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The Childcare Management Blog

Childcare Funding: COVID-19 Financial Relief Resources

Posted by Jeffrey Thomas on May 20, 2021 1:30:00 PM
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Over half of childcare providers reported losing money by staying open during the pandemic. Just under half reported taking on debt using a personal credit card to pay for supplies and other necessities. 

It’s no wonder that the costs of maintaining a childcare center have increased an average of 47% since the pandemic began, mainly due to enhanced health and safety guideline compliance.

Help is on the way. The American Rescue Plan Act, signed into law in March, makes provisions for childcare providers. It has $39 billion in direct funding for childcare providers through the Childcare and Development Block Program and Headstart. 

Also, there is still funding available from the package released in December of 2020 that adds another $10 billion, creating a total of around $50 billion.

Where Does the Funding Go?

Over half of the money, around $25 billion, funds grants through the childcare stabilization fund for providers. $15 billion is available for emergency funding for those providing childcare for essential workers. 

Congress requires providers who receive funding to provide their clients financial relief if they can, since many families are still struggling to pay tuition.

Meanwhile, Down in Texas…

The Texas Child Care & Development Block Grant received $1.13 billion from the federal Coronavirus Response, Relief, and Stimulus Act. The state provides the funds to both childcare providers who have been part of a subsidy program as well as those who have historically not been in subsidy. 

There are over 14,000 regulated childcare providers in Texas:

  • Licensed childcare centers
  • Licensed childcare homes
  • Registered childcare homes

The Texas Workforce Commission administers the Texas Child Care & Development Block Grant. The TWC has several plans:

  • Develop a grant program.
  • Determine how much money each provider will receive.
  • Develop an online application system.
  • Make technical assistance available for providers applying for funding.

The grant amounts are based on a formula that looks at each provider’s licensed capacity and location. The providers can use the funding for rent or mortgage, payroll, and taxes. The provider, in return, must maintain documentation of how the funding was spent. They may be monitored and asked to provide the paperwork.

If you are a childcare provider in Texas, you don’t need to reach out to TWC. They will reach out to you via email if you are a regulated childcare provider in the state. 

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Childcare.gov’s COVID-19 Resource and Information Page Highlights

ChildCare.gov is a national website devoted to helping families and providers find each other and provides access to numerous resources. The site runs a COVID-19 resource page packed with helpful advice and links to resources across the U.S. and in each state.

ChildCare.gov advises parents to ask childcare providers if the staff has received their vaccinations against COVID-19. If you or your team haven’t been vaccinated, be assured they are free to childcare providers. If you and your employees have struggled to find a vaccination site, the Federal Retail Pharmacy Program furnishes the vaccinations. 

The page starts with some general resources from the federal government at large and the CDC.

For example, you can visit the USA.gov coronavirus website where there are loads of links to vaccination and testing information, information about stimulus checks, and how to avoid scams.

If you are a provider and have yet to be vaccinated, Childcare.gov has a link to a VaccineFinder. Just type in your zip code. You can narrow your request to one of three approved vaccines. 

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Other Resources for Childcare Providers

Taxes

The U.S. Department of Treasury and the Internal Revenue Service have a couple of ways to save on your taxes. 

The Employee Retention Tax Credit expires after the second quarter of 2021 (June 30). The credit, based on your share of the Old Age, Survivors, and Disability Insurance (OASDI) payroll taxes, is shifted to your share of Hospital Insurance (H.I.) taxes after June 30 and is extended through the end of the year.

The American Rescue Plan also extends the paid sick and family leave tax credit through the end of September. It’s voluntary and contains no employee entitlement to paid leave. 

Also, up to $10,200 in unemployment compensation is exempt from federal tax for 2020 income if your income is below $150,000. If you drew unemployment last year, you could get a tax exemption.

The new law extends and modifies the Employee Retention Tax Credit. The credit rate is increased to 70% of qualifying wages, and the per-employee creditable wages are now $10,000 per quarter.

Eligibility for this credit reduces the quarterly gross receipts from a decline of 50% to 20%. 

U.S. Small Business Administration Assistance

The SBA reopened the Paycheck Protection Program (PPP). If your program had 300 or fewer employees and can demonstrate at least a 25% reduction in gross receipts for quarters one through three of 2020, you were eligible to apply.

These loans are “forgivable” and can be used for more types of costs than the first batch of loans.

  • Cover operational expenditures like business software or cloud computing services.
  • Cover supplier costs like expenses pursuant to a contract, order, or purchase order for perishable goods and other items. 
  • Cover worker protections, including expenses incurred while complying with COVID requirements laid out by the CDC. 
  • Expand payroll costs like specific employer-provided group insurance for group life, disability, vision, and dental.

Documentation

As with anything connected with the government, you need to keep scrupulous records of how you received and spent any money from a grant program or loan. 

Federal, state, and local resources are available for most childcare providers in every state. Contact your regulatory agencies and use the resources above to find ways to keep your business humming during the recovery.

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Topics: Billing and Finances, Childcare Management

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