Poster #60 - Impacts of Child Care Stabilization Funding in Wisconsin

• In Event: Friday Poster Reception

Abstract

Background: In response to the COVID-19 pandemic, the American Rescue Plan Act (ARPA) allocated $23.97 billion to states, territories, and Tribes via the Child Care Stabilization Program. Research by the Council of Economic Advisors (CEA, 2023) suggests that provision of these funds successfully met goals such as stabilization of child care prices, access to care, and increased employment and wages for child care workers; however, more recent research analyzing the effects of the expiration of ARPA funding suggests setbacks in progress for these same outcomes (CEA, 2024).

From November 2021 to January 2024, Wisconsin distributed over $479 million of ARPA funds to providers through the Child Care Counts (CCC) program. An additional $170 million from Coronavirus State and Local Fiscal Recovery funds continued CCC through June 2025, although payments to providers were reduced by 50%. Through a partnership with the Wisconsin Department of Children & Families (DCF), the Institute for Research on Poverty engaged in a series of studies to evaluate CCC, including analyses of how providers used funding, impacts of funding on programs, impacts of reduced funding, and anticipated impacts should CCC funding end in June 2025 as scheduled. In this paper, we share findings from the latest study demonstrating what happened when CCC funding was reduced. Then—as a true example of research in action—we plan to leverage the research partnership to measure what happens after June 30, 2025, whether Wisconsin chooses to continue or end CCC.

Methods: To measure current and predicted impacts, researchers embedded a questionnaire into the November 2024 CCC funding application resulting in a diverse sample of child care providers (N=3,646) representative of over 80% of providers throughout the state. To reduce bias of overreporting, the study first establishes evidence of behavioral and experiential changes during a period of 50% reduced CCC funding (May 2023 through November 2024), then asks providers to consider impacts on their programs if CCC is discontinued. An open-ended question captured provider ideas about what would be possible if CCC funding were continued at its original level.

Results: Providers reported substantial reductions in their ability to provide competitive compensation, hire qualified staff, and provide high quality care, as well as significant increases in tuition during the reduced funding period. Most providers who reported changes attributed at least some of the change directly to reductions in CCC funding. When asked what would happen if CCC funding ended, 25% of providers reported they were at least somewhat likely to close, and most predicted additional challenges in staffing and meeting the needs of families. Over three-fourths of providers anticipated raising tuition. 

Conclusion: Initial research suggests that loss of public funding for child care may lead to reductions in access to and quality of care. After June 2025, we will continue to work with DCF to analyze state administrative data to determine whether trends in operations, staffing, and service provision continue, and whether predictions come to fruition based on the outcome of the state budgeting process this summer.

Author

• Hilary M Shager, Institute for Research on Poverty
  Presenting Author