The Intersection

State COVID-19 Fiscal Supports for Child Care

April 1, 2020

Updated: September 14, 2020


The Challenge

The fiscal heath of America’s child care industry is precarious during the best of times. Despite its high cost to consumers, quality child care is equally costly to provide, resulting in slender profit margins, even as the industry’s workforce remains among the nation’s most poorly compensated.

Now called on to serve as first responders during the COVID-19 outbreak, hourly child care providers, many of whom lack paid sick leave and employer paid health benefits, are being asked – in the event they are working at all – to take on the high-risk duty of caring for the children of the nation’s essential health care and emergency workers during a global pandemic.

Concurrently, small business owners within the industry are facing the threat of financial ruin – and permanent closure – as a result of the one-two punch brought on by widespread “shelter in place” orders and a growing number of mandatory child care closures for all except the children of essential personnel.

Policy Considerations

As the COVID-19 crisis unfolds, a growing number of states have enacted emergency measures, some underwritten using federal funds, designed to support and secure both the child care industry and its critical workforce. This short brief highlights the efforts of states on the leading edge of this public policy frontier. The federal Office of Child Care has released guidance to support state decision-making using the federal block grant dollars.


At the time of this writing, perhaps no state is moving as aggressively to ensure the ongoing solvency of its state’s child care providers as Vermont.

While many states – Vermont included – are taking steps to ensure the continued flow of both state prekindergarten funds and federal child care subsidy payments to participating centers (permitting programs to be paid based on children enrolled, as opposed to real-time attendance during the closure period), Vermont has concurrently enacted the nation’s first child care stabilization initiative to replace the lost tuition payments of parents during the closure period.

Announced in conjunction with an Executive Order by Governor Phil Scott extending the state’s school closures for the remainder of the 2019-2020 school year and the closure of child care on an indefinite timeline, the initiative, as described by the VT Department for Children and Families, is designed:

  • To ensure that child care programs are able to reopen at the end of the COVID-19 closure period;
  • To provide financial stability to providers to help maintain their anticipated tuition income;
  • To support families who are not able to receive child care services at this time due to the closure; and
  • To ensure that early care and learning professionals continue to be paid, and will be able to return to their child care programs as soon as the programs are able to open.

The state’s response will be differentiated within two timeframes (the state’s initial closure period, from March 18, 2020 – April 5, 2020, and a new, extended closure period beginning April 6)

During the initial closure period from March 18- April 5, 2020 the State of Vermont will cover regular tuition not paid to providers on behalf of each family (private paying families as well as CCFAP co-pay and remaining costs to meet the provider rate). According to guidance distributed by the Department for Children and Families:

“In order to receive these payments child care providers must:

  1. Request families pay their full regular tuition and/or co-pay;
  2. If a family is unable to pay their tuition the provider can receive a payment from the state on behalf of the family regardless of the family’s income status.
  3. Pay all their staff at full salary;
  4. For registered home providers this includes where there is only one staff member (Owner).
  5. Provide required information to the Child Development Division for the processing of payments.
  6. Maintain the slot for the child of the enrolled family regardless of whether payment comes from the family.

During the extended closure period, the State of Vermont will cover half of any regular tuition not paid to a provider on behalf of a family (private paying families as well as CCFAP co-pay and remaining costs to meet the provider rate). In order to receive these payments child care providers must:

  1. Ensure slots are maintained for children of families who pay at least 50% of the program’s regular tuition and/or co-pay;
  2. If a family unenrolls their child from the program, the child care provider may request 100% of the tuition (up to $360) from the State of Vermont. The provider must certify that the family has unenrolled and no longer has a slot in the program.
  3. Pay all program staff at full salary;
  4. For registered home providers this includes where there is only one staff member (Owner) this includes yourself.”


On March 18, 2020, New Mexico Governor Michelle Lujan Grisham took steps to secure the healthcare needs of the early childhood workforce providing emergency care during the COVID-19 pandemic, announcing that the state will pay the cost of premiums so that uninsured child care workers who test positive for COVID-19 (and are not eligible for other coverage) will be allowed to enroll in the New Mexico Medical Insurance Pool (NMMIP) the state’s high-risk pool — and receive comprehensive health care coverage until they recover. The opportunity will be available to both providers and the members of their immediate households, regardless of income or immigration status.

A press release issued by the New Mexico Children, Youth and Families Department provides additional context, noting that:

“NMMIP is chaired by New Mexico’s Superintendent of Insurance; it provides comprehensive health coverage for people who have significant medical conditions, are uninsured, and are not currently eligible for other coverage (such as Medicaid or Medicare). The board of NMMIP held an emergency meeting on March 6 and voted to include COVID-19 as one of its covered conditions, which triggers expedited enrollment.

NMMIP does charge premiums to enrollees. The state of New Mexico will cover the premium costs for all uninsured child care workers with COVID-19 and their immediate household members who obtain coverage through NMMIP. Under emergency rules issued by the Superintendent of Insurance, deductibles and copayments are waived for treatment of COVID-19, influenza and pneumonia through NMMIP.”


Effective April 1, 2020, North Carolina child care providers remaining in operation must be approved as emergency care providers by NC DHHS’ Division of Child Development and Early Education. Programs opting to do so in support of essential staff will be eligible for a package of financial supports from DCDEE, which includes bonus pay for staff.

According to guidance released by the agency, NC DHHS will provide bonus payments to all full-time child care employees during April and May 2020, with teaching staff (in both center-based programs and family child care homes) eligible to receive $300 per month, and non-teaching staff eligible for $200 monthly. DHHS is requiring programs to issue prorated amounts of this monthly bonus during each regular pay period and reminding programs that they have the flexibility to offer additional bonuses using their own funds.

The state is simultaneously adopting a “hold harmless” model for subsidy and NC Pre-K payments to providers, ensuring that each is paid at least what it received in February 2020. NC DHHS is also covering the cost of all parent copayments for the child care subsidy program during April and May 2020, requiring programs to waive these costs for parents.


Finally, a growing number of states are seeking to secure the ongoing operation of child care through emergency grant programs.

Minnesota: On March 26, 2020 the Minnesota Legislature approved a request from Governor Walz providing $30 million in grants for child care centers and in-home providers as part of a larger spending package aimed at mitigating the economic and public health damage of coronavirus.

Under the bill, child care providers remaining in operation can apply for a $4,500 monthly grant from the state, with an additional $1,000 available if the program serves children who have special needs, don’t speak English, or if the program operates during nonstandard hours like nights and weekends. Centers currently caring for 15 or more children may receive an additional monthly grant up to $15,500.

To receive these grants, eligible programs must agree in writing to:

  1. Prioritize spaces in their program for children of essential workers, as identified in state guidance;
  2. Maintain service for the period of the grant or until the peacetime public health emergency ends, whichever is first, except during any periods of temporary discontinuation of service in response to public health guidance to protect the safety and health of children and child care providers; and
  3. Use health and safety practices that issued by the state.

The grant program is designed to support both providers and families, allowing programs that receive grants to charge fees to families actively attending the program, while securing the slots of families enrolled but not currently attending (from whom fees may not be collected).

Indiana: Using federal Child Care and Development Fund dollars, Indiana’s Office of Early Childhood and Out of School Learning has established a short-term grant program for child care providers meant to cover lost tuition revenues. The grants, open to both programs that have closed and those with low current attendance, are “meant to pay the child care staff in order to retain the supply of child care even after the COVID-19 pandemic is over.”

The state has developed a budget template to help calculate the amount of grant funding requested, based on the number of private/cash pay children enrolled, the weekly cost of care by age group and administrative costs not to exceed five percent (5%). Each grant period is for two weeks, with providers eligible to submit additional applications for each new period.

North Dakota: In order to help childcare providers cover the extra costs of operating that will come with the state’s modified operating practices, and to help sustain the childcare industry through this period of disruption, the state of North Dakota has created Child Care Emergency Operating Grants open to all licensed childcare providers choosing to remain in operation.

The grants will be based on a provider’s license type, with per child payments ($109 per child in family child care settings, and $139 per child in center-based care) issued every two weeks up to the center’s licensed capacity. A center-based provider with a licensed capacity of 75, for example, would be eligible to receive grant funding of $10,425 (75 x $139) every two weeks.

In exchange for grant support, participating providers must use modified operating practices set by the state, agree to prioritize caring for the children of essential health and safety workers, and cap at $50 per month any fees they would typically charge families to hold slots during an extended absence from care. Providers opting out of the state-provided Childcare Emergency Operating Grants, will not be required to prioritize service to essential staff or modify absence policies but will be required to follow modified operating standards.

Tennessee: Using federal Child Care and Development Fund dollars, The Tennessee Department of Human Services (TDHS) has partnered with The Community Foundation of Middle Tennessee (who will administer the grants) to make $10 million in Disaster/Emergency Response and Recovery Grants available to licensed child care providers impacted by COVID-19. Providers are able to apply for grant funds to recoup losses and expenses, in categories including (but not limited to):

  • Lost Income resulting from closing due to the disaster/emergency, with grant awards based on itemized losses to operating income during the period of closure.
  • Response and Recovery Operations Costs that occur as a result of the disaster/emergency such as cleaning, utility repair, inspections, and substitute staffing, with grant awards based on actual costs incurred.
  • Equipment, Materials and Supplies that were lost or compromised as a result of the disaster/emergency such as area rugs, soft toys like stuffed animals, books, curriculum, learning tools and displays, damaged cabinets and shelving, supplies, and playground surfacing and equipment.
  • Consultants and Coaches that are needed specifically related to disaster/emergency impacts such as helping children, caregivers, or staff through recovery, grief, anxiety, stress, or trauma.

(Award amounts for the Equipment, Materials & Supplies and Consultants and Coaches categories will not exceed $1,000 per slot of licensed capacity to care for children.)

← Click to access The Hunt Institute COVID-19 Resources & Policy Considerations Page

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