California budget deficit could delay new child care funding

Every weekday, Patricia Moran has up to a dozen children in her San Jose home day care center, mostly from low-income families — and sometimes the kids are as young as 2 weeks old because their parents can't afford to take more time off from work.

In between helping the children make bubbles, serving them meals at a big table with small chairs and teaching them “Twinkle Twinkle Little Star” in English and Spanish, Moran said she is fielding phone calls from other parents — sometimes up to four per day — who are desperate to find care for their young children.

That's why Moran was surprised when Democratic Gov. Gavin Newsom, who is just starting his second term in office, proposed to delay funding for 20,000 additional slots for subsidized child care for low-income families in order to help balance the state budget.

Even more perplexing was Newsom's reasoning for the delay: The child care spots that were already funded were not yet being used.

“They need (these vouchers) right away,” Moran said. “The parents, they have to go to work."

It's true that there's plenty of demand for subsidized child care, and it's also true that much of the funding California has already allocated has not been used — a paradox that reflects the state's roller coaster revenues and the strange funding decisions that arise.

For the past four years, the state has had so much money that it couldn't spend it fast enough. With record-breaking surpluses aided by billions of dollars in federal pandemic aid, Newsom and state lawmakers paid for 146,000 new child care slots for low-income families. That's so many new slots — more than double what had been previously available — that state officials couldn't fill them fast enough.

State-funded child care workers must be licensed by the state, a process that requires background checks and inspections to ensure that day care centers — some of which are in homes — are safe and secure. It can take up to a year to go through the whole process.

Once the administrative hurdles are out of the way, enrolling families can take more time. Farooq Azhar, executive director of BJ Jordan Child Care Programs in Sacramento, said there are 4,700 families on his waiting list. When it's time for enrollment, some families don't respond, some don't follow through and others just “take a long time to complete the required paperwork,” he said.

Now, with state revenues falling as the stock market slows, California has an estimated $22.5 billion deficit. Determined not to dip into the reserves, Newsom scoured the state's massive bureaucracy looking for savings. Delaying funding for the 20,000 new child care slots will save $134 million.

Even though it's a relatively small sum, it could have big consequences. The delay puts Newsom at odds with the state’s newly unionized child care workforce just months before their first contract is set to expire. And it has upset the Legislative Women’s Caucus, who, after gains in the November elections, now make up nearly half of the Legislature. Their support will be key to advancing Newsom’s agenda during his second term.

“We want to make sure child care (continues) to be a priority,” said Assemblymember Cecilia Aguiar-Curry, a Democrat from Winters who is vice chair of the California Legislative Women's Caucus. “Women want to get back into the workforce. We need them to help bolster the economy.”

The California Department of Finance, the agency responsible for crafting Newsom's budget, said that the administration “remains committed to expanding access to child care that's consistent with the budget agreements,” according to agency spokesman H.D. Palmer.

The Legislative Analyst's Office, the nonpartisan agency that advises the Legislature on budget decisions, said Newsom's plan “seems reasonable.”

“Overall, we do not expect access to child care to be significantly impacted given the amount of currently unfilled slots,” the LAO said.

Child care providers say the bigger problem is that there aren't enough workers available to fill the slots. California lost one-third of its child care jobs in the first two months of the pandemic, compared to the state's overall loss of 15% of jobs, according to the Public Policy Institute of California. While lots of those jobs have come back, the child care industry is still below pre-pandemic levels.

The subsidized slots only pay about 75% of what child care workers should be earning on the open market, making it tough to recruit new workers, advocates said. Almost all of California’s child care workers are women, and most of them are women of color, said Lea Austin, executive director of the Center for the Study of Child Care Employment at the University of California, Berkeley.

Many child care workers have said that they are often paid less than minimum wage after expenses.

“People have other options,” Austin told lawmakers during a public hearing earlier this month. “When we look at the wages ... the pandemic really was just kind of the breaking point for many.”

Moran said that she sometimes takes home $3,000 each month after expenses — which include paying for supplies, two assistants, insurance and utility bills. She has to keep her heater and air conditioning running more than a typical home to keep the children comfortable. Her gas bill in January was $600, she said.

Many times Moran has thought about closing her day care, but she's never been able to do it. She has a bachelor's degree in child development, and she sees her job as preparing these children for life, including training them to interact with others with empathy — something she said requires “all of my heart, my mind.”

But it's the phone calls from parents that change her mind.

“I'm thinking, 'My god, what is going to happen if I close mine too?” she asked.