Minnesota child care providers face staffing shortages and rising costs

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New Horizon Academy, Minnesota’s largest daycare center, has dozens of empty classrooms and hundreds of families waiting for a spot in one.

The missing link: teachers and assistants.

New Horizon is looking for 500 of them to work at its 70 child care centers across the state.

“If we could find teachers, we would reopen those classrooms,” said Chad Dunkley, chief executive of the Plymouth-based company. “I’ve never seen him so difficult.”

With soaring costs and frequent quarantines of COVID-19 cases, the pressures on Minnesota’s child care industry are greater now in many ways than when the pandemic began.

At first, the state was quick to provide grants so providers could keep lights on for first responder families while other families kept children at home in confinement. Aid continues to flow, mostly federal funds, but the grant formula was changed last fall to be based on the number of employees at a child care company.

This means monthly subsidies as low as $420 for family claimants, who previously received $1,200.

“That’s not even enough to cover a week of losses” from quarantines, said Hollee Saville, president of the Minnesota Association of Child Care Professionals, which represents child care companies in residence.

Adhering to public health guidelines has added complexity and cost. Until this month, state officials required providers to impose quarantines on children who had been exposed to someone who contracted COVID-19.

As costs rise and benefits evaporate, some providers have been forced to raise tuition prices to levels typically ranging from around $150 to $350 per week per child. Others are closing their doors.

Even before the pandemic, Minnesota was experiencing a decline in the number of child care providers and a shift in their size.

Since 2010, the number of Minnesotans ages 5 and younger has dropped about half a percent, according to census data. But the number of child care providers has declined by about 37%, according to data from the Minnesota Department of Human Services. Capacity, or the number of childcare slots, fell by around 5% during this period as more centers that could accommodate more children opened and took over some of the slack.

Outside of the Twin Cities, where daycare was harder to find even before the pandemic, the problems are even more acute.

The Stay ‘n Play childcare centre, with locations in Willmar and Litchfield, has operated at a loss for several months over the past two years. “There have been times when, as owners, we haven’t been paid just to make ends meet,” said Kristin Jaquith, CFO and Director.

Many providers don’t charge — or at least not charge full — when a child needs to stay home to self-quarantine.

“If we have a closed classroom, it’s a huge, huge financial hardship for the company,” Jaquith said. “Our rent and mortgage aren’t going away. Utilities aren’t going away. Our fixed costs aren’t changing.”

For companies already in difficulty, the pressure increases when it is the teachers themselves who are sick. Jaquith closed the Litchfield center for a few days last month when seven of her teachers were discharged with COVID-19. This meant families of 120 children had to scramble to find alternate arrangements at the last minute.

Minnesota’s child care industry is dominated by home-based businesses, which make up nearly four out of five of the state’s 8,500 providers. They are the ones leaving the industry at a rapid rate. “We’re losing almost two a day,” Saville said.

Beth Jackson closed her home childcare business in July and took the leap into real estate. She opened a child care program in St. Paul in 2003 after having her third child. It was a great way for her to work from home and spend time with her youngest.

The work has always been difficult, but it has become exhausting with the pandemic, she said.

“Child care is a really, really difficult and interesting industry,” she said. “You have to have tenacity. And work 10 hour days. I’ve never taken five days off in 18 years, and now I’m in this industry where everyone’s like, ‘Take a day off by week and seven -day vacation once per term.’ And I’m like, ‘What?'”

Some vendors who survived the pandemic are now raising prices to meet rising costs.

At Tierra Encantada, which has several Twin Cities locations, family rates are up 8% this year, compared to 2% in most other years.

“And that doesn’t even cover the staff [wage] going up,” said CEO Kristen Denzer. “A lot of things are more expensive now.”

She listed some examples in a letter she wrote to the families. A case of toilet paper purchased by the center cost $41.20 a year ago. Now it’s $51.20. And the bulk macaroni and cheese he uses is down to $21.45 from $14.59 a year ago.

New Horizon Academy raised tuition in October by 6.5%, the largest increase in more than a decade and more than double its usual rate increase. Dunkley said it allowed him to increase wages by 8%, not to mention an additional $2 an hour bonus he gives employees through state subsidies.

A month earlier, it shifted most of its marketing dollars from recruiting families to recruiting workers. He added recruiters and began running television and radio ads.

“It’s expensive, but we’re getting more applicants because of it,” said Dunkley, who added that hiring increased enough in December and January that some classrooms could be reopened.

Still, if New Horizon had enough staff, it would have room for at least 700 more children — and has that many on its waiting lists across the state.

Providers would like to raise salaries even more if they could, said Maria Snider, director of the Rainbow Child Development Center in St. Paul.

“But it’s a crazy situation,” she said. “Families can’t afford to pay more.”

She uses her state grants to raise wages by an additional $3 an hour. But she still hasn’t had many bites on the job postings she posted last fall.

“As the director of a small center, we don’t have … a human resources department,” she said. “We don’t even have a cook right now, so half the time I’m the cook. And if someone’s sick, I’m the sub.”

Writer Dee DePass contributed to this report.

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