MINNEAPOLIS – Experts warn the country could be on the brink of a child care funding "cliff" next month when COVID-era relief money expires.

The American Rescue Plan, a pandemic aid package, included $40 billion for the child care industry to stay afloat, including Child Care Stabilization Base Grants, or payments to providers mostly so they can pay their workers more and keep them from leaving. But that funding runs dry Sept. 30.

The consequences could be severe: The Century Foundation, a progressive think tank, estimates 70,000 programs nationwide could shutter and three million children could lose their spots. In Minnesota, that translates to nearly 71,000 children and more than 2,700 day care programs expected to close, according to the report. 

An analysis by the Minnesota Department of Human Services found 96% of providers who received the grant funding said the support helped them stay open.

"They did find that both center-based programs as well as individual home providers that got the grants were less likely to close," said Jennifer Valorose, research manager at the Wilder Foundation, a nonprofit in St. Paul. "There is some indication that this infusion of money is helping folks stay open and continue to provide that important care for families."

Chad Dunkley, CEO of New Horizon Academy — the largest child care provider in Minnesota — and president of the Minnesota Child Care Association, added that the state would probably have half the child care providers today compared to pre-pandemic if not for the federal funding.

But he said Minnesota is a bright spot in the national crisis: The state legislature this year approved a similar grant program of their own, where all funding — not at least 70%, like the federal grants — must support higher salaries for educators. Read more.