Public Policy Response to the COVID-19 Outbreak in Michigan: CHILD CARE

Updated November 23, 2020

Where we are:

At the beginning of the COVID-19 public health emergency, the Michigan Department of Education informed licensed and license-exempt child care providers that they could temporarily bill for currently enrolled children whether or not those children were still attending, were absent or the facility was closed. As of June 21, this policy was rescinded and providers could only bill for children if their programs are open and the children are attending (with some absence hours permitted). In addition, the number of hours that providers could bill for school-age children was increased, and redeterminations for child care subsidies were extended. On April 29, the governor launched a new Child Care Relief Fund to help child care providers stay afloat during the COVID-19 crisis, and ensure that child care is available when Michiganders go back to work. Approximately $130 million was made available for noncompetitive grants to cover providers’ basic operating costs during the public health crisis, with grants initially provided to child care centers, family and group homes, and license-exempt providers.

As part of the 2020 final budget agreement an additional $125 million in federal CARES funding was provided for rate relief for parents, with up to a 30% reimbursement to providers who reduced rates during June, July and August. In part because of the administrative burden for child care providers of administering rate relief in its original form as a tuition credit, a large portion of those funds went unspent, and were subsequently repurposed in the 2021 state budget as additional Child Care Relief Fund grants, as well as a simplified flat rate tuition credits for families. The sixth and final round of Child Care Relief Fund grants is now concluded, as all federal CARES funds must be allocated by December 30, 2020. In the final round, funds were available to licensed child care providers who were open and serving families, with at least $9,000 provided to licensed child care centers and homes, and additional funding available based on licensed capacity and the number of stars in the state’s five star quality rating system

At the federal level, an additional $3.5 billion in federal Child Care Development Block Grant (CCDBG) funding was approved as part of a COVID-19 stimulus package—short of the $50 billion proposed by Senate Democrats and child care advocates as part of the next phase of federal relief. Michigan received $100.8 million in additional CCDBG funding in the stimulus package, with funds used for Child Care Relief Fund grants to providers. Child care providers were also eligible to receive expanded unemployment benefits, and could apply for the federal Payroll Protection Program.

On March 19, 2020, Gov. Whitmer issued an Executive Order to address the short-term critical need for child care for essential health and other workers by authorizing regulatory changes that would allow employers and school districts to quickly establish temporary disaster relief child care centers. Provisions for disaster relief child care centers were ultimately extended through July 7, 2020. On June 5, the governor issued Executive Order 2020-114 that allowed all child care providers to return to full operations with certain public health safety precautions. On August 6, the governor issued Executive Order 2020-164 that established new face mask requirements for staff and some children in child care centers. Subsequent to litigation that ended in a ruling by the Michigan Supreme Court that the 1945 Emergency Powers Act relied on by the governor was unconstitutional, the Michigan Department of Health and Human Services issued emergency orders maintaining the face mask requirements in child care settings.

Our recommendations:

Provide sufficient funding to allow parents to retain their child care slots and compensate child care providers for their lost income as a result of the coronavirus crisis. Provide contracts or incentive payments for providers who offer to care for children during the emergency, including adequate payments for staff caring for children of essential workers who are at a higher risk of being exposed to COVID-19, costs related to finding substitute teachers, and additional costs associated with operating during a public health emergency.

To ensure that child care programs can reopen safely and stay open, establish grants and contracts with providers to increase high-quality care in areas of shortage such as infant and toddler care, care for parents working evenings and weekends, and care for children with special needs.

Provide ongoing emergency grants to cover new expenses child care providers incur by staying open during the emergency and after programs reopen, including added costs for sanitation and cleaning supplies, higher costs related to procuring food, and other needed equipment or supplies.

Expand the child care subsidy income eligibility entry guideline to at least 185% of poverty to help more families access child care.

Why Michigan must act now:

Michigan businesses and the state’s overall economy hinge on the ability of parents to find reliable child care that allows them to work, and the role of child care has become even more critical in the wake of the coronavirus pandemic. As parents have been asked to remain at home, and schools and businesses have closed, child care providers are facing the hard decision of closing themselves, or remaining open for the parents who are considered essential employees and still need child care. Now they face substantial hurdles to reopening their businesses in a time of uncertainty, and parent and provider concerns about safety.

Even before the coronavirus at least temporarily changed the way we work and live, Michigan’s child care market was struggling. The cost of child care was out of reach for too many parents—exceeding the cost of rent or a mortgage. Plus, a legacy of systemic racism has created significant racial inequities when it comes to child care access and affordability. Adding to Michigan’s child care problems, the state’s child care subsidy program has been one of the most restrictive in the country.

Michigan child care providers, who are some of the lowest-paid workers in the state, have also struggled. Child care businesses operate on a razor-thin margin, and the disruption of payments can result in the closure of child care centers and homes in a state that already has significant child care shortages. In fact, an estimated 4 out of every 10 people in Michigan live in child care “deserts,” and 10 Michigan counties do not have any licensed slots at child care centers for infants and toddlers. Very few child care providers care for children whose parents work evenings and weekends—as many essential employees do.

Michigan needs to support and redeploy current child care providers by providing adequate funding to allow them to serve essential employees during this public health crisis, as well as their attempts to reopen their businesses. A national survey of child care providers shows that nearly one-third would not survive a closure of more than two weeks without help to compensate and retain staff, pay rent or mortgages, and cover other fixed costs. Recent data show that approximately half of all child care businesses in Michigan are currently closed. If Michigan does not provide sufficient support to child care providers, when the coronavirus crisis passes the state will face a secondary crisis caused by the closure of current child care centers and family child care homes, and many Michigan workers will not be able to get back to work.