Some child care providers expect to shutter after Texas lawmakers leave $2.3 billion proposal off final budget

Tracy Hanson teared up at her dining table last May. The Killeen child care operator had gotten word from Austin that Texas legislators would not fund her child care center or any other center in the state.

“Cody, I’m not going to make it,” Hanson said to her friend who was on the other end of the line.

She kept her phone on speaker but an unease had settled in for the night. For 28 years, Hanson had managed to keep her center, Education Connection Preschool and Child Care Solutions, afloat. She had made calculated moves to downsize, first after the 2008 recession and then again in response to the COVID-19 pandemic. But she was running out of moves.

She could only raise tuition so much in Killeen, home to Fort Cavazos, one of the largest military bases in the nation. The most she could offer her employees was a $10 to $12 an hour starting salary — not enough to be considered a living wage and not enough to compete with higher paying jobs at food chains across town. She was hemorrhaging employees.

“We get them hired, we orient them, we train them, and then Burger King calls and says, ‘Hey, we have an opening and we're gonna pay you $15 an hour.’” Hanson said. “How? How is it that a fast food place can pay more than a child care center?”

Running a child care business was hard before the coronavirus pandemic wreaked havoc on the industry beginning in 2020. Since then, some child care providers have never reopened. Those operators whose businesses did survive credited federal pandemic relief funds, which will end this year. Hanson says her child care center got its last federal paycheck in June.

This year, the Texas Legislature passed on a chance to step in and fund child care providers now staring at this looming economic cliff. A $2.3 billion House proposal for child care was left out of the final budget. Texas child care providers say they were counting on help from the state. They had hoped to use state money to help raise the average wage of staff and educators from $12 per hour to at least $15 per hour.

“When you're a high quality center, you need to pay for high quality staff. And when there's no funds to help with payroll. Even if they just helped with payroll,” Hanson said, before trailing off. “No one listened.”

Without substantial funds going to child care providers and their employees, Texas could see a wave of mass closures in the coming months, forcing working families to scramble for child care alternatives.

Since 2020, Texas child care providers have received more than $4 billion in federal COVID-19 relief funds. That money helped cover child care costs for an estimated 836,000 Texas children, according to the federal Administration for Children and Families.

Federal relief dries up

In Wichita Falls, Keri Goins was once again playing a game of musical chairs with the enrollment charts for her child care center, Child Care Partners. She was trying to make space for a working mom who had shown up with her infant in hand and her two older kids trailing behind.

“Please,” the mom had implored. If Goins couldn’t find her a spot, her two older kids would have to take turns missing school to stay home to take care of her infant.

Goins knows keeping her business open means parents can keep their jobs. But COVID-19 devastated child care providers, forcing some businesses to permanently close. Goins says the numbers on the invoices are a lot higher than before the pandemic — feeding the kids has gotten more expensive; fuel surcharges are tacked on to every purchase; even the cost of paper has doubled.

In Goins’ case, she used the federal relief funds to increase pay for staff by $2 an hour. Most of her staff are on food stamps or get groceries from the local food bank, she said.

“The only reason why we were able to pay (staff) during covid was because of the child care relief grant,” Goins said. “As soon as that drops off, things are going to get really hard.”

For the Wichita Falls child care center, the last of the federal funds came in June. Goins says the money will be gone by October. She’ll have to find another way to find the funds to pay her employees.

With the federal pandemic relief money set to expire, state Rep. Armando Walle, D-Houston had hoped the state could step in and buoy child care providers. He tucked a $2.29 billion request to fund child care in the 2024-25 budget.

Walle admitted it was “an ambitious ask” but one that felt justifiable given the need and the record budget surplus of $32.7 billion.

“We had a $30 billion surplus so we thought that that was something we could pull off,” Walle said. “We weren't trying to reinvent any wheel. There was already an existing funding source at the federal level that was helping. We just wanted to maintain that assistance.”

The proposal ended up being relegated to the “wish list” section of the budget, which meant it was a point of negotiation between the House and Senate. But it did not make it into the final budget.

The record budget surplus ended up going towards different state priorities, including $12.3 billion in new money to property tax cuts.

Lawmakers did add $35 million in child care money to the next budget cycle at the request of the state workforce commission — a required state match before Texas can access an additional $52 million in federal money. That money will not support the child care workforce directly but will instead serve as financial aid for families to afford child care. Families qualify for a subsidy if their income is below 85% of the state’s median income.

Texas historically hasn’t invested in child care, according to Cody Summerville, the executive director of Texas Association for the Education of Young Children. Instead, the state has allocated the minimum amount of money to child care required to draw down more federal dollars.

“You really have to think about child care as the bedrock of economic recovery,” Summerville said. “The Legislature hasn't been able to connect those dots. There’s been some great champions in the Legislature who do understand it but, as a whole, the body is not there yet.”

Mass closures coming

Of the over 1,500 child care programs surveyed by the Texas Association for the Education of Young Children, 44% suggested a likelihood they will close their programs within the next year.

Back in Killeen, Hanson had to increase tuition by $20 a week after federal relief dried up. It’s the only way her program can survive — for now, she said. She’ll still have to close doors if she can’t get staff up and enrollment within the next six months.

“I have fought the good fight and have done the best that I can to get help for child care centers to be able to continue to offer quality care for less. It has fallen on deaf ears at the Capitol,” Hanson said in a letter last week to her families about pricing changes.

Hanson was among the providers who testified in front of the Texas Senate finance committee when lawmakers were in session. Even standing in front of the podium, she said she didn’t feel heard.

“Child care is at the bottom of everybody’s list. And even testifying, you felt that in the room,” Hanson said. “There weren’t a lot of questions asked of you. There weren't a lot of comments made.”

Already, two families have told Hanson they need to leave the center because of the new costs. Her center specializes in kids with unique learning disabilities and learning needs, so Hanson worries about what it will mean when they no longer get that specialized support.

“Just moving furniture in a classroom. I was just talking to one of my therapists that works with one of them and he [the student] is melting down because the Legos are not in the same spot,” Hanson said. “And he’s one that’s fixing to have to go to public school because they cannot afford to keep him here.”