American Rescue Plan funds are an opportunity to invest in NC businesses owned by people of color

When Congress passed the American Rescue Plan (ARP) in March 2021, state and local governments in North Carolina were to receive more than $8.8 billion in federal funding for pandemic relief and recovery. Since then, our elected leaders have understandably focused on how to spend the funds. From addressing the eviction crisis to the childcare shortage, ARP funds will allow state and local leaders to make a significant down payment on meeting the urgent needs of North Carolinians still reeling from the pandemic.

Less discussed is a different question: How can state and local governments make sure public contracts using ARP funds are distributed in an equitable and inclusive way?

With ARP dollars, state and local governments can expand jobs and build wealth with significant impacts for Historically Underutilized Businesses (HUBs) and the communities they empower.

New analysis of federal contracting data, however, should alarm anyone concerned with equity in public contracting. Recent work from the National Equity Atlas found that entrepreneurs of color received less than 12%  of federal contracting dollars in 2020 —  despite the fact that people of color represent 39% of the U.S. population and own 29% of all businesses.

The authors also found that the overall number of small businesses winning federal contracts had fallen dramatically over the past decade — declining 40% since 2010 — and that federal contract spending was largely concentrated in just 17 congressional districts. Where public procurement could be used to foster equitable economic development, it is instead concentrating public dollars in a select few communities.

Anyone hoping for more encouraging data from North Carolina will be sorely disappointed. The state’s own 2021 Disparity Study found that state agencies, community colleges and universities have made abysmal progress toward the modest goal of awarding 10 percent of public contracts to Historically Underutilized Businesses. Across all five industry categories in the report, aggregated from FY2014 to FY2018, Minority Businesses Enterprises never received more than 2.02 percent of contracts awarded by state agencies.

The same story holds true at the local level in North Carolina. Read more

Federal and state COVID-19 responses fail to match scale of NC child care industry’s needs

As federal negotiations continue is search of an agreement on a fourth COVID-19 relief package, child care providers in North Carolina wait to hear what funds will be made available to stabilize their industry. The House’s proposal includes only $7 billion in Child Care and Development Block Grants (CCDBG) within the $3 trillion HEROES package. The Senate’s HEALS Act proposes only $5 billion for CCBDGs along with $10 billion in less flexible “Back to Work Child Care Grants.” Both proposals are a fraction of the $50 billion that child care advocates say is needed, and while the House recently passed the $50 billion Child Care Is Essential Act, the legislation faces long odds as a stand-alone bill in the Republican-controlled Senate

Both HEROES and HEALS fail to acknowledge the scale of challenges within a child care system that policymakers have allowed to operate in financially precarious conditions for years. Providers’ ability to cover the true costs of care is dependent upon parents’ ability to dedicate large portions of their income to child care costs (25% on average in North Carolina). This system results in low pay for early childhood educators, limited access to health care, and challenges in investing in many other aspects of quality care.

The North Carolina Department of Health and Human Services (NCDHHS) has taken important steps to respond to the industry’s needs. Using $118M in CARES Act funds, $20M in emergency funding allocated by the General Assembly in July, and $48M from prior year one-time funding, the department has been able to provide emergency subsidy support, educator bonuses, and operational grants to keep providers afloat.

In the context of chronic underfunding, lost revenue, and increased costs, however, these supports were only sufficient to provide aid through the month of July. With NCDHHS data showing most child care programs operating at 50% vacancy rates and only 35% of private-paying children in attendance (compared to 70% of subsidized children), providers’ dependency on lost tuition fees will push them toward permanent closure without additional state and federal aid.

The crisis has made clear that our economy cannot work without a sustainable and equitable system for providing quality care for the youngest North Carolinians. Child care providers and their staff stepped up in the early days of the pandemic to provide care for the children of other essential workers, at great cost and personal risk. The shuttering of these small businesses will only prolong and deepen the COVID-19 recession, contributing to additional layoffs, fewer care options, and potentially pushing parents out of the labor market. Federal and state funding must match the scale and urgency of the child care industry’s needs to stabilize and strengthen this core component of our economic infrastructure.

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

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One-third of N.C. childcare programs still closed as parents need to return to work

Three weeks after North Carolina entered the first phase of its reopening process, one-third of all childcare programs in the state remained closed, according to survey data provided by the NC Partnership for Children.

These persistent childcare closures are a concern as more North Carolinians return to work, with fewer care options available for our state’s youngest children and fewer jobs to go back to for the people — primarily women — who work in early childhood education.

As of May 29, counties across the state continued to experience high closure rates among childcare providers, particularly in western and rural areas. Twenty-nine counties had closure rates of 50% or higher, including Cherokee (88%), Clay (86%), Polk (80%), and Jackson (78%).

Closure rates vary according to program type and program quality. Forty-one percent of childcare centers remain closed, compared to only 7% of family childcare homes. A majority of five-star facilities – the highest rating issued by the NC Division of Child Development and Early Education – remain closed, while the vast majority of one- and two-star facilities are open.

Even before the COVID-19 pandemic forced closures throughout the state, nearly half of all North Carolinians lived in a childcare desert, with more than three young children competing for every available childcare space. The current public health crisis has made clear what was always true: The childcare industry is a core feature of the infrastructure of North Carolina’s well-being and educational attainment. Many providers remained open at the outset of the pandemic – even operating at a loss – to provide care for the children of essential workers.

If policymakers hope to see the state’s economy up and running again soon, preventing the permanent closure of early childhood programs must be the highest priority in the General Assembly. With persistent closures across the state and many providers concerned about their ability to access cleaning supplies and protective equipment, the stabilization of the childcare industry must be at the forefront of any recovery strategy. The availability of childcare programs is crucial for parents’ ability to return to work, the strength of the state’s post-COVID economy, and the safety and well-being of the very youngest North Carolinians.

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