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Report says early education system needs huge financial bailout to operate safely

Early education centers and family day care homes in Massachusetts will need an infusion of $690 million over the next five months to successfully reopen and recover from the shutdown caused by the COVID-19 pandemic, according to a new report.

As the state this week begins to review child care center safety plans and green light reopenings, the study from the liberal-leaning Massachusetts Budget and Policy Center highlights how the situation has worsened for an industry already reliant on tuition that was struggling to meet the needs of families before the pandemic.

"There's no going back to normal in the economy without child care being available. I think we're all realizing, as parents and around the commonwealth, that this is vital," said Colin Jones, a senior policy analyst for the center and the author of the report.

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The call for state government to think about how it can prop up an industry in crisis comes as state tax collections are collapsing and states are looking to the federal government for new financial aid to fill budget holes, and cover new expenses.

Some daycare operators have said that they are struggling to obtain the personal protective equipment necessary to reopen, while others worry that they will burn through their cash reserves within a couple of months as they are forced to operate at reduced child capacity to observe social distancing. Daycare centers planning to reopen next week had to submit their safety plans to the state by June 21 for review.

The report does not recommend where the money should come from, but the center has previously suggested eliminating ineffective tax breaks for wealthy individuals and corporations or tapping the $3.5 billion "rainy day" fund as ways to avoid cuts to services if the federal government doesn't step up with more money.

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"There are a bunch of options and all are preferable to allowing the child care sector to collapse," Jones said.

About 8,200 early education providers in Massachusetts offer care and services to families of the more than 360,000 children aged 4 and under around the state. About 65 percent of those providers are caregivers who provide early education services from their homes.

During the COVID-19 shutdown, over 500 daycare centers continued to operate on an emergency basis for medical professionals, first responders, and other parents who had to continue to report for work. Only about 4,000 children filled the roughly 10,000 slots made available.

Based on data compiled by the Department of Early Education and Care, MassBudget reported that family child care homes and centers lost up to $536 million since being ordered by the state to close on March 23, including $250 million a month in private tuition.

Part of that tuition loss was covered by the state continuing to pay subsidies and family fees for subsidized children whose daycare centers were closed for the past three months. The emergency payments from the state made up for about $18 million in lost tuition, according to the report.

Early education providers are also estimated to have received $150 million in Paycheck Protection Program loans, and $46 million in dedicated CARES Act funding from the federal government.

The MassBudget plan recommends filling the entire $536 budget hole blown into the early education industry. The report also said that it has been estimated that reopening child care centers under new health and safety regulations mandated by the state could cost about 20 percent more than normal operations, adding $150 million in expenses to the system over the next five months.

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"Without significant additional funding from the state or federal governments, the early education system in Massachusetts will be unable to reopen successfully and remain financially viable over the coming months as parents return to work," Jones wrote.

If child care centers are forced to raise tuition, Jones said there is a concern that early education could become something that only wealthy parents can afford, exacerbating the impact of COVID-19 on low-income and people of color who live in poorer neighborhoods who have been disproportionately affected by the virus.

“Families with means have a lot more options to fall back on than folks who don’t,” Jones said.