Facing West Virginia’s Child Care Cliff

The end of pandemic-era benefits will affect child care costs and access on a national level. West Virginia hopes to avoid those shortfalls by relying on individual child care subsidies that date back to the 1960s.

Sept. 30 marked the official end of federal pandemic-related stabilization money aimed at bolstering child care services in the U.S. Meaning, states had to have spent their allotted funds by that date.

In 2021, $40 billion in funding went to child care centers across the nation from the American Rescue Plan Act (ARPA).

According to the Administration for Children and Families, in West Virginia, 645 child care centers and 925 child care family homes received stabilization payments totaling more than $160 million.

The child care centers used the funds to pay for personnel costs and keep programs staffed. In some cases, child care centers used the funds to keep prices lower for parents struggling to pay for child care. Child care family homes mostly used the money to pay for personal protective equipment to ensure safe environments for children and staff.

Of that $160 million total, $101 million in ARPA funding was allocated to DHHR’s child care subsidy program in order to increase reimbursement rates. 

Kent Nowviskie, deputy commissioner for Programs and Policy at the Bureau for Family Assistance at the DHHR, said the funding allowed child care providers to be paid on the basis of enrollment in their programs rather than daily attendance.

“We switched to doing something that providers had been asking for for a long time, which was to pay them a monthly rate for each child enrolled in their setting instead of a daily rate that they had to calculate based on the attendance of the child,” Nowviskie said.

While the 2021 ARPA stabilization funds were a source of additional funding, West Virginia has had access to child care subsidies since the Appalachian Regional Development Act.

“We here at the West Virginia Department of Health and Human Resources, or even before it was the Department of Health and Human Resources, we’ve been doing that since 1969,” Nowviskie said. “That is an ongoing thing, it is not going away, those child care subsidies are not going away.”

Nowviskie said it is important to understand that in the child care industry, subsidies refer to the payments that are made to providers for services provided to specific children.

“So it’s an individual payment per child who’s being served in a child care setting,” he said.

Nowviskie said some ARPA funds had dedicated purposes, or places they had to be spent. One of these designations was subsidy payments, so the state increased the rates it paid for each child. 

The DHHR also expanded eligibility to everyone regardless of income who met the definition of essential worker, as outlined in the governor’s March 2020 executive order.

Julie Kashen is the director of women’s economic justice and a senior fellow at The Century Foundation, a progressive think tank in Washington D.C. She said the federal grant structure allowed families of more diverse incomes to qualify nationally.

“One of the differences between the stabilization grants and the supplemental grants is that the stabilization grants were able to reach a wider variety of families because they didn’t have that same income restriction,” Kashen said. “There was much more of a combination of the poorest families, lower income families, middle class families, were able to benefit from that.”

Nowviskie said the DHHR has taken steps to mitigate the loss of ARPA funds but in October 2022, the DHHR restored income eligibility requirements for child care subsidies.

“When we saw that those monies were dwindling, we circled the wagons here to try to figure out what we could do to stretch those out as long as we could,” Nowviskie said. “And we put an income limit back on.”

When this ARPA funding allocated for subsidy assistance was exhausted in May 2023, the DHHR set aside $24 million of Temporary Assistance for Needy Families (TANF) funding to allow providers to continue being paid by enrollment for services rendered through August 2024.

“So until September of next year, services provided through August of next year, then we’ll be able to keep the pay by enrollment going as well as those increased rates,” Nowviskie said.

Nowviskie and other experts agree a long term solution would be the best case scenario.

“We don’t anticipate readjusting rates downward,” Nowviskie said. “But absent an influx of additional funding, we may have to go back to a pay by attendance model, which is not ideal. Child care providers nationally are advocating and trying to move toward the pay by enrollment model. In fact, I think Congress is looking at the issue. So we hope they have some additional funding that will come along with that.”

Bill Franko is an associate professor of political science and director of graduate studies at the WVU Eberly College of Arts and Sciences. He worries that child care settings will struggle to pay their staff at the same rate they have since 2021.

“What’s going to happen is the centers are not going to have the money to pay living wages to the child center workers,” Franko said. “You’re gonna have fewer people who are going to want to enter that industry or stay in that industry. It’s going to be much more temporary, like it was prior to the 2021 influx of the child care stabilization funds.”

Appalachia Health News is a project of West Virginia Public Broadcasting with support from Charleston Area Medical Center and Marshall Health.