As part of the American Rescue Plan Act signed into law in 2021, the federal government allocated $24 billion in grants to child care providers to help create financial relief through the COVID-19 pandemic.

Texas alone received a little over $4 billion through the Child Care Stabilization Program—funded through the American Rescue Plan Act—but with the end of fiscal year 2022-23, funding is set to be cut off Sept. 30.

The big picture

According to the White House website, the stabilization grants were used to help small businesses stay open by providing funds to pay rent, improve facilities and/or retain employees. In Texas, the stabilization program served 836,000 children with 10,790 child care programs in the state receiving support from the government.

The Century Foundation, a nationwide nonpartisan think tank, projected the impact the cutoff of funds could have for children, families and Texas' economy.
  • Nearly 4,000 child care programs could close statewide.
  • Over 300,000 children could be left without care in Texas.
  • Total cost of turnover and loss of productivity in Texas is nearly $1 billion.
Nationwide, the foundation reported more than 70,000 child care programs will likely close, and approximately 3.2 million children could lose their child care spots.

Zooming in

Kim Kofron, senior director of education for Children at Risk, a Houston-based nonprofit advocacy group, said she has already begun to hear stories of longtime day care centers beginning to close.

“We already have child care deserts, [and] with the impending child care cliff, we are anticipating even more closures, and because of that it will be even harder to find child care," she said. "The remaining centers will have to either lower wages or increase tuition. Neither of those are good choices."

In 2021, Child Care Aware, a nonprofit organization geared toward child care issues, reported the average cost of child care per month in Texas is:
  • $813 for infants
  • $744 for toddlers
  • $669 for preschoolers
Kofron said she believes a lack of affordable and reliable child care access will take a toll on the economy and workforce as more parents are forced to stay home.

The impact

A study by ReadyNation, a nonprofit organization based in Washington, found the economy is losing an estimated $122 billion nationwide per year due to the infant-toddler child care crisis.
  • Not having enough child care costs individual parents more than $5,500 a year.
  • The government loses about $21 billion in lost income and sales tax revenue a year.
  • The estimated annual economic impact of the child care crisis in Texas is $11.4 billion.
Hank Lewis, an economics professor at Lone Star College-University Park in Houston, said he believes the loss of affordable child care will have a domino effect.

"You're going to have a lot of people who will have to cut back on their hours, and less wages means less spending," he said. "That's going to lead to higher prices to offset the difference. So the economy is looking at less spending and higher prices."

Looking ahead

During the 88th Texas Legislative Session, a $2.3 billion House proposal for child care was left out of the final budget. However, a joint resolution was passed to put a constitutional amendment on the Nov. 7 ballot to create targeted property tax cuts for child care centers.

Senate Bill 1145 prohibits the exemption from being less than 50% of the appraised value. If the constitutional amendment passes in November, counties and municipalities can adopt the exemption effective Jan. 1.