By Sarah Ladd, Kentucky Lantern

Gov. Andy Beshear is asking the legislature to spend $141 million over the next two years to stabilize the child care industry, but some advocates for children say that won’t be enough.

Beshear’s budget proposal comes as pandemic-era federal assistance is ending, leaving Kentucky’s child care providers to face potential closures, tuition increases and wage cuts for staff if the state doesn’t subsidize the industry.

Beshear wants funding to support reimbursement rates and help open more child care facilities and slots. The governor also wants to spend $172 million to begin funding universal preschool for Kentucky 4-year-olds.

Advocates worry that Beshear’s plan would not provide enough financial support to child care centers to make up for their losing 4-year-olds to the new proposed preschool programs.

Child care centers don’t usually start to make a profit until their clients are 3 and 4 years old, explained Sarah Vanover, a policy and research director for Kentucky Youth Advocates. Without the profits from 4-year-olds, she said, caring for infants and toddlers could become cost prohibitive. More adult employees are required to care for younger children, making their care costlier than that of older preschoolers.

“If you take 4-year-olds completely away from child care programs, then infant-toddler programs are completely (in) a deficit based on their ratios” of children to adults, she said. “They just lose money consistently.”

Governor says child care, pre-K can work together

In an interview with the Lantern on Tuesday, Beshear said he’s aware of the concerns “and we believe we can address all of them.”

“Every 4-year-old deserves universal pre-K,” Beshear said. “And child care centers saying we just don’t want to give up the 4-year-olds but we’re not going to provide the pre-K services isn’t an acceptable solution.”

Beshear sees the proposed child care dollars working in tandem with pre-K funds “to incentivize the way that universal pre-K and child care need to work together.”

The governor said his proposal “opens up thousands of additional child care spots that the 4-year-olds were in that can now be filled by 0-through-4 year olds,” he said. “If we simply made the stabilization payments right and didn’t provide the extra incentives, we wouldn’t create any new slots for those kids.”

Mike Hammons with Northern Kentucky’s Learning Grove said he is “impressed the governor is trying to do both” — support pre-K and child care.

“He seems to be aware,” said Hammons, “that the expansion of preschool is going to have a negative impact on enrollment in child care centers.”

That awareness, he said, is “a good place to start.”

Even though he’d “rather stabilize the child care sector first,” Hammons said, “it’s really common across the country for movements to push for universal preschool or expanded preschool without giving a lot of consideration to what that does to the child care sector.”

Vanover and the Prichard Committee are concerned that Beshear’s child care funding would fall short of need. The governor is asking for $68 million in the first year of the budget and $73 million in the second year to maintain higher reimbursement rates and expand assistance for children, 3 and younger.

The Kentucky Center for Economic Policy has estimated that $300 million would be needed to replace the federal aid that’s ending. The state Department for Community Based Services has estimated the need at closer to $100 million .

Beshear told the Lantern that the state must provide “the right amount” of assistance so “we don’t end up in a place where this is state-run child care.”

The Prichard Committee applauded Beshear’s budgetary support for education but raised concerns about the child care piece. “While the governor’s proposal for preschool is exceptional, we are concerned that the budgeted investment in the Child Care Assistance Program is not enough to maintain coverage of the currently 37,000 children relying on the support of child care,” said a statement by the education nonprofit.

Child care struggles to compete on wages

Vanovover said Beshear’s pitch includes nothing for wage stabilization, which means child care providers may still have to take pay cuts next year.

Some employees face the possibility of going from making $13 an hour to $10.

Vanover said stabilizing wages long term is a big challenge.

“Target’s not going to go back to $10 an hour,” she said. “And neither is anybody else in retail and hospitality. So, child care is going to have to find a way to compete.”

Terry Brooks, the executive director of Kentucky Youth Advocates, told the Lantern that “however good the intentions are,” support for pre-K could “cannibalize sufficient support for child care.”

“Unless and until we get that infrastructure…of child care set up on a strong and sustainable basis,” Brooks added, “we’re going to be in trouble. Kids are going to be in trouble. Families are going to be in trouble. Local economies are going to be in trouble.”

“Unfortunately, a lot of the conversations in Frankfort are binary when it comes to that: Are you for or against universal pre-K?” said Brooks.

“My concern is whether it has a chilling effect on fully adequate resources for child care.”

On the national stage, the Biden administration is asking Congress to pass $16 billion to help continue support for child care providers as pandemic-era American Rescue Plan funds expire. Kentucky’s U.S. Rep Morgan McGarvey recently joined House Democrats in urging Republicans to support the emergency funding to  provide “a much-needed lifeline to the child care industry,

A spokesperson for the National Women’s Law Center said Kentucky would be slated to get roughly $290 million should Congress enact the proposal.

McKenna Horsley contributed to this report.