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Child care shortage looms as more people go back to work, but expanded PPP program could help | COMMENTARY

From left, Heidi Wehner, 5, Isabella Galicia, 5, and Nerrys Cancel, lead teacher, are seen from outside the door to Bright Beginnings Learning Center in April.
From left, Heidi Wehner, 5, Isabella Galicia, 5, and Nerrys Cancel, lead teacher, are seen from outside the door to Bright Beginnings Learning Center in April. (Kim Hairston/Baltimore Sun)

As Maryland enters stage two of the governor’s “Roadmap to Recovery” plan with thousands of nonessential workers heading back to work, it’s becoming abundantly clear that there’s nowhere for our children to go.

With schools and most camps closed indefinitely, and vulnerable family members unable to provide support like before, child care has never been more critical. In a country where 40% of our labor force has children under the age of 18, resuming economic activity — particularly for women who still tend to shoulder the lion’s share of care giving responsibilities — will depend on addressing the need for child care.

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Care facilities in the state, which have been closed since late March except to critical workers, are beginning to expand access to other working families. According to Steve Rohde of the Maryland Family Network, the Maryland State Department of Educations estimates that there are roughly 45,000 spaces currently authorized to open, which is woefully insufficient in a state of more than 2.6 million workers.

In the best of times, the child care industry struggles with supply side constraints that leave more than half of American families without access to licensed care. But following the added challenges of decreased revenue and increased regulatory burdens posed by the viral pandemic, the entire industry is on the brink of collapse. The fact is that many of the providers that families have come to rely upon have already shut their doors permanently due to insolvency or remain closed as capacity restraints make it unprofitable to operate.

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In Maryland, more than half of child care providers surveyed in March reported an inability to float costs for more than a two-week closure without substantive government support.

That was two months ago.

The $45 million in supplemental funding Congress sent to Maryland through the CARES Act was effectively used to prop up providers serving essential workers. But that money did not benefit shuttered operators and has run dry — just as Maryland attempts to reopen its economy.

The time to act has never been more urgent. While securing the child care industry will require a multifaceted approach over the course of this pandemic, an amended Paycheck Protection Program (PPP) could be a critical lifeline for many businesses in desperate need of a cash infusion.

The $660 billion Paycheck Protection Program was set up to provide emergency loans to cash-strapped small businesses as a form of subsidy for maintaining employee salaries during reduced operations. The recipients will be granted complete loan forgiveness if funds are used predominantly, 75%, for payroll and other qualifying expenses during the eight-week period of the loan.

However, many child care providers were unable to access the original funds or decided against applying due to the timeline restrictions. According to the National Association for the Education of Young Children, only a quarter of the child care centers surveyed were approved for a PPP loan, and many reported difficulty applying or expressed concern about their ability to fulfill forgiveness agreements.

The program began to allocate funds in April, so last week many of its earliest recipients hit the end of the term before most of the country had resumed business operations, leaving Congress scrambling to pass much-needed fixes to the program.

The House responded by passing a bipartisan bill introduced by Reps. Chip Roy, a Texas Republican, and Dean Phillips, a Minnesota Democrat, to reform the Paycheck Protection Program by extending the period by which businesses can fulfill the requirements of those loans from 8 to 24 weeks; it also includes added flexibility to use more of the funding for general overhead other than personnel.

The Senate passed the legislation by a voice vote last week, and moved quickly to the president’s desk for a signature Friday. These updates could significantly alter the calculus for child care providers, making the roughly $130 billion in remaining PPP loans terms much more attractive.

In addition, last week the Treasury and Small Business Administration authorized an additional $6.8 billion set aside within the PPP program’s second tranche specifically for community lenders with smaller asset bases, with the intention of reaching our smallest concerns, and more minority-owned and rural businesses.

These updates should substantively benefit child care providers that will be better positioned now to fulfill forgiveness agreements, but might require additional time and outreach to access the funding stream. The impact of these forgivable loans would ripple out in our economy enabling millions of working parents to return to work.

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Securing the future of our working families depends on shoring up our child care providers.

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Maggie Cordish (maggiecordish@gmail.com) was most recently the policy adviser to White House adviser Ivanka Trump on paid leave and family policy. She is a fellow at the Bipartisan Policy Center in Washington D.C. Linda Smith (lsmith@bipartisanpolicy.org) is director of the Bipartisan Policy Center’s Early Childhood Development Initiative. She served in the Obama administration as deputy assistant secretary for early childhood development in the Administration for Children and Families at the U.S. Department of Health and Human Services.

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