It’s Monday morning and most of the classrooms at Beautiful Oasis Childcare in Mesa sit bare.
The center, licensed to serve about 200 kids, these days has closer to 30.
In one room, brightly decorated bulletin boards look out over a roomful of empty tyke-sized desks and chairs. In another, a staffer rocks a single baby to sleep, as half a dozen vacant cribs line the room’s perimeter.
There’s plenty of room for new kids, CEO Toshina Thames said. But when families call asking to enroll, more often than not, she has to turn them away.
“Because how am I going to pay for it?” she said with a sad smile.
A post-pandemic federal funding cliff, so far left unaddressed by Arizona lawmakers, is deepening a stark mismatch between the price of child care and what poor families can afford.
For the first time in five years, the state has temporarily stopped accepting kids into a subsidy program that is widely used in low-income areas. As a result, many child care centers, particularly those in lower-income neighborhoods, are starting to empty, even as the waitlist for their services grows.
Arizona’s Department of Economic Security, the agency that oversees the child care subsidy, reports that as of late February, there were about 2,400 children on the waiting list, though that figure is incomplete. Several parents who spoke with The Arizona Republic applied for the subsidy months ago but have not yet received word as to whether they’ve been placed on the waitlist.
In a statement to The Arizona Republic, the agency acknowledged it has a backlog processing applications, which it aims to resolve by the end of March.
Not every provider has been adversely affected by the subsidy waitlist, especially those that serve a higher-earning clientele. But for many child care providers who serve low-earning families, the funding cuts are already ushering in a period of economic hardship, according to interviews with ten business owners who, combined, oversee about 35 child care centers across the state of Arizona.
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In some zip codes, it’s common for the government funding to support up to 80% or 90% of a daycare’s children.
With no guarantee of income, the centers have stopped taking on clients who are waiting for the subsidy to be restored. One company, the biggest interviewed by The Republic, has not yet been acutely impacted.
Of the nine small business owners interviewed, most have seen their enrollment decline since the federal funds expired last summer, some modestly and some steeply.
Most said they have laid off staff or cut back on hours; a couple said they have cut back on quality assurance practices or have forgone long-awaited quality improvements; one reported raising tuition costs for their private-paying clients.
Kenneth Wentworth, who oversees three child care centers in the Valley, has cut back one-quarter of his staff and seen declining enrollment across the board since August, when the waitlist was imposed.
“Winter is coming,” said Wentworth. “It’s going to be a rough year or two if we don’t somehow find the funding to provide the care that these kids need.”
Business owner Gregory Garrett said that enrollment at one of his centers has declined by a quarter over the past six months.
“If we’re already feeling a 25% decline from August, I can’t imagine when we get to next August,” Garrett said.
That creates hard decisions for thousands of families. Several parents awaiting the subsidy told The Republic that the cost of child care is simply out of reach for them without government assistance. Several said they are choosing to stay home from work. One mom is keeping her daughter in less formal care. Another has opted to pay the cost out-of-pocket, which puts her on a shoestring budget for other expenses like groceries and her kids’ clothes.
“I’d be working if I still had that scholarship,” said Maria Cervantes, 24, a child care worker who received a tuition grant during the pandemic.
‘How do you tell a child: I can’t afford it, and I’m being waitlisted’
Rachel Camara is beaming as she pushes her three-month-old son, Terrance, in a stroller through Wesley Bolin Memorial Plaza in front of the Arizona Capitol.
“No matter who you are, what your background is, just do good: For other people, not just for yourselves, because it comes back ten times fold,” she said. “Now having my child, that’s what I’m going to work to instill in him.”
Camara, 31, is from west Africa, growing up in Sierra Leone, Liberia and Ghana. She came to Arizona as a 10-year-old with a family member, but had to be taken away from him “for my safety,” she said. Camara spent her teenage years in Arizona’s foster care system. As an adult she has worked in group homes as a caregiver, though she left the workforce as her pregnancy entered its third trimester.
Now she lives at Maggie’s Place, a shelter for homeless pregnant women in Phoenix, where she plans to stay until Terrance turns one.
A local human services organization drove her from her home to the Arizona Capitol, where she took meetings in mid-February to make the case for child care funding. She said in an interview that state-run nutrition assistance programs and her health care have been invaluable for her and her son.
Tears briefly cloud Camara’s smile as she describes the impact the programs have had on her. She blinks them back.
“Just to be able to be alive for him is what I strive for,” she said.
She is passionate about her work as a caregiver and wants to return, but she doesn’t have anywhere to leave Terrance. He alternates between her and her foster sister, who she still leans on for support. She said she has applied twice to receive the child care subsidy.
“Making sure that he’s safe, healthy, and happy is the most important thing for me,” she said.
Arizona will still provide the child care subsidy for kids in certain categories, such as those referred from the state’s Department of Child Safety or cash assistance programs. The families affected by the waitlist are the ones without those exemptions, whose income puts them below 165% of the federal poverty line. That’s in the ballpark of a $30,000 annual salary for a single parent with one child.
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Maria Cervantes, 24, is a mother of four who used to work in the child care sector. A government grant covered her child care costs during the pandemic. Now that subsidy is gone and she estimates the cost of child care would come out to hundreds of dollars per week. Now she stays home and the family relies on her husband’s income.
“We’re paying rent, we have our phone bills, food. It’s just so expensive,” she said.
Mariah Hogan, a 31-year-old single mother from Chicago, also received the pandemic-era grant for child care workers. When those funds vanished, the most immediate impact was on her transportation. Hogan doesn’t have a car, so she had to pay for several extra rideshare trips every day to shuttle herself and her daughter, Marveeana, between school, work and home. It was a large and unsustainable new expense.
At first several of Hogan’s friends took turns taking care of her daughter, but that became stressful for the 9-year-old. Things are more bearable now, largely because Hogan’s friend, Monique, picks Marveeana up from school every day and takes care of her until her mom gets off work.
Hogan said the biggest impact is on Marveeana’s learning and social development.
“Sometimes she just doesn’t want to do (homework) because she misses her friends, she misses her teachers,” she said.
Some days Marveeana says: why can’t I go?
Hogan struggles to explain.
“Like, how do you tell a child: ‘I can’t afford it, and I’m being waitlisted’?”
Some child care centers empty while waitlist grows
Many providers haven’t been acutely impacted by the funding cliffs, The Republic’s survey found. Some centers haven’t yet seen turnover in their clientele, so their enrollment has remained roughly the same, even if they depend on the Department of Economic Security-run subsidy. Businesses with a higher-income clientele are also less impacted, as they rely on the subsidy program much less or barely at all.
The waitlist only affects new applicants for the DES subsidy, not those who already receive it.
Bill Berk is the CEO of Small Miracles Education, a relatively large corporate child care business with 18 total preschools in Arizona. He estimated that about 70% of his clientele relies on a DES subsidy or scholarship, and the remaining 30% pay the costs privately. He’s aware of other companies that have been more acutely affected, but enrollment at his centers is roughly the same as it was last year, he said in January.
Still, certain corners of the industry are highly dependent on the DES subsidy, in some cases overwhelmingly so. It’s not uncommon for child care centers in low-income zip codes to rely on the program for a majority of their clientele, even as high as 80% or 90%.
At many of those centers, classrooms are starting to empty, even as the waitlist for their services grows.
Mark Werber, owner of Tots Unlimited Preschool and Child Care, operates two preschools in Glendale. He said that he began to feel the effects of the waitlist in October, two months after it went into effect.
At one of his centers, where about three-quarters of kids receive the DES subsidy, he used to get about 15 “new starts” through the program each month. Now he gets only three or four. As a result his enrollment is down by about a quarter.
“I am down approximately 30 to 35 children a day, and every month, that number increases because there’s no inflow of new children coming in,” he said. “That’s very dramatic.”
Werber’s other center, where just over half of his kids receive the DES subsidy, is more modestly affected, with enrollment down 15 percent.
He’s laid off one-fifth of his workforce as a result.
“That’s a real tragedy,” Werber said. “There is a need for child care. People meet the income requirements, and are just being told, ‘We can’t accept you right now.’ … That hurts families that can’t afford the private rate of childcare, and it just hurts the economy in general.”
Thames, with Beautiful Oasis Care in Mesa, said her enrollment halved during the pandemic, and it has sunk even lower since the waitlist was imposed. She called her enrollment levels “drastic” and “nowhere near normal.”
Demand is still there. Several business owners said they regularly field phone calls from low-earning families, pleading for services while they sit on the waitlist. Most child care providers say they have no way of taking on those students.
“We can’t just unnecessarily spend a couple thousand dollars a month, anticipating that we’re going to get new enrollments off the DES waitlist,” Thames said.
“I had about four tours this past week and they’re waiting to hear from DES,” said Eileen Buckley, director of Magical Star Preschool in East Phoenix, who estimates she’s lost 15 families since the waitlist started in August. “We’re just sitting, waiting.”
“The government holds these little levers that (mean) either we have way too many childcare sites, or too few,” said Jared Cook, who owns four child care centers in the West Valley and Mesa.
Cook has cut back on staff, including for positions that focus on the quality of care. He sees the terrain as political and it makes him resent other government expenditures, bringing up the example of tightened federal requirements for air-conditioning standards in prisons.
“When they cut our resources, we cut back on the resources we can offer our families,” Cook said.
For others the strain manifests through long-delayed repairs. Theresa Christensen, founder and CEO of Bright Beginnings Preschool and Childcare, had saved up half a million dollars to renovate her 40-year-old facility. She’s spent the last few years fighting with the city of Peoria to get permits for the remodeling. Now she’s darkly relieved it didn’t happen.
Saving up that money took her ten years, she said.
It’s gone.
She started to cry.
“We’ve considered anything from pulling equity out of our home to selling it. So we know sacrifice, when it comes to trying to provide for our community and trying to provide for our kids.”
In the meantime a pipe burst in her facility’s kitchen, a reminder of her dream deferred.
“We just have to keep plugging along, because that’s what early childhood does,” she said. “We don’t get the best of the best. We just have to keep pushing.”
Funding shortfall lays bare an affordability gap
The disruptions to Arizona’s child care subsidy lay bare market forces that have driven up the cost of child care nationwide.
A 2018 survey by the Department of Labor found that the median price of child care reaches into the four or five figures per year, depending on the quality, geographic region and age of the kids. That’s equivalent to between 8% and 19% of median family income per child, the department found.
“It goes back to what families can afford,” said Barbie Prinster, executive director of the Arizona Early Childhood Education Association, a trade group. “And if child care is too expensive, you’re going to have to figure out somebody else to watch your child.”
The issue has gained some political traction among Democrats.
Former President Joe Biden sought to include a wider child care program as part of the Build Back Better package, a more sweeping version of what would become the Inflation Reduction Act, Biden’s landmark climate-focused law.
The topic of childcare is a touchstone for progressive Democrats in the mold of U.S. Sen. Elizabeth Warren, D-Mass., who has called for government-funded “universal pre-K.”
It has a more mixed reception on the American right.
At the state level, resistance to more child care appropriations has typically come from Arizona Republicans. On the campaign trail last year, both parties’ vice presidential candidates had a rare moment of agreement that the country should spend more on child care, though they disagreed on how to go about that transfer. Vice President J.D. Vance in 2021 denounced Warren’s proposals as “class war against normal people” and he has argued for economic tools such as tax credits rather than government-funded child care centers.
How federal, state funds ran dry
In many ways Arizona’s child care waitlist resumes a pre-pandemic status quo. The waitlist previously went into place in the wake of the 2008 recession, when then-Gov. Jan Brewer cut childcare money from Arizona’s budget. It remained in place until 2019, when federal block grants originally set in motion by former President Barack Obama were, after a delay, appropriated into Arizona’s budget.
The pandemic was rocky for child care centers but it also saw a new wave of public support. As part of the federal government’s massive COVID-19 stimulus packages, Arizona’s child care industry received more than $1 billion. That shielded the industry from the pandemic’s worst impacts and, for some businesses, allowed them to make investments, such as staff pay raises or new equipment.
Last year, for the first time since the Great Recession, the Arizona Legislature allotted $12 million for child care, though that was a far cry from the $100 million the governor had initially requested.
DES has said that the pandemic-era funds allowed them to continue to suspend the child care waitlist, but warned of a looming shortfall if additional funding wasn’t appropriated.
The agency ended up imposing the waitlist with less than 24 hours’ notice, citing “increased demand and limited funding” in an email announcing the change.
No indication how long waitlist will last
Child care providers and advocates have no clear picture of how long the waitlist will last.
The agency wrote announcing the change that “when funding becomes available and enrollment drops to a sustainable level, families will be removed from the waiting list.”
In the meantime child care providers are reading tea leaves to figure out when exactly that will happen.
“We really don’t know the numbers,” Werber, the Glendale preschool owner, said. “What are they trying to get down to? We don’t know.”
Hogan, a child care worker on the waitlist, said DES told her in a phone call that she was in a priority group and that the department was waiting for funding. That was months ago.
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“They said, ‘we just don’t know,’” Hogan said. “They said as soon as they open the waitlist, I’ll be on there.”
In a statement to The Republic, DES acknowledged that it has a backlog processing applications. By March the agency aims to resolve applications that have been waiting for more than 30 days.
“Although these families will subsequently be placed on the child care waiting list, we want families to have clarity on their potential eligibility for assistance,” wrote the agency’s public relations chief, Brett Bezio.
“We understand the incredible need within our community for child care assistance, knowing that working families rely on this support to secure or advance their employment, pursue education or training, and achieve self-sufficiency.”
Future of program will hang on budget negotiations
The future of the child care waitlist will hang on a round of budget negotiations underway at Arizona’s state Legislature.
Arizona Gov. Katie Hobbs has signaled she wants to make it a flagship issue, introducing a plan to create public-private partnerships to lower child care costs plus state funding that her office says would cut the waitlist in half. Business groups including the Arizona Chamber of Commerce and the Greater Phoenix Chamber have begun helping to make the case for public investment in child care.
State Rep. Sarah Liguori, D-Phoenix, has put forward a proposal that would include $120 million for child care from the state’s general fund, on top of $91 million in federal funding. It remains to be seen how much support those measures will garner from the GOP: Liguori’s bill has no Republican co-sponsors.
In the meantime, several business owners observed the industry’s dependence on public money makes it sensitive to the whims of politics.
“This is kind of the pattern I’ve seen over the decades,” said Cook, the West Valley child care center operator who has cut back his staff. “They’ll fund it, child care centers will open, we’ll thrive. … Then they’ll cut the funding, the kids will disappear, the quality will go down, the centers start to all be half full. Essentially, what you’re left with is a bare-bones program every time”
“When you have a bare-bones program, you can’t run the kind of quality that you need to give kids a good first chapter. … That’s really what they deserve.”
Laura Gersony covers national politics for The Arizona Republic. Reach her at [email protected] or 480-372-0389.
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