Charlotte Lewis, the owner of Learning Institute MKE LLC, was on a call with other child care providers when she heard the news: Child Care Counts, a pandemic-era relief program for regulated child care providers, would not be extended further. The state program is set to expire in June. By the time Child Care Counts
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Charlotte Lewis sits in a classroom at her child care center on Milwaukee’s north side. Credit: Valerie Hill[/caption]
The history of Child Care Counts
Child Care Counts launched in March 2020 to distribute federal COVID-19 relief dollars, initially as emergency payments and then as “stabilization” payments, to child care providers. It was previously set to expire in January 2024, but Gov. Tony Evers redirected emergency funding and pandemic response funds to extend the program.
Evers proposed a $340 million investment in his 2023-25 biennial budget to continue supporting child care providers through the CCC program, but the Republican-controlled state Legislature ultimately did not include those funds in the budget.
In his 2025-27 biennial budget, Evers proposed more than $500 million of investments in child care. This included $480 million to continue Child Care Counts. On May 8, the Legislature’s budget-writing Joint Finance Committee eliminated this proposed Child Care Counts funding from the budget bill.
In May 2023, CCC payments were reduced to 50% of their original levels. This funding cut negatively affected most Milwaukee child care providers who responded to the Milwaukee Succeeds survey, called “Still Making Every Dollar Count.”
Hundreds said the reduction impacted operations. Some cited difficulty paying bills, cutting back on activities, supplies and food, reducing hours of operations and raising fees. Nearly 200 providers had to decrease pay for their staff members, cut staff hours or lay people off because of the funding change.
A similar survey of child care providers statewide found that about a quarter of respondents are somewhat or more likely to close after CCC funding expires. More than one-third of respondents said they are “at least somewhat likely to close classrooms or reduce the total number of children served, or reduce available hours of care.” The survey was conducted by the University of Wisconsin-Madison’s Institute for Research on Poverty and the Wisconsin Department of Children and Families, which oversees regulated child care providers.
“The results of this survey are crystal clear: if we don’t make needed investments to support our child care providers and industry, programs will close, waitlists will get even longer, providers will be forced to raise prices, and parents and loved ones who can’t afford for costs to get any higher may have to leave our workforce,” Evers said in an April news release.
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‘Forcing people out of the workforce’
Widespread closures of Milwaukee child care centers would have direct consequences for the workforce and economy, providers and advocates say.
“You stop Child Care Counts, parents won’t have child care centers to keep their children,” Lewis said. “How are they going to work if they don’t have someone to take care of their children? This is a domino effect.”
Early childhood education is a powerful two-generation strategy, said Celata, who has been working to support early childhood education efforts for nearly ten years. He formerly served as deputy director at Milwaukee Succeeds, a position he maintained until June last year.
When adults have access to affordable, quality child care, they can drop off their kids and fully participate in the workforce and economy, Celata said.
“That allows employers to have access to employees that can be there and show up to work more regularly and more fully,” he said. “It can then, as a result, allow households to earn more money. It can allow businesses to grow because they have access to a broader labor force. It helps us when it comes to household income, when it comes to growing our economy today.”
Children benefit from more positive outcomes later in life if they experience quality learning environments during their early years, Celata said. By the time a child begins kindergarten, about 80%-90% of their brain is already developed, so those early years are crucial.
“We know that when children are in high-quality environments in their early years, they are less likely to need special education services,” Celata said. “When they get to K-12, they are more likely to read proficiently by third grade, more likely to complete high school, more likely to go on to post-secondary, more likely to have higher earnings when they become adults. There are all of these academic and long-term financial benefits from making those investments in the early years.”
But there’s already a shortage of child care slots available in Milwaukee. The city needs more than 2,600 additional child care slots in order to meet current demand, according to the Milwaukee Succeeds report. And if 100 providers close their doors, Milwaukee Succeeds predicts that at least 800 child care slots could be lost – only widening the deficit.
“We’ve already seen data showing how many parents, but especially mothers, stepped out of the workforce during the pandemic when they struggled to find child care,” said Kristin Kappelman, director of research at Milwaukee Succeeds.
While labor force participation rates dropped for both men and women at the height of the pandemic, women are returning to the workforce at a lower rate. The cost of child care is a leading obstacle to participation in the workforce, according to the U.S. Chamber of Commerce.
“Here we have another potential issue on the horizon where we might see more parents, more women stepping out of the workforce,” said Kappelman, who worked on the Milwaukee Succeeds survey. “There’s a lot of research that shows the impact that it can have on a person, especially when you think about retirement, where you end up departing, when you leave the workforce, where you end up coming back in, and how many years you have lost in standing and everything else. I think that’s a big issue.”
How are child care providers using CCC funding?
This graph from the Milwaukee Succeeds survey shows the vast majority of respondents are using their CCC funding for classroom supplies, and other essentials.
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Source: Milwaukee Succeeds’ “Still Making Every Dollar Count” survey[/caption]
Making ends meet
Child care providers across Milwaukee and the state have been using relief dollars “for really basic needs,” said Samantha Reynoso, an early childhood education data analyst at Milwaukee Succeeds. Reynoso worked on the organization’s recent report about CCC funding.
“They just really want to give to their community and to their families,” Reynoso said. “They often get second jobs to try to stay afloat so they can stay open to support their families. They don’t charge co-pays sometimes because they know that their families can’t afford it. It’s heartbreaking to hear how they have to stretch themselves so thin and have sacrificed their own economic security to try to support their community because they know that it is such a desperate need.”
Since CCC payments were reduced in May 2023, Lewis has often needed to cover funding gaps with her own salary, she said.
“It stops me from collecting a payment for myself,” Lewis said. “Now I’m basically living off my husband and side things that I do.”
The amount of CCC funding a center receives on a monthly basis can vary based on how many children it serves. Lewis received $1,260 in April 2023 through the relief program – but that dropped to about $600 to $800 per month after the May 2023 reduction.
“This changed the scope so dramatically,” she said.
Her husband, Larry, has also provided financial support for the business, taking away from “what he brings in for our household,” she said.
Lewis said she does not charge additional fees beyond subsidy payments because families cannot afford it. The state Department of Children and Families offers the Wisconsin Shares subsidy program to help eligible parents pay for child care.
The Milwaukee Succeeds survey similarly found other area providers don’t charge co-pays in order to be more competitive, knowing that families struggle to pay out-of-pocket fees. Providers were encouraged to use CCC to reduce fees for families.
Child Care Counts funding helps Lewis cover food costs for children, including for those with allergies or other individual food requirements.
“If I have a child that has special needs and needs specific things, I had to request some of that from parents,” Lewis said. “And some parents are having a rough time themselves, so my husband has to jump in and take away money from his job to help offset some of these.”
Lewis fears that without any CCC funds, it will become even more difficult to make ends meet and keep her doors open.
Imer Lopez Esquivel has been operating her child care program, called Huellitas Celestiales LLC, out of her home on the south side of Milwaukee since early 2024. Child Care Counts has helped her pay rent.
She is also considering closing her doors after that funding expires.
“She’s already struggling now,” said Milwaukee Succeeds early childhood education manager Yimma Davila Castro, who translated Lopez Esquivel’s interview with BizTimes. “The money is basically going right to rent, into bills, and that’s it.”
Anita Ramirez, owner of Anita’s Family Day Care on the south side of Milwaukee, has been in business for over 20 years. While she does not believe she is at risk of closing after CCC funding expires in June, she knows her budgeting will change as a result. Right now, some families want their children to have healthier, organic foods that she may soon not be able to afford.
“Many parents some weeks, some months, don’t have enough to pay the child care, so this decision affects the children, affects the routine, affects my income,” Ramirez said. “It’s bad for
everybody.”
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Imer Lopez Esquivel at her home child care center on Milwaukee’s south side.[/caption]
Paying for staff
Without sufficient income, Lewis said she had to change her employees’ status from full time to part time. She is now the only full-time employee at her center.
“I just had a conversation with one young lady – I had to take her off the schedule because we couldn’t afford it,” Lewis said.
Malaika Early Learning Center, a local nonprofit organization and five-star provider, has been receiving Child Care Counts funding “since day one,” executive director Tamara Johnson said. Malaika operates a center at 125 W. Auer Ave. in Milwaukee and opened its new site at ThriveOn King this year. The organization serves about 150 children.
The majority of Malaika’s relief dollars have supported staff pay and bonuses. When that funding expires, Malaika will have to get creative to retain staff, Johnson said.
“I think that is going to be an issue that not just Malaika will have, but many centers across the city,” Johnson said.
For-profit child care programs do not have the same access to grants and other funding opportunities, and this inherently presents an obstacle for many, said Ashley Harrell, site director of Malaika Early Learning Center’s ThriveOn King location.
“They’re only able to sustain their program using Wisconsin Shares in addition to Child Care Counts,” Harrell said. “That puts them in a situation where they’re stuck unless someone just drops a pot of money off for them. I know providers I have worked with where they own a child care program and they’re working another job just to stay afloat and to pay their bills and to pay their staff.”
Providing infant and toddler care can also be more expensive than care for older children due to the staff ratio requirements. For example, if a staff member is caring for children age 2 or younger, they can only have four children in their care at a time, according to a DCF worksheet.
“Once they get to 3 and 4 years old, you can increase those ratios a little bit,” said Celata. “So the unit cost for each child is a little bit lower. But when we have more 4-year-olds in half-day kindergarten or full-day kindergarten, that then shifts the financial model for child care providers, further increasing the average cost of care for each child.”
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Tamara Johnson[/caption]
Fragility in the child care landscape
Due to a myriad of variables, such as inflationary pressures and a greater demand for child care amid a shortage of slots, Milwaukee’s child care landscape is “fragile,” Celata said. An absence of CCC funding would only worsen the difficult realities many providers and families have already been facing.
“The variables that have been putting pressure on this sector have been in place for a while, and both providers and parents have been doing everything that they can to make the situation work because, financially, parents have to work and providers, at the end of the day, have to pay their bills,” Celata said.
The cycle of closings and openings in the sector have created instability for parents at a time when there is a shortage of slots, he said. Another obstacle is the affordability challenge of child care.
In Milwaukee, child care can cost more than $18,000 per year for one infant, which is more than 36% of the city’s median household income. It’s “completely unaffordable” for families with low incomes, and also hedges out middle class families, Reynoso said.
But there’s also a greater demand today for regulated child care.
“In the past, more families were in a position to have at least one adult be able to dedicate time when their children were young to provide that care at home,” Celata said. “That’s not a reality in today’s economy, and there is a necessity for families to have both parents or caregivers working at least part of the time just to be able to get by.”
Without enough slots available, the demand for child care “creates a scarcity that can then further exacerbate the challenges the sector faces,” Celata said.
For providers, it can be a struggle to cover the costs of providing care. Paying for insurance, rent, or other operating costs can be difficult to manage. Inflation has only made those variables worse.
Child care has essentially become more expensive for both families and providers, so the sector can’t sustain its current business model, Celata said.
“The inflationary pressures that we’ve seen over the last few years have dramatically accelerated this breaking of the business model,” Celata said.
Competition with other sectors has also posed staffing challenges for child care providers. Many early childhood educators hold post-secondary degrees but often make between $7.25 to $13 an hour, depending on the provider. On the other hand, companies like Amazon, Costco, Kwik Trip and Target offer significantly higher wages with access to benefits.
“That is going to drain the (early childhood education) workforce, because all of a sudden, financially, they’re better off working in a different sector,” Celata said.
Johnson, who joined Malaika Early Learning Center in 2012, said she’s concerned about child care’s “backwards business model.” Though the early years of a child’s life are an important period of brain development, ECE is not funded the same way as the K-12 system.
“If you are expecting kids to just do well, starting in the K-12 system, they have had five years of life before K-12, before they started kindergarten,” Johnson said. “We put the least amount of money in the care for infants and in an ideal world, that’s where we should be putting most of our money.”
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A need for public funding
In order to address the looming absence of Child Care Counts payments, Wisconsin has to come up with some creative solutions, Celata said.
“Child care should no longer be treated as a small business, but instead a public good and invested as such,” the Milwaukee Succeeds report stated.
This means child care could be treated as part of the education system with similar public investment, Kappelman said.
“Whether that’s grabbing models that have been done in other parts of the country, where it’s more of a collaboration between the school system and child care providers to ensure a more streamlined approach from early childhood into the K-12 system,” Kappelman said. “But there needs to be something. The big issue is it’s a small business right now, and it’s just not sustainable.”
Kappelman pointed to Boston as a possible model for greater collaboration between early childhood and the K-12 system. The Boston Public Schools Department of Early Childhood developed curricula and instructional support for children in pre-kindergarten (includes 3 and 4-year-olds) through second grade.
Wisconsin may also be able to look to states such as Kentucky, New Mexico and Vermont, Reynoso said. Each has taken steps toward public investment in early childhood education. New Mexico directs a portion of state land trust revenue to early childhood education and offers child care assistance to families earning up to 400% of the federal poverty level.
“Parents alone can’t maintain this burden any further, and providers need help because they have been struggling for far too long,” Celata said.
