ST. PAUL — A $550 million boost from the federal government reinvigorated Capitol conversations about how lawmakers could help child care providers around the state.

And now, lawmakers say it could give them a unique opportunity to jumpstart the industry and start making longer-term adjustments. But Republicans and Democrats in the divided Statehouse will have to reach an agreement about what that looks like.

With federal money set to come in just once, some said the aid dollars could resurrect shuttered day care centers and sow new ones around Minnesota. Others worried that the infusion could pull away legislators' focus from broader discussions about transforming the state's child care infrastructure.

Across Minnesota, parents have struggled to find child care options as home-based care providers have left the market. And COVID-19 made the problem even worse, according to data from the Rural Policy and Development Center.

Between 2000 and 2020, the state saw a 50% drop in licensed family child care providers, representing a 47% decrease in capacity among all family-based providers. Small upticks in new center-based care options have helped dull the blow but around Greater Minnesota, child care deserts have emerged as family providers closed their doors over the last two decades.

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More than 20,000 child care slots disappeared with the closures, according to the Center, but the demand for day care around the state has grown. With few options, parents fill waiting lists at remaining providers around the state, and in many Greater Minnesota communities, put in hourlong commutes or patch together care arrangements with family members or friends.

“There was a huge shortage before COVID and now it's rampant," Chris Cortez, director of the Loving Arms Child Care Center in Willmar, told Forum News Service. Cortez said she gets three or four calls a day about availability.

State lawmakers said they hoped to address the shortage of providers in Minnesota and use the federal American Rescue Plan funding to help them hang on. And in the next two months, members of the divided Legislature will have to strike a deal on how to help providers and encourage new ones to set up shop in the state.

$550 million for Minnesota child care

It took almost a year, but U.S. Sen. Tina Smith said she was glad to see her provision to provide a $40 billion boost to child care providers around the country under the American Rescue Plan. The DFL senator had conversations with day care providers around the state before COVID-19 took hold and they said they'd struggled to stay afloat financially.

Tina Smith
Tina Smith

The pandemic made that even tougher as some parents pulled their children out of child care settings and providers had to secure personal protective equipment and manage risks around COVID-19 exposure for themselves and for the children they cared for.

"There's just sort of palpable sense of relief and knowing that this help is on its way and this just makes it all worthwhile," Smith told Forum News Service. "I believe that what we're doing right now is stabilizing the child care system so that we know that people can kind of hang in there ... This will help to jumpstart this discussion because what is happening here is that people are starting to realize that they can't take this child care system for granted.”

Minnesota is set to receive almost $550 million in child care funding through federal legislation and the Walz administration and lawmakers were still assessing last week how that funding could be distributed. Even though the details weren't completely clear, lawmakers jumped at the opportunity to put more money toward child care access.

A big infusion or a big distraction?

Lawmakers and industry experts said the $550 million boost from the federal American Rescue Plan could provide a needed jumpstart for providers that had been struggling to make ends meet. But they split on the best way to spend it and on additional phases of support needed to sustain the industry and help new providers get up and running.

"It's good that we have that opportunity," said Scott McMahon, executive director of the Greater Minnesota Partnership. "But one of the concerns I have is, does that large infusion of federal money distract from the underlying conversation that needs to happen within the state about where do we go today so that tomorrow is different?"

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Greater Minnesota communities for years have asked lawmakers for support in getting new providers up and running. And while the Legislature took a step in that direction last year by creating a grant program for those looking to start new day care centers, they didn't put any money in the account.

"So we want to see some funding go into that program because we know one of the biggest challenges that we have in expanding child care is access to capital," McMahon said.

Greater Minnesota Partnership and the Minnesota Chamber of Commerce have also called for getting additional grant funding out to providers to help them hang on through the end of the pandemic.

“There’s a longer-term problem that needs to be sorted out there and we’re working on it, but in the immediate term, they need funding to keep their doors open,” Laura Bordelon, the chamber's senior vice president for advocacy, said earlier this year.

The state has put up grant funds for providers over the last several months and the federal government freed up loans to help keep employees on the payroll even if day care centers were running at limited capacity. But it has still been difficult for child care centers to weather the ever-changing landscape, directors said.

"It’s been like being on a roller coaster and a merry-go-round basically at the same time," Cortez, of Willmar-based Loving Arms, said. "On top of loving, caring and keeping your child safe from COVID, we now have all the added stresses of making sure we don’t spread a pandemic."

Home-based care providers faced especially difficult choices as they decided whether they could stay open despite possible health risks to themselves and their families. And 345 licensed home-based providers dropped out of the industry for various reasons, between the end of 2019 and end of 2020, according to the Center for Rural Policy and Development. Those departures slashed capacity by more than 1,500 slots.

House Democrats have put forward a slate of proposals that would create a new department of early childhood education, set a cap on day care tuition adjusted according to a family's income, increase provider salaries and put in place a 10-year study to evaluate and overhaul the state's child care system.

“This is an area that has been underfunded for so so long so there’s going to be a lot that we need to do,” Rep. Dave Pinto, D-St. Paul, said. Pinto chairs the House Early Childhood Finance and Policy Committee. "The new federal government rescue plan and the funding that's come with it, it's wonderful. And we need to recognize that there remain and will remain really big needs."

As part of early plans for the state's next budget, DFL lawmakers planned for an additional $50 million in state funds to be targeted to child care programs. They've also proposed Greater Minnesota child care grants, which have gained bipartisan support.


Sen. Carla Nelson, R-Rochester, said $524 million of the federal funds should be used to "help stimulate the retention and growth of quality early learning programs in child care deserts" and provide roughly 35,000 early learning scholarships to low-income families.

“We have fiscal limitations that have not allowed us to fully fund those high-quality early learning scholarships,” Nelson said. “We must take advantage of this unique opportunity to make an investment in our youngest children, their parents and child care providers that will grow our economy for this generation and the next."

Senate Republicans have said they hope the one-time federal funds can making a meaningful dent in addressing the state's child care crisis.

“It’s $525 million, it’s a large amount of money injected into child care over the next two years but I would like to have something to show for it when the money stops coming,” Senate Human Services Reform Finance and Policy Committee Chair Jim Abeler, R-Anoka, said. “The Senate will not have additional money in child care, this will be a lot. And if we invest it well, we can have a lot to show for it.”

Follow Dana Ferguson on Twitter @bydanaferguson, call 651-290-0707 or email