Temporary halt in childcare subsidy program in Arizona

A childcare subsidy cliff is creating a problem for many in Arizona. For the first time in five years, the state has temporarily stopped accepting kids into a subsidy program widely used in low-income areas. As a result, child care centers, particularly those in lower-income neighborhoods, are starting to empty, even as the waitlist for their services grows.

The cliff does not appear to be affecting those in higher income areas as they do not necessarily need the financial assistance. In some zip codes, it’s common for the government funding to support up to 80% or 90% of a daycare’s children.

The Department of Economic Security (DES) acknowledges there is a backlog; the subsidy backlog only affects new applicants. During the pandemic, subsidies were in place as part of the COVID recovery plan, but without those subsidies, many parents and childcare centers cannot afford the cost of care.

Kyrstyn Paulat, Director of Early Learning and Education at Children’s Action Alliance, joined us to discuss the topic.

“Childcare is just not affordable for families. When we’re talking about what this expense means, infant-based care right now is upwards $14 to $15,000 a year,” Paulat said.

Last year, the CAA asked for $100 million in funding from the state, and that money became part of the governor’s budget. After budget negotiations, the program was given $12 million. That is the reason DES has re-instated the waitlist.

“It’s [the waitlist] for families that are currently not receiving the child care subsidy, but when we talk about the families that even qualify for this, they have to 165% or less of the federal poverty line,” Paulat said.

In Arizona, childcare facilities are not able to run their business to its fullest extent, and there is a “reduction of quality first scholarships that also helps alleviate some of those costs,” Paulat said.

This year, the CAA has asked for $112 million and it is in the governor’s budget. Paulat said that would cover half of the DES waitlist.