that is fractured both by underinvestment and by the inherent limits of stagnant and often too low wages of parents to pay for quality early education.

In a report released today by the Budget & Tax Center and Children First/ Communities in Schools of Buncombe County, a proposal to move toward a more equitable and public financing system for providing quality, accessible early child care was presented for federal and state policymakers to support. The report includes data from each county.

“COVID-19 has put in relief that child care is an essential service that is operating on thin margins to meet the quality early education needs of every child. In order to achieve the best outcomes for North Carolina, one key step is to publicly support quality care and compensate educators through reimbursement to providers serving children from low-income families,” said Alexandra Sirota, Director of the Budget & Tax Center, a project of the NC Justice Center.

The report argues for the establishment of a statewide market rate that would serve as a floor for reimbursing providers as an interim step towards ensuring North Carolina finances high quality care for every child. Analysis shows that this reform would narrow the gap between the cost of delivering services and the reimbursement received, improving the quality of programming that providers can offer and creating greater equity in funding across the state. Research also indicates that a higher reimbursement rate not only increases the likelihood that a child receives quality care, but also increases the number of eligible families served by subsidized programs and the work hours of parents.

“In North Carolina, we have an overly complex and complicated process for determining the amount of money an early childhood provider will be paid for serving a child through the child care subsidy program,” said Greg Borom, Director of Advocacy for Children First/Communities in Schools of Buncombe County. “The rates vary across all 100 counties and create significant inequities in reimbursement that undermine the stability of our early childhood system.”

The report highlights that even before the COVID-19 pandemic, quality child care in North Carolina was widely inaccessible and unaffordable, with families with young children paying approximately 25 percent of their income to child care costs. While the state’s child-care subsidy program helps thousands of families access early childhood services each month, the program is severely underfunded, serves only a small fraction of eligible children, and reimburses providers at varying county market rates that fall short of the cost of quality care.

“This crisis for families threatens to become an economic disaster for our entire state,” said Patrick McHugh, Research Manager with the Budget & Tax Center. “Failing to save and strengthen our child-care system will extend the COVID-19 recession and frustrate our collective ability to recovery.”

The nonpartisan Budget & Tax Center is a project of the NC Justice Center, which works to eliminate poverty in North Carolina by ensuring every household in the state has access to the resources, services and fair treatment it needs to achieve economic security. 

FOR MORE INFORMATION, CONTACT Alexandra Sirota, Budget & Tax Center Director, at alexandra@ncjustice.org; or Patrick McHugh, Budget & Tax Center Research Manager, at patrick.mchugh@ncjustice.org or 919-856-2183.