New York City and State are in the midst of government budget negotiations, and the expiration of Federal emergency Covid relief funding has pushed our ongoing child care crisis into both conversations. 

It’s a major crisis for families and also for child care providers. The Federal government recommends that affordable child care should cost no more than seven percent of household income. Nevertheless, a report by the Citizens Committee for Children of New York found that 80 percent of New Yorkers can’t meet that standard; a family earning the median income in New York City with two children under age five paying for child care to cover their full-time work hours spend at least 36 percent of that income on child care. 

As for child care workers: the reality is, as it always has been, that child care relies on unpaid household labor, predominantly provided by women, and distressingly low-paid labor by child care workers in center- and home-based programs

Child care programs cannot pay competitive salaries to staff within the parameters of the City contracts and State vouchers they rely on to provide 3-K, Pre-K, and care for low-income families eligible to receive State vouchers. In 2021, after meeting overhead expenses, the median home-based child care provider in the city paid herself just $10.61 per hour – more than $4 less than the minimum wage at the time. Long delays in receiving reimbursements from government agencies for services rendered exacerbate this problem. As a result, child care programs are often forced to reduce capacity because they don’t have sufficient staff to meet regulatory requirements for quality and safety. 

During the pandemic, City and State leaders used Federal Covid relief funds to lessen some of these child care costs and pressures.

Former Mayor Bill de Blasio kick-started an expansion of the City’s free 3-K program, available to families regardless of income, with the intention that it would spark the City to find a permanent funding solution. But the current administration of Mayor Eric Adams has instead shrunk the 3-K program, citing expiring Federal funds as the culprit. Last week, a City Council budget hearing ran until 10 pm, in large part to hear from parents and others out to protect 3-K from further cuts in the next City budget, due by the end of June.

For their part, State officials used Federal Covid relief funds to create three annual rounds of “stabilization grants” to child care programs to cover operating costs and retain workers. Governor Kathy Hochul also pushed through legislative changes in the last two budgets to increase subsidized child-care voucher eligibility and reduce parent co-pays. The State’s income eligibility for vouchers is now at the maximum allowed by the Federal Child Care Development Block Grant used to fund them. 

Earlier this month, the State Senate and State Assembly released budgets in response Governor Hochul’s Executive Budget. Negotiations are now underway to get to “yes” on a new State budget before the April 1st start of the next fiscal year. The legislative “one-house” budgets include two important elements, but will also require public investment beyond what’s available from the Federal government. 

The Assembly budget bill would require the Office of Children and Family Services (OCFS) to revise how it sets the value of subsidized child care vouchers. Currently, the State determines that value based on what parents pay out of pocket for child care in a particular region of the state. OCFS ranks a region’s providers by what they charge parents, then pays the region’s providers what those in the 85th percentile charge. NYC Public Schools (formerly known as the City Department of Education) also relies on this methodology in paying home-based child care programs for 3-K programming. 

However, this system does not take into consideration the costs associated with running an early care and education program, only what parents currently pay without public subsidies –  which we know parents on their own cannot afford. Requiring OCFS to instead use a model based on actual cost estimations of early care and education programming – including providing staff competitive wages and benefits – would fundamentally improve payment rates, and make it easier to retain staff and operate at fully licensed capacity. 

The Assembly and Senate budget bills also include a $500 million statewide workforce compensation fund subsidizing pay for child care workers. It’s intended to boost their take home pay until the State develops a more realistic cost estimation model. While it’s not the $1.2 billion that the Empire State Campaign for Child Care believes is needed to prevent further decline in child care staffing, it would be welcome start –  especially since the State would be putting its own money into this fund. 

Implementing a cost estimation model, developing a robust workforce compensation fund, and maintaining the City’s existing 3-K program are all top demands of parents, workers, and advocates in this year’s budget negotiations. All three priorities require the City and State to face the reality that Federal Covid relief funds are gone and aren’t coming back and that other Federal funds won’t be sufficient to solve the child care crisis. 

Instead, New York’s policymakers need to think expansively about what it would cost to pay living and competitive wages to early care and education workers and providers, what it would cost to make child care affordable to all parents, and what City and State progressive revenue raisers might be needed to implement those changes.

Lauren Melodia is deputy director of economic and fiscal policies at the Center for New York City Affairs at The New School. This Urban Matters draws on joint testimony she delivered with Natasha Quiroga, CNYCA’s director of education policy and InsideSchools, at the March 18th City Council Education Committee Hearing on the FY2025 Preliminary Budget.

Photo by: Eden, Janine and Jim