Arizona leaders’ decade of neglect imperiled fragile child care system. The pandemic nearly made it collapse.
As coronavirus cases crept up across Arizona in March 2020, Gov. Doug Ducey announced a statewide school shutdown meant to curb the spread of COVID-19.
It was, at the time, the most aggressive step state leaders had taken to prevent infections. And for employees and clients at Yuma child care center Desert Trails, who’d grown increasingly worried about the safety of their families, it was a breaking point.
“As soon as the governor said ‘schools are closing,’ people … really just panicked,” center director Arianna Zaroff said. “We only had about 15 staff, and I would say at least half those staff,” after weighing the risk of exposure against the realities of a low-paying, high-stress industry, ”basically walked out on us.”
On top of that, “we lost families very quickly,” she said. “There were several days where we only had five, six, 10 kids in the center,” which is licensed for 78.
That meant a sharp drop in earnings as mortgage, utility and most other expenses held steady. For a child care provider that, like most in Arizona, was already operating on thin margins and struggling to compensate staff, it was a “massive hit,” Zaroff said.
A $1.2 billion infusion of federal relief funding has helped soften the financial blow to Desert Trails and other operators, staving off a sector-wide collapse. But industry experts say even that sizable amount alone isn’t enough to reverse the decade of neglect the child care system endured at state leaders’ hands before the pandemic took hold.
Elected leaders slashed state child care dollars when Arizona was in the red during the Great Recession, eventually eliminating the state’s contribution to subsidies designed to make care more affordable. They declined to restore that funding when the state was in the black, instead pushing through a major tax cut that state budget analysts found would mostly benefit the wealthy. In between, officials bungled multiple opportunities for federal financing, in some cases failing to do what was necessary to secure new funding while, in others, letting tens of millions of dollars in existing federal aid sit unused.
Those decisions exacerbated the fragility of a system that already didn’t work particularly well for anyone except Arizona’s wealthiest families, who could weather climbing child care costs and declining state support.
In the two years preceding the pandemic, Arizona already had lost more than a fifth of its child care providers—nearly 900 operators—as they struggled to stay afloat amid low state reimbursement rates that remained largely unchanged for almost 19 years. High turnover among workers, almost 20% of whom lived in poverty, further contributed to an industry in crisis. And nearly half of Arizonans lived in a so-called child care desert, meaning there were more than three children for every available spot, and those who didn’t often couldn’t comfortably afford care.
From January to June 2020, a period capturing the first three months of the pandemic, another 244 providers shut down, according to the most recent data available from the state’s Child Care Resource and Referral network.
“The early childhood system has tightened its belt and worked on a shoestring budget and lowered costs to the point … it can’t function,” said Kelley Murphy, vice president of policy for the Arizona-based Children’s Action Alliance. She said the pandemic exacerbated “pretty deep issues that were troublesome before COVID hit.”
An unstable, unaffordable child care sector has clear implications for children: They need safe, developmentally appropriate care to arrive at kindergarten on equal academic and social footing, in turn positioning them for long-term academic success.
It also has far-reaching consequences for the economy.
Parents, especially single heads of household and those without paid time off or other benefits, need reliable child care to earn a living and advance. Further limiting access to high-quality care disproportionately affects rural communities, low-income families and working women.
During the pandemic, women’s workforce participation dropped to its lowest level since 1988, as mothers took on the bulk of child care duties at home. About 1.4 million of the women still out of work early this year were parents, according to Census Bureau data, and less-educated mothers of color continue to experience the slowest financial recovery.
Federal recovery funding has given Arizona a chance to reevaluate and address longstanding structural problems in its approach to funding and delivering child care services, according to local and national experts. If officials don’t seize it, they say—and if an ambitious federal plan to reduce child care costs nationwide never makes it through Congress—the state will likely end up back where it started once relief dollars run out.
“We’re many, many years behind other countries in terms of finally making these investments,” said Rasheed Malik, associate director of early childhood policy research at the left-leaning Center for American Progress. “It’s expensive, but it’s potentially more expensive the longer we wait to fix this.”
‘Not the kind of business where you can just cut corners’
Early childhood development advocates had long warned of the unsustainable nature of Arizona’s child care market in the years leading up to the pandemic.
Reliable, high-quality child care is expensive to provide. And strict health and safety requirements mean it’s “not the kind of business where you can just cut corners” to save money, Malik said.
As a result, providers often end up passing costs along to parents via higher tuition rates, risking pricing out all but the highest earners. By the time the pandemic hit, the average cost of child care for toddlers had topped $8,500 a year in Arizona, according to the Economic Policy Institute, while infant care averaged nearly $11,000 annually. That’s more than base tuition at an in-state college.
“Most business models … if your costs go up, you raise your fee,” said Liz Barker Alvarez, chief policy adviser at early childhood agency First Things First. “In child care, the people who need your service the most can’t afford you to raise your fees. You’ll actually lose families, because they just won’t be able to afford it.”
Providers that opt not to raise tuition typically lean on state child care subsidies. Families apply for assistance through the Arizona Department of Economic Security, which then pays operators serving those families directly.
Though not every family that qualifies for aid secures it, the assistance makes a huge difference for those that do: Dede Mitchell, a Yuma-area single parent of two girls, told AZCIR there was “definitely no way” she could have afforded child care in recent years without state assistance, despite working full-time.
Providers who rely heavily on subsidized clients, on the other hand, tend to just scrape by.
Arizona’s reimbursement rates have long failed to cover the true cost of providing safe, high-quality care. Murphy, with the Children’s Action Alliance, pointed to state lawmakers’ reluctance to chip in state funding in recent years as a key reason why.
Before the recession, Arizona allocated nearly $85 million in state General Fund dollars to child care assistance, about 43% of the total cost of aid at the time, according to an analysis by Arizona State University’s Morrison Institute for Public Policy. Money administered through the federal Child Care and Development Fund, which aims to reduce the child care cost burden on low-income parents, and Temporary Assistance for Needy Families program, which provides cash assistance, covered the rest.
By 2010, state lawmakers had cut Arizona’s contribution by more than 70%, to about $24 million. In 2011, then-Gov. Jan Brewer wiped out the remainder, risking another $40 million in matching federal funds the state would’ve lost had First Things First, which is funded through a tobacco tax, not stepped in to fulfill Arizona’s requirements.
With the exception of $7 million in aid for kids in Department of Child Safety custody, “they’ve not replaced any of the rest of that funding at the state level,” Murphy said. “We’ve been relying on federal funding for the last 11, 12, 13 years.”
That’s despite 20-plus attempts by a handful of lawmakers—primarily Democrats, but at least one Republican—to expand child care assistance or increase provider reimbursement rates using General Fund money over the last decade. Most bills did not get a committee hearing in the state’s GOP-controlled Legislature, which generally has been loath to increase spending on social services.
“For some of those years, (legislative leaders) said we didn’t have money,” said Sen. Lela Alston, a Phoenix Democrat who has tried seven times to increase state child care funding since 2012. “Now, we do have money, and we’re trying to give more breaks to the wealthy with the flat tax stuff.”
In approving a nearly $2 billion tax break earlier this year, Republican leaders argued the move would keep more money in Arizonans’ pockets, which residents could in turn spend however would most help their families. But the cut won’t exactly be a game-changer for those in lower income brackets: The state’s Joint Legislative Budget Committee projects those earning $50,000 or less will save, at most, $39, while those earning between $500,000 and $1 million a year will save more than $12,000.
“Getting those subsidies for child care into the ongoing side of the ledger is tough,” Alston said. “I don’t know the answer.”
Rep. Michelle Udall of Mesa, the leading Arizona Republican to push for child care investments in recent years, has had slightly more success than Democrats, perhaps because her bills have largely focused on freeing up federal funding versus spending state dollars. But even that has been an uphill battle at times, such as when she fought to make federally funded pandemic loans available to child care providers in spring 2020.
“Many communities throughout Arizona already experience a child care desert, and the inability for child care providers to reopen their businesses as a result of this pandemic may result in a permanent loss of thousands of child care slots,” Udall told her colleagues on the House floor at the time.
“For businesses to thrive in Arizona, their workforce needs reliable and affordable child care. If we do not do something now to support the child care industry, it will take much longer for Arizona to be back in business.”
The measure made it through the House, then stalled in the Senate.
Fate of new reimbursement rates unclear
Barbie Prinster, program manager at the Arizona Early Childhood Education Association, also highlighted the way the Department of Economic Security determines reimbursement rates to explain why they’ve historically fallen short.
Federal rules require the agency to complete a “market rate” study every three years, collecting and analyzing fee information from providers throughout the state.
The studies are meant to capture the true cost of providing child care, but instead simply reflect what providers charge, Prinster said. Provider fees are typically based on what area families can afford, she said, not the amount required to run a safe, well-staffed child care business.
“I have a member that charges $370 a week for an infant off of (Interstate) 17 and Carefree Highway, then I have a provider on 43rd Avenue and Thomas that charges $175 a week for an infant,” she said. “But the cost of doing business for them is probably close to the same.”
In 2016, the federal government gave states the option to use alternative or additional methods to set reimbursement rates, but it wasn’t until recently that DES partnered with First Things First to launch its first “cost of quality” study, which is ongoing.
As of 2018, Arizona was the only state still reimbursing providers based on 2000 market rate survey amounts, after eliminating a brief 5% bump the state had approved pre-recession, according to the National Women’s Law Center.
That year, Arizona got a slap on the wrist from the U.S. Department of Health and Human Services’ Office of Child Care for failing to maintain “reasonable” reimbursement rates, a condition of receiving federal Child Care Development Block Grant funding. Federal officials indicated they would not approve Arizona’s 2019-2021 CCDBG spending plan until the state set reimbursement rates high enough to “ensure equal (child care) access” for low-income families.
In response, lawmakers in early 2019 released $56 million in available federal child care aid officials had left untouched the previous year.
Still, even after that hike, hundreds of operators decided they couldn’t make the math work.
In 2018, there were about 3,945 known child care providers in Arizona, including center-based providers and group homes licensed by the Department of Health Services, home-based operators certified by the Department of Economic Security, and smaller-scale in-home providers.
By January 2020, that number had plummeted to 3,052, according to the state Child Care Resource and Referral network. Six months later, it had dropped to 2,808.
Federal relief funds have allowed the state to significantly increase reimbursement rates since, a lifeline for providers still grappling with unsteady enrollment. On average, operators now receive 10% more for school-age children and 25% more for infants, toddlers and children in Department of Child Safety care, according to DES spokeswoman Tasya Peterson.
In some cases, the state even reimburses providers at higher rates than those paid by private clients—a first for Sharon Armstrong, who manages Premier Children’s Center and Children’s Campus in Phoenix.
“It’s exciting,” the 20-year industry veteran said. But it may also be temporary.
Though DES said it intends to “continue to inform policy makers about the impact of these rate increases and the cost of providing critical early education services for Arizona’s children,” it’s unclear whether the state will be able to maintain those reimbursement rates once relief dollars run out.
“We’re all in care for the right reasons. We all want to do the best (work),” Armstrong said. “But you can’t do quality if you can’t pay for it.”
Employee ranks decimated
Persistently low industry wages throughout the U.S. have long pushed child care workers, of whom almost 95% are women and more than 40% are Black, Asian or Latino, out of the profession.
As of 2020, early childhood educators across the country earned a median wage of $11.65 an hour, while preschool teachers earned $14.67, according to the Early Childhood Workforce Index, produced by the Center for the Study of Child Care Employment at the University of California, Berkeley.
Few in the field receive job-based benefits, leading to high rates of reliance on public assistance programs such as Temporary Assistance for Needy Families or the Supplemental Nutrition Assistance Program.
Advocates said child care positions are easy for politicians to dismiss as “babysitting” or “unskilled” labor, because they typically don’t require a four-year degree. But Arizona Association for the Education of Young Children director Eric Bucher argues the work of early childhood educators is essential both for individual children and society at large.
Kids experience the fastest rate of brain development in their lifetimes from age 0-5, so “educators have to understand child development and how children grow and learn,” he said.
“They have to develop lesson plans and activities for children. They have to be culturally aware and sensitive and relevant in their materials. They have to engage with families. They have to attend required professional development. And they do all this on what’s oftentimes a minimum wage, if not slightly higher.”
That, historically, has led to a revolving door of largely entry-level workers, according to the Center for American Progress’ Malik.
“There was such a great amount of turnover in that job already, before the pandemic,” he said. “Even though people really felt passionately that they wanted to make their career in that work, most people just had to leave, could not make it work, couldn’t raise a family on those wages.”
Prinster, with the Arizona Early Childhood Education Association, put a finer point on it.
“People go to lunch, and they don’t come back,” she said. “This is hard work.”
It got even harder once COVID-19 began to spread, particularly in the months before vaccines against the virus became available.
Some workers swiftly decided the pay was not worth the risk to them or vulnerable family members. Others ended up transitioning out of the field more gradually, as the unpredictability of repeated closures and reopenings wore them down.
Even now, as in the restaurant, retail and aviation industries, a nationwide reckoning over low wages has child care operators struggling to build back their ranks, even as demand for their services returns. Four out of five operators continue to report staffing shortages, according to the National Association for the Education of Young Children.
“This is the first time in my entire career that we have to turn (children) away because I just don’t have the teachers to support them,” said Armstrong, the Phoenix center operator. “… It’s just been devastating.”
A recruitment and retention grant administered by the state will give participating operators the ability to give existing staff raises or bonuses, create incentives for new hires, and possibly raise base wages.
But again, the grant funding, provided through the Coronavirus Aid, Relief and Economic Security (CARES) Act, is finite.
“Our intent is to invest in the wage enhancement, or help providers learn how to invest in wage enhancements using these federal funds,” Bucher said.
“But … if we don’t have (state) investments in early childhood education in two years when the federal funds are all obligated or expended, we don’t want child care providers to be in that sort of fiscal challenge where they either have to put people back to non-living wages or make some tough decisions about closing classrooms.”
Closures create chaos for families
Just one closure can be devastating in a state where nearly half of residents live in child care deserts, areas where kids needing care vastly outnumber available spots.
“If I’m in La Paz County, and the one program that was anywhere near my house has shut down, I don’t have a choice but to stay home, because I can’t find somebody else to watch my child for me,” said Murphy, with the Children’s Action Alliance.
Other times, desperate parents leave children alone or with someone they haven’t had much of a chance to vet, because they can’t afford to quit their jobs.
“(Unequal access) disproportionately impacts our tribal communities, our rural communities, low income families, single parents—in particular, women,” she said. “… Because wealthy people will figure something out, right? They’ll hire a nanny.”
An August analysis from economist Didem Tüzemen concluded that the “presence of young children seems to have weighed on the labor market outcomes of less-educated women in general and minority women in particular, suggesting these women may have faced challenges juggling work and childcare during pandemic-related school and day care closures.”
A National Women’s Law Center report released the following month found that women would need “nearly nine straight years of job gains at (August 2021’s) level to recover the nearly 3 million net jobs they have lost since February 2020.”
Beth Frost, who runs Foresight Learning Center in Flagstaff, said “there’s a lot of options” in the greater metropolitan area, which is home to Northern Arizona University.
“But up in Page,” a less populated town near the state’s northern border, “it’s terrible,” she said.
“They have no care. Their preschool, I don’t even know if they exist any longer,” she said. “The county is so, so big. It’s so hard to get services out there, and then it’s so expensive.”
Urban child care centers can be nearly as inaccessible if families don’t have reliable transportation. In south Phoenix, where Children’s Campus is located, the majority of staff and families rely on city buses or rides from relatives, Armstrong said.
“If we were to close down, those families would be in a hurt locker, because there isn’t anything else around us that would be able to meet their needs,” she said. “It’s got to be convenient on their bus route, close to their jobs.”
Even temporary closures wreak havoc on families that rely on paid child care so parents can work.
When COVID-19 swept through Arizona early last year, Phoenix mom Alexia Mallory and her husband vowed to keep daily routines for their three children as consistent as possible.
That meant continuing to send Dayton, Cason and Remi to Premier Children’s Center, which they’d attended since they were just weeks old, even as the pair of hospitality workers confronted pay cuts and furloughs.
“It basically became a priority at the same level as paying our mortgage,” Mallory said. “We had started to see the impact, mentally, of what COVID was doing to kids, and we both agreed that we didn’t want our kids to lose out on their childhood because of a pandemic.”
But there was only so much Mallory and her husband could control.
Despite new safety protocols implemented at the center, confirmed or suspected COVID-19 exposures prompted four rounds of mandatory two-week quarantines for the children, which were a logistical nightmare for the family.
Since Mallory’s husband’s job had little flexibility, she bore the brunt of the child care responsibilities during those weeks. And because she could not work remotely, she had to rearrange and often reduce her hours, resulting in cuts to the paychecks they needed to make ends meet.
As for the children, the interruptions and uncertainty contributed to learning disruptions and behavioral issues, leading to a “a lot of screaming and a lot of crying” on the part of their 2-year-old daughter.
“It was really hard,” Mallory said.
Advocates worry improvements will be short-lived
To hear Gov. Ducey tell it, Arizona has gone above and beyond this year to stabilize its struggling child care system. When he signed the latest state budget in June, his office put out a press release touting Arizona’s spending plan for the sector as “the most sweeping … in the nation.”
The budget did include several targeted early childhood investments for the next few years, including:
- $548.9 million for child care stabilization grants;
- $134.8 million to increase reimbursement rates;
- $39 million to keep families off child care assistance waitlists;
- $73.4 million to increase the number of child care providers classified as high quality;
- $45 million to fund child care for low-income Arizonans pursuing an undergraduate teaching or nursing degree;
- $30 million to fund child care for other low-income students;
- $30.2 million to cover child care subsidies as an incentive for unemployed Arizonans to return to work;
- $45 million to improve and expand the state’s preschool curriculum; and
- $47.2 million to develop early literacy programs for children.
And operators and advocates say DES was responsive as they weighed in on how they’d like to see the cash used.
But the roughly $1 billion in child care spending promoted by Ducey is coming out of the federal government’s pocket, not the state’s. Of the 10 industry experts and providers interviewed by AZCIR, only one was confident Arizona officials would step in to ensure the system would be financially sustainable once relief dollars run out.
That skepticism isn’t unfounded: Lawmakers have faltered when it came time to kick in state money to sustain improvements in the past.
When Arizona received $81 million in federal Preschool Development Grant funding, for instance, officials were aware the state would have to create its own stable funding source to sustain the program in the future. That way, improvements and expansions made to preschool infrastructure, particularly in high-need communities, wouldn’t abruptly drop off.
After using the federal funding to serve more than 9,500 children over three years, however, Arizona could not point to a long-term funding source. The state was denied a new round of grant money in 2019.
That doesn’t bode particularly well for the state if President Joe Biden successfully pushes through his Build Back Better Act, which would fund universal preschool and cap families’ child care costs on a sliding scale. The federal government would cover the full cost for the first three years, but after that, states would be expected to chip in 10%.
Arizona leaders also would have to opt in to participate in the initiative in the first place. In a state where some elected officials have resisted Medicaid expansion and others decried pandemic relief funding as excessive and unnecessary, there’s no guarantee that will happen.
When asked whether Ducey would support Arizona participating in the program, the Governor’s Office did not respond, even as DES said it “continues to … advocate for the continuation of federal investments into child care after the expiration of the emergency funding.”
No matter what happens in terms of financing, families, operators and experts are seizing the industry’s moment in the spotlight to push for sweeping shifts in how elected officials and others view the child care sector and how the state treats and trains its child care workers.
“If there was a major thoroughfare or major interstate or bridge that was broken from one city to the other, they’d be out there fixing it right away. And that’s what childcare is: the infrastructure for our economy,” Prinster said.
“We can’t go back to the way that we were doing things before.”
This report was first published by the Arizona Center for Investigative Reporting.