COVID-19, NC Budget and Tax Center

N.C. child care industry continues to experience widespread closures, enrollment decline

Survey data from the end of June reveals that more than 1 in 4 child care programs remain closed in North Carolina, three months after the state locked down to prevent the spread of the novel coronavirus and almost two months after a phased re-opening process began.

While the statewide closure rate has declined slightly since the end of May, when 1 in 3 programs were closed, persistently elevated closures raise concerns about the industry’s immediate well-being and long-term financial viability.

Even after taking into account the seasonal fluctuations in the opening of centers and the sometimes strong connection of child care providers to public school facilities, the rate of closures statewide should remain a concern for the prospects of reopening with the support of quality early childhood opportunities for every child. Among child care programs that reported being closed at the end of June, fewer than 1 in 4 exclusively serve school-age children.

Moreover, providers that are currently open report dramatic declines in enrollment compared with pre-COVID-19 numbers. On average, open child care centers are serving 44 percent fewer students than when the pandemic began, and they are likely facing higher costs of keeping children and staff safe while receiving reduced revenue.

Taken together, the COVID-19 crisis puts into relief the problems with our approach to funding and delivering quality early childhood education across the state.

Child care programs – which include both centers and family homes – are small businesses that operate on thin margins in the best of times; at the start of the pandemic in March, one-third of providers in North Carolina reported that they would not survive a closure of more than two weeks without significant public investment. For many child care programs, the primary reliance on a parent’s ability to pay in order to fund early education and the

Disparities in closure rates continue to be seen according to program type. More than one-third of all child care centers – which have the capacity to care for much larger numbers of children – are closed, compared with only 6% of home-based programs. Survey data also indicate that the highest-quality providers have been slowest to reopen, putting the state in danger of reversing gains made in recent years in children’s enrollment in high-quality programs.

The permanent closure of programs would have a cascading impact that will be felt across the state’s economy, including lost employment for child care staff and even fewer care options when parents return to work.

While the General Assembly appropriated $20 million for child care in the latest allocation of CARES Act funds, policymakers at both the state and federal level must do more to respond to growing evidence that the industry is in crisis. Rebuilding our early childhood infrastructure will require a reconsideration of the ways in which we have relied on parents’ ability to pay to fund a system that is critical to the well-being of North Carolinians for generations to come.

The pandemic has made clear that quality child care is not only essential to children’s well-being, but it is also core infrastructure for a well-functioning state economy. Public investment from Raleigh must reflect this understanding, ensuring that the industry not only survives through the ongoing pandemic, but comes back stronger than before.

Sally Hodges-Copple is an intern with the N.C. Budget & Tax Center, a project of the North Carolina Justice Center.

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