It is becoming significantly more expensive to run a childcare business. And as public funding fails to keep up with inflation, these costs are passed on to families who, in many cases, cannot afford to pay more.
These are some of the main conclusions of a new report by the National Association for the Education of Young Children, which earlier this year surveyed more than 7,000 early childhood educators from various early learning programs across the country.
According to providers, the costs of food and supplies have increased the most, followed by facility maintenance and liability insurance. Child care programs have long reported difficulties obtaining and maintaining liability insurance, which is required for child care centers in many states.
In an effort to stabilize their operations, 65 percent of center-based providers and 31 percent of home-based providers reported increasing tuition fees in the past year. However, many families cannot afford to pay more. A study published in January by Loan tree found that the average annual cost of child care for an infant and 4-year-old is more than $28,000 per year, meaning a family with two children would have to earn more than $400,000 for child care to represent 7 percent less of their household income, a federal measure of affordability.
“There is a significant gap between what parents can afford and what early childhood educators need to live,” Michelle Kang, CEO of NAEYC, said in a statement. “As public funding stagnates and costs continue to rise, more early childhood educators will leave the sector and more programs will close – with lasting consequences for children, communities and our economy. »
These findings add to growing concerns about the stability of the child care sector post-pandemic. In anticipation of federal budget cuts to programs such as Medicaid and the Supplemental Nutrition Assistance Program, also known as food stamps, some states are making up the budget shortfall by significantly reducing state funding for child care.
More than half of program leaders surveyed by NAEYC said they have seen impacts from rising tuition, including an increase in the number of families leaving their programs. Sixty-one percent of respondents said their programs were underenrolled because very few families could afford to pay.
In Philadelphia, Mary Graham, executive director of the Children’s Village early learning program, said liability insurance has skyrocketed in recent years, from $45,000 in 2024 to $62,000 this year. “I almost had a heart attack,” Graham said.
Costs for food, health insurance and workers’ compensation have also increased for the program, which opened in 1976, leading to a $200,000 deficit this year.
This is the first time the program has experienced a deficit in more than three decades. Graham is proud to offer a living wage and benefits to its 76 full-time employees, who care for children from infancy through school age. This year, however, she had to reduce the number of substitutes as well as the amount of money she planned to spend on raising salaries. Despite an increase in the number of children with disabilities identified in its program, it is unable to assign an additional teacher to these classes to provide support. “The kids need it, but we can’t,” Graham said.
“That means we have to be more creative,” she added. “We do what we can.”
This story about the cost of child care programs was produced by The Hechinger reportan independent, nonprofit news organization focused on inequality and innovation in education. Register for the Hechinger newsletter.
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