Cuts to child care services are affecting Indiana’s most vulnerable families and contributing to economic losses statewide, with ripple effects in Northwest Indiana. A study conducted by the U.S. Chamber of Commerce Foundation and Early Learning Indiana found that the lack of those services already creates a $4 billion hole in missed economic opportunity statewide.
Gov. Mike Braun’s administration announced in September that it felt compelled to cut the Child Care and Development Fund, or CCDF, voucher reimbursement rates by 10 to 35% to balance the state’s budget. As a result, some child care centers have closed their doors after facing a plunge in enrollment as parents grapple with the increased costs for child care.
As a result of the cuts, no new families can enroll for the program or add more children to it.
In Gary, Maceo Rainey, owner of the Rainey Center, saw one of his four daycares close in the last month after parents could not afford to keep up with the increased expenses. Rainey said that the center applies the child care vouchers to 99% of its clientele to pay for the child care service.
That daycare, housed in a residential building in the Midtown neighborhood, had 30 children enrolled. According to Rainey, about 75% of the 125 children at the Rainey Center are either infants or toddlers.
The state made some childcare voucher cuts in October.
The overwhelming majority of children in the Rainey Center daycares are Black or low income, whose parents work in shifts across multiple industries, including the Hard Rock Casino, FedEx, the steel mills and other jobs that have third shift hours, Rainey said. The Rainey Center day cares are open 24 hours a day to be available for parents at any time to accommodate their jobs’ hours.
“Child care is an infrastructure — just like bridges, roads, utilities,” Rainey said. “Child care is an infrastructure because it supports workforce development, promotes child development, spurs economic growth and promotes community functionality.
“No business is going to a community where there is no child care,” he said. “Because who’s going to watch their children while the workers are in the factory?”
Why the funding cuts?
Data shows approximately 55,000 Hoosier children receive child care supported by CCDF vouchers, and at least another 30,000 families are on the waiting list to become a beneficiary, according to Rainey.
According to the Braun administration, the funding crunch stems from former Gov. Eric Holcomb using temporary COVID-19 relief money to increase CCDF reimbursement rates and availability beginning in 2021 with no long-term strategy to cover the ongoing additional costs.
Earlier this year, the governor and the Republican-controlled General Assembly approved $147 million in additional funding for CCDF vouchers to avert more severe provider rate cuts and maintain child care access for thousands of families, The Times previously reported. Before the Braun administration announced the CCDF cuts, The Indiana Chamber of Commerce, in partnership with the U.S. Chamber of Commerce Foundation and Early Learning Indiana, conducted a study in March to examine how child care issues affect Indiana’s economy in part of a larger series of studies to reveal missed economic opportunities for the state, employers and working parents.
The study found that Indiana loses $4.22 billion each year, including $1.17 billion in tax revenue, due to child care issues.
Additionally, 57% of parents of young children missed work or class at least once in the surveyed three-month span for child care-related reasons and 40% of parents that experienced such employment disruptions in the prior year reported leaving the workforce as a direct result of child care-related issues, according to the study.
The report also found that child care-related employee turnover and absenteeism costs Indiana employers an estimated $3.05 billion annually.
“The U.S. Chamber of Commerce Foundation (USCCF) recognizes child care as a two-generation workforce issue that is essential to supporting the workforce of today and developing the workforce of tomorrow,” an executive summary of the study says. “Unfortunately, the current supply of child care falls short of demand due to a tight labor market and lack of sustainable solutions to support access to child care programs.”
“Indiana’s child care gaps drive parents out of the workforce, reduce tax revenue for the state, and put undue strain on households–particularly among the most economically vulnerable. While these challenges are complex and persistent, they are addressable, and the business community can play a central role in developing solutions that benefit all Hoosiers.”
The child care gap also creates rifts in academic achievement, according to Rainey, who is also a former school principal.
“The brain is developing at 1,000 neurons a day with cell connectors,” Rainey said. “So early learning is essential.”
“Your brain has been developing since birth to kindergarten, and if you haven’t been exposed to some of the social skills and the foundational skills of literacy, social, emotional learning, you’re behind already versus a kid who went to daycare. They’re already learning how to count, how to tie their shoes, how to get in line… so the achievement gap starts as early as kindergarten,” Rainey said.
The state made some childcare voucher cuts in October.
Gary resident Jacinda Fitzpatrick has two children, a three-year-old and a 15-month-old at a Rainey Center facility. As a single mother, she is the family’s breadwinner and has no one else to take care of her children for her.
Because Fitzpatrick works from 7 a.m. to 10 p.m. as a bus driver in the city of Gary, the need for child care is vital for her family. Without it, she wouldn’t be able to work at all, she said.
Fitzpatrick’s expenses at the Rainey Center have risen $60 a week, or $240 a month. The additional costs were to pay for her children’s Saturday care.
Fitzpatrick says her family is not alone in having that expense go up. Prior to the cuts, Fitzpatrick said that she would see 60 to 70 children at the Rainey Center on a Saturday. Now she only sees four to six children on a Saturday.
The added Saturday expense and work to pay for it have cut down Fitzpatrick’s plans for further jobs training, she said. She was planning to enroll in a class to earn a CDL HAZMAT certification to drive bigger tank trucks — a higher paying job than the one she currently has.
“I’m not trying to be on food stamps all my life,” Fitzpatrick said, noting that while she currently is on the government assistance program, she was planning to better her situation.
“It just feels like one step forward, and two steps backwards,” she said.
Revival funding attempts
A month after families felt the brunt of the child care voucher cuts, the Indiana Chamber of Commerce held a summit on Nov. 25 to engage with employers and those in philanthropic circles to discuss what steps they could do to fill in the child care gap.
Indiana Chamber of Commerce President and CEO Vanessa Green Sinders told The Times, “we have heard a lot of concern and impact on these cuts.”
“We’re talking to legislators all the time… we want to keep the state at its most competitive,” she said.
On. Dec. 8, Indiana Sen. Fady Quaddora (D-Indianapolis) drafted a bill that would require the office of the secretary of family and social services to apply for federal assistance to fund the cuts made to child care vouchers and pre-K vouchers.
Quaddora could not be reached for comment.
Quaddora’s bill estimates that in order for the child care voucher funds to be reinstated to what they were before the cuts, Indiana would need between $110 million and $177 million for the 2026 fiscal year budget, and between $477.3 million and $766.8 million for both the 2027 and 2027 fiscal years.