MINNEAPOLIS (WCCO) — Minnesota’s child care capacity can only meet about three-quarters of demand, a new report details, which could impede the state’s economic recovery if the child care crisis doesn’t change.

By the end of 2020 there were about 223,000 child care spaces across Minnesota, according to a new report from the Center for Rural Policy and Development. But there’s a need for more than 312,000 spots, leaving a 30% gap between supply and demand.

Marnie Werner, who authored the report, said parents are becoming desperate as a result.

“It’s gotten to that point now where availability of childcare is determining whether couples will get pregnant or not,” she said.

The report shows rural parts of the state are hit the hardest. Licensed family care providers are most prevalent in less densely-populated areas — the “foundation” of child care in Greater Minnesota, the report says — and they’ve been shrinking for decades, decreasing by 47% since 2000.

Minnesota lost an additional 4,092 in-home daycare spots in 2020 alone. The decline is partly because these child care workers aren’t paid enough to stay afloat, and the pandemic drove many parents to take their kids out of daycare for virus fears or because they lost their jobs.

This poses challenges to Minnesota’s economic recovery, but if resolved could position a unique opportunity for growth in Greater Minnesota, which has had long-standing needs to fill jobs.

“We’re just hearing increasing stories from employers saying that they have finally found someone to fill some of these jobs that they had sitting vacant for many years,” Werner said. “And the person will get there with their family and they’ll take the job and then they discover there’s no childcare in town. And they just say, ‘Sorry we can’t stick around.’”

(credit: CBS)

Affordable housing and child care are two of the biggest barriers to economic development, Werner noted. So if Minnesota can work to fix its child care gaps in rural parts of the state, that would help unleash more opportunity.

“It’s going to take government and businesses and early childhood education — the world and government at all levels — to sit and figure out what’s going to work in particular locations because a lot of these things solutions, you can put in some fixes at the top, but then you need fixes at the grassroots level, too,” Werner said.

But it won’t be an easy fix on an issue that’s persisted for decades. The report details more short-term and long-term needs, and Werner likened the need to the scope and scale of a Marshall Plan, requiring a significant amount of money and great political will.

Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, echoed the importance of child care for a post-COVID recovery in a meeting with state lawmakers last month. He said “wartime” spending was needed at the federal level to help.

“There simply aren’t any silver bullets that can be done quickly. It’s just a complicated issue,” she said. “But I think we do need to start looking at it from a different perspective and really stop nibbling around the edges of it.”

Millions in child care help could be coming from federal virus relief package

Chad Dunkley, CEO of New Horizon Academy, the largest child care provider in the state with 73 child care centers, suggests Minnesota expand child care assistance to families and boost reimbursement rates to providers — revenue from child care subsidies for low-income people — to help assuage the swelling crisis. Such rates stayed about the same or decreased over 14 years before a significant boost in 2020.

“Parents can’t afford to pay more, providers must make more or they have to leave the industry, and so Minnesota should be doing more,” he said.

In Minnesota, there are a slate of bills that tackle child care and early childhood education moving at the state capitol this year, including proposals that would create grants for providers and issue bonds for development of child care facilities, according to a bill tracker from a nonprofit group.

He also praised what he called a “one-in-a-generation” opportunity for child care aid in the COVID-19 relief bill passed by the U.S. House of Representatives last week that could get a vote in the Senate this week. It expands child tax credits and provides billions in funds for providers and child care assistance for families. Together with child care relief in the December stimulus package, the total aid would be $50 billion.

“I really believe that people the leaders in Washington have heard childcare is an issue not just in Greater Minnesota, but all around this country,” Dunkley said. “This pandemic may actually get us to once and for all help solve this problem by providing more financial support to families with young children.”

Caroline Cummings