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San Diego Facing A Child Care Crisis As Pandemic Decimates Finances Of Providers

Miles and Emilia Lum play in the backyard at home in San Diego in this undate...

Credit: Randy Lum

Above: Miles and Emilia Lum play in the backyard at home in San Diego in this undated photo.

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KPBS surveyed 10 owners of preschools throughout the county and all said they are losing money each month they stay open. This is dire news for the economy in a county that already had a shortage of daycares.

Aired: July 20, 2020 | Transcript

Randy Lum was eagerly awaiting the opening of his son’s preschool at the beginning of July.

Ever since the March shutdown he and his wife, Abigail, had been engaged in the unenviable balancing act of working from home while caring for three-year-old Miles and his younger sister, Emilia. However, they felt they couldn't balance any longer, so Miles had to go back to preschool.

"But the closer it got, they said they were going to reopen, but then we were a couple days away and didn't hear anything," Lum said.

Then the email arrived. It had a short statement saying the school wouldn't be able to open as expected in July. They were told to check back in September.

Lum’s predicament could become reality for many parents. KPBS in recent weeks has talked to 10 different childcare operators throughout San Diego County and all said their businesses have been decimated during the pandemic, even those that stayed open continuously. Seven said they are in danger of going out of business permanently.

RELATED: As Day Cares Reopen, Parents Face Difficult Decisions

The county had a significant shortage of childcare spots before the pandemic. Now, many are worried that a full-blown childcare crisis is unfolding that could sink a local economy already depressed by the coronavirus.

Photo credit: Holly Weber

Holly Weber talks to a student at Magic Hours Preschool in this undated photo.

Elected leaders are sounding alarms and calling for millions in relief funds for the industry. But it is far from certain at this point whether a national or local bailout package will be enough and if it will come in time. If there is any solace to be taken locally, it’s that the situation here is also playing out nationwide.

"The current moment looks bad, but the long term looks dire," said Alicia Sasser Modestino, an associate professor in economics at Northeastern University. She recently conducted a survey of 2,500 working parents about their childcare during the pandemic and plans to publish the results soon.

Even though schools closed in March and districts are now delaying reopening in the fall, some daycares and preschools have stayed open throughout the pandemic. But social distancing requirements caused class sizes to be cut in half. Also, groups had to remain stable, with no mixing of teachers and students.

From a public health perspective, the restrictions have proved successful. While there have been significant local outbreaks traced back to nursing homes, bars and restaurants, so far only one has originated from a childcare center, according to county data.

Photo credit: Ryan and Amy Jellison

Children play at Magic Hours Preschool in Mira Mesa in this undated photo.

But, owners said, they’ve had drastic impacts on their bottom lines.

"My hourly wages and salaries for staff, my rent, any operating expenses are made to sustain full time enrollment," said Holly Weber, the owner of Magic Hours Preschool in Mira Mesa. "Now I'm at a third income, but my operating expenses haven't changed, my salaries and expenses are the same, so I'm at a two-thirds deficit."

Sally Chenoweth, the owner of Discovery Preschools, Inc., in Oceanside, said the new reality means childcare centers are full without really being full.

"Right now, based on the restrictions for how many kids we can have in the building, we're bringing in about 60% of what we normally do but our costs exceed that,” Chenoweth said.

Billions Needed

Because daycares and preschools operate under very slim margins, these restrictions, along with short-term closures, are difficult to recover from, Sasser Modestino said. Economists are now estimating that $50 billion will need to be spent nationwide to support and sustain the childcare industry over the next six months.

"So there's something to come back to when we need it," she said.

If half of the country's daycares and preschools go out of business, 450,000 childcare slots could be lost, she said. This is particularly sobering given that before the pandemic, there were potentially twice as many children in San Diego County who needed care as available spots.

In her survey, Sasser Modestino found that 13% of working parents reported losing a job or reducing hours as a direct result of a lack of childcare. And, she said, 60% of those who lost a job were women, and the reduction in work hours disproportionately impacted women without a college degree, or who were lower income, or who were Black or Hispanic.

"All parents are dealing with a paradox," Sasser Modestino said. "If they are working from home, they are grateful to have a job and have that flexibility, but at the same time they are drowning in how hard this is to juggle."

So far, San Diego County has spent $5 million on vouchers for essential workers, but that money does not help schools stay open, said Chenoweth, the owner of Discovery Preschools.

"All that does is replace what a parent would have already paid us, so it doesn't give us any extra money," she said.

Instead, the county is now looking to spend an extra $25 million in federal CARES funds on grants for existing schools to help them make up some of the loss. County staff are currently working on a proposal, including how big the grants will be and how schools can apply, and will present it to the Board of Supervisors for approval on August 4.

Photo credit: Children's Growing Center

Children play at Children's Growing Center in Mission Valley in this undated photo.

More than 600 childcare centers in San Diego County closed temporarily during the early days of the pandemic, said County Supervisor Nathan Fletcher.

"Many of them are going to need significant help in accommodating the changes in the number of kids, in accommodating the changes in the safety protocols and procedures," he said at a July 7 supervisors meeting. "So if our staff could come up with a holistic plan, a regional plan that could strategically help this industry get up and running in a safe and responsible way, that would be appropriate."

The state and county have also begun to loosen restrictions on how childcare centers operate. Previously, the county and state rules on class sizes clashed, creating confusion and miscommunication that frustrated providers.

RELATED: San Diego Day Cares Set To Reopen Despite Confusing Rules

In mid-June, the county changed its public health order to say that childcare providers should refer to the state for guidance, and then the state changed its rules into guidelines. Now, the state says only that "children should remain in groups as small as possible" and "it is important to keep the same children and teacher or staff with each group...to the greatest extent possible."

Several of the owners surveyed by KPBS said the loosening of the rules mean they will increase their class sizes to 12 and have a "floater" teacher who goes between groups when necessary to give other teachers breaks—a requirement under labor laws.

Chenoweth, the owner of Discovery Preschools, Inc., said those changes would help, but still would not bring her business's balance book back into the black.

She and other preschool owners who spoke to KPBS also said that raising tuition fees would not solve their financial problems because there is only so much parents can afford to pay.

"We'd all have to double our rates, and that's not going to work," she said.

Lum, who is still looking for a preschool for his son, said he could stomach a small tuition increase.

"The dentist now has a $20 PPE upcharge, and if people want to be properly guarded, they have to pay that fee," he said. "The teacher to student ratio is more challenging, and with more challenges comes more expense."

But there would be a limit.

"If it went above $1,500 a month, we're not going to be able to do it," he said.

Listen to this story by Claire Trageser.

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Photo of Claire Trageser

Claire Trageser
Investigative Reporter

opening quote marksclosing quote marksAs a member of the KPBS investigative team, my job is to hold the powerful in San Diego County accountable. I've done in-depth investigations on political campaigns, police officer misconduct and neighborhood quality of life issues.

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