As Louisville’s childcare landscape faces an uncertain future, the need for collaboration between the public and private sectors has never been more crucial. Following the turbulence of the COVID-19 pandemic, federal funding sustained Kentucky’s childcare centers, which faced unprecedented challenges due to restrictions. However, these supports ended this year while our region still needs 4,700 more childcare spots.
The American Rescue Plan Act (ARPA) of 2021 allocated $470 million to address child care in Kentucky. This funding has been instrumental in sustaining the operations of approximately 1,700 providers, offering quarterly sustainability payments. These payments allowed centers to retain their staff by increasing wages and making child care more affordable through consistent fees. Families also had more access to direct assistance through the expansion of Child Care Assistance Program, CCAP.
However, in September, ARPA-funded sustainability payments ran out and $293 million designated for one-time child care and development block grants dried up. Although the state is putting $50 million towards child care through the fourth quarter of 2023, without additional funding allocated for the next session, the loss of these federal dollars will lead to the potential closure of many childcare centers. It exacerbates the existing challenges families face in accessing affordable care.
Reliable child care is a foundational component of a strong economy. According to a survey conducted by the Prichard Committee, 47 percent of workers leave work early to attend to their children and 33 percent work limited hours. This has a direct impact on employers and economic growth. In addition, this has a disproportionate impact on women and has led to a decreasing number of women in the workforce and derailed years of progress towards gender equity. Barriers to work for women impact families and the future of our economy as women make up over 50% of Kentucky’s population, according to census data. Today, many families are forced to weigh the high costs of child care with the potential costs of not participating in the workforce.
Businesses and governments must address this urgent situation to stop an impending crisis. Local and state lawmakers must prioritize supplementing the loss of this federal funding. Employers must do their part by participating in programs to subsidize employee childcare costs.
At the state level, lawmakers must include funding in the biennial budget to fill the $331 million gap and keep childcare funding at its current levels. But they also need to look beyond maintenance mode, which leaves many children and working Kentuckians without reliable and affordable options. They must also lean into innovative programs that can impact our community’s chronic shortage. Lawmakers should invest in childcare infrastructure and staffing, streamline licensing processes, and explore new ways to make childcare more accessible.
Employers also have a role to play. In 2022, the legislature passed House Bill 499 to create the Employee Child Care Assistance Partnership to make child care more affordable for working Kentuckians by incentivizing employers to contribute toward their employees’ childcare costs. This innovative public-private partnership allows qualifying employers and child care providers to opt-in to the program where the state would match an employer’s child care assistance funding to the employee with state
dollars up to 100 percent. Employees with wages below the state median income (SMI) would receive 100 percent of the state match, and employees at or above the SMI would receive 80 percent. As we work to create more childcare capacity, we must find ways to make childcare affordable. The General Assembly has allocated substantial funding for this pilot program; now, we need more employers to take advantage of it by enrolling through the Kynect portal.
As a community, we have the power to help Kentuckians reenter and stay in the workforce while providing a strong educational foundation for our future workforce. Now is the chance to ensure working parents and guardians. Specifically, women have the necessary resources to be part of the workforce. The impending loss of federal funding will create repercussions beyond childcare centers. The challenges are significant, but so is the opportunity for meaningful change. Greater Louisville Inc. encourages lawmakers and the business community to do their part to revitalize this critical sector.
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