Hopes that greater Minnesota’s economy could soon “return to normal” could be dashed by a severe and worsening childcare shortage, according to a new report from the Mankato-based Center for Rural Policy and Development.
Released last week, the nonpartisan think tank’s latest report effectively pegs the shortage as the biggest driver behind greater Minnesota’s persistent workforce shortage, though a lack of housing and transportation play roles as well.
In Minnesota, nearly four out of five children live in a family where all parents work. Nationwide childcare issues are the leading cause of absenteeism. According to a July 2019 report from First Children’s Finance, Greater Minnesota has some 40,000 unfilled childcare slots, including 865 in Rice County and 489 in Waseca County, though Steele County had slightly more slots than needed.
The number of unfilled childcare slots has increased dramatically in recent years, driven by a loss of family child care slots. According to the Minnesota Department of Human Services, the number of family child care providers has been halved over the last 20 years.
Since the pandemic has hit, the challenges have only gotten worse. Sherry Tiggs, a longtime child care provider based in western Minnesota, said that nine childcare providers have closed in her county since fall 2019.
Karen DeVos, vice president of Public Policy for the Minnesota Childcare Association, said that overhead is extremely high for smaller childcare providers like her and have risen due to COVID-19. Between additional testing and cleaning costs and limited group sizes, DeVos saw overhead costs increase by 34% last year even as her facility served fewer children. Tiggs said she’s seen steep increases in costs for everything from WiFi to water and other basic utilities.
“Our overhead is so high, I’m lucky to be able to claim a profit of double digits on my taxes most years,” said Christy Hanson, a childcare provider based in Owatonna.
Hanson said that the state’s approach to regulation has made it much more difficult for providers to make ends meet. Several years ago, the state required additional training not only for providers but their backups as well, promising it would be affordable and accessible.
Hanson said that often hasn’t been the case. Just one class can cost over $500, and require an hour or more of driving time. Some classes have gone online in recent years, but greater Minnesota providers who lack a good connection to WiFi are left out in the cold.
Despite the high demand for childcare slots, Hanson has chosen not to take additional children during the duration of the pandemic. That stance has business far worse than she’d anticipated at first, when she imagined the pandemic wouldn’t go on nearly so long.
One bright side for Hanson is that most of her clients were essential workers to begin with, so they’ve continued to work and send their kids to her. Faribault provider Diana Jandro said she’s much in the same boat — but knows providers who haven’t been so fortunate.
In many cases those providers have closed up shop, while others have simply left the industry out of an unwillingness to expose themselves to COVID-19 every single day, particularly given the industry’s low wages.
While family child care providers have been on the decline for years, child care centers are picking up at least some of the slack. In the Twin Cities, the vast majority of lost family child care slots have been replaced with child care center slots.
In Dundas, a new childcare center could accommodate up to 40 children, making a modest but important dent in Rice County’s shortage. It’s the brainchild and dream of Tawna Schneider, who has provided in-home family childcare for the last 12 years. Schneider believes the center could be particularly successful because most childcare centers in the Northfield area are on the opposite side of the city. She’s hired eight staff members so far and is interviewing families, with an eye toward opening next month.
While they may work in reasonably well-populated areas, childcare centers have struggled to replace family childcare outside the metro. While about 35,000 family childcare slots have been lost outside throughout greater Minnesota, only 15,000 childcare center slots have been added.
In the short term, the report highlighted the importance of continuing emergency childcare grants awarded by the state and its Initiative Foundations throughout 2020. Tiggs said that she hopes to see the state not only maintain but increase those grants.
“Those grants have been instrumental in helping us to keep the doors open,” DeVos added. “We couldn’t have done it without them.”
The Initiative Foundations have also played a crucial role in helping providers to move toward more financially sustainable models. Among them is the “pod” approach, which enables multiple family child care providers to operate under one roof.
Crucial to that work is funding provided by the state legislature. A bill sponsored by Sen. Carla Nelson, R-Rochester, would provide more funding for each of the Initiative Foundations to invest in childcare solutions.
Southern Minnesota Initiative Foundation President Tim Penny said that what works best in each community often differs. For some communities, “pods” may work well, while in others it may make more sense to house childcare at the local school or to focus on in-home settings.
“What we largely do is help communities explore which option works best for their needs,” Penny said.