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Dionne Miller, who runs Room to Bloom Learning Academy, a child care program in Indianapolis, has been faced with some impossible choices over the past year. 

In December, Indiana鈥檚 Family and Social Services Administration that, due to the end of pandemic-era federal relief funding, it would stop enrolling new children in its main child care subsidy program, the Child Care and Development Fund (CCDF), and institute a waiting list. The number of child care vouchers available per month dropped by from last December to September, according to the state agency. The waitlist now has over 30,400 children and the state has it won鈥檛 issue any new vouchers until 2027. 

Miller鈥檚 program is one of many that鈥檚 feeling the strain. All of the families with infants at Room to Bloom rely on subsidies to afford care, but those infants have aged out and moved into toddler classrooms. Because families can鈥檛 enroll new babies, she鈥檚 had to completely shutter her infant classroom. That took a big toll on her financially. 鈥淵our highest rates of pay comes from your infants,鈥� she said. 鈥淲e no longer have that stream of income coming in.鈥�

Then, on Sept. 4, Miller received an from Indiana鈥檚 Family and Social Services Administration鈥檚 Office of Early Childhood and Out-of-School Learning (OECOSL) with even worse news. The department was drastically cutting CCDF voucher reimbursement rates. 鈥淭hese adjustments address a $225 million funding gap through 2026 created by the prior administration’s unsustainable use of temporary COVID relief funds and ensure continued compliance with federal requirements,鈥� the email stated.  

According to the email, providers would see a 10% decrease in the vouchers that pay for infants and toddlers from birth through 3 years old, 15% less for children ages 3 to 5, and a 35% drop for school-aged children cared for after school and during the summer. To arrive at these cuts, OECOSL said it had surveyed 25% of licensed providers and calculated reimbursement levels 鈥渢hat reflect current operating realities.鈥�

鈥淲e did not have any warning whatsoever鈥� that the reductions were coming, Miller said. 鈥淲e were blindsided.鈥� Since Miller鈥檚 program serves children from birth through age 5 during the day and provides after-school care for older children, she knew she鈥檇 be impacted by cuts across all the age bands, so she reworked her budget to be able to absorb the cuts without having to ask her families to pay any extra. She eliminated field trips and programming like baby sign language and STEM.

But about three weeks later when she went into the system to view her reimbursements, she discovered that the state had cut deeper than the email suggested. She found that her original rate of $155 a week for a school-aged child was not in fact being reduced to $100.75, which would have been a 35% cut. Instead, she received $49 per school-aged child, which is about a 68% drop. At first she thought it was a mistake, but then she made some calls and eventually was told that the percentage cuts were taken from a new, lower base rate. 

That $49 a week is supposed to cover everything Room to Bloom offers school-aged children: transportation from school, a teacher who offers homework help, an established curriculum. She said her reimbursement rate for children ages 3 through 5, meanwhile, has also been reduced by $68 dollars a week, while the rate for the youngest kids decreased by $14. Miller can鈥檛 afford to absorb that kind of cost on her own. She鈥檚 reduced staff hours, dropping some to part-time status, which may make it harder to retain quality employees. 

Even that is not enough. 鈥淯nfortunately now we have to ask our families to pay a CCDF shortage just so we can stay afloat,鈥� she said. She鈥檚 not asking any parents to pay the full amount that she鈥檚 losing, but she鈥檚 asked most to kick in something. Those with school-aged children have been asked to pay $51 a week. 鈥淚 will tell you, that鈥檚 hard,鈥� she said, adding that before the cuts, parents didn鈥檛 pay at all. Some families simply don鈥檛 have that kind of money. For them, she鈥檚 just eating the cost. 鈥淲e have to take care of them,鈥� she said. 鈥淚 cannot allow these students to be left hanging. I cannot do it.鈥� 

Miller is far from alone in her experience. The cuts Indiana has implemented in its child care program since the end of last year are wreaking havoc on providers across the state. The state did not respond to a request for comment on the number of child care programs that have closed this year. According to Hanan Osman 鈥� executive director of the Indiana Association for the Education of Young Children (AEYC), which is gathering data on closures 鈥� more than 100 child care programs closed in September and October following the steep reimbursement rate cuts. Of those closures, 49 were due to economic hardship, while 16 were because of low enrollment. 鈥淭hose programs are done forever,鈥� Osman said. 

The decrease in vouchers means that collectively, providers are losing an estimated $1.9 million a week in revenue, while the reduced reimbursement rates have led to an estimated $1.8 million weekly loss, according to Early Learning Indiana, a state-level nonprofit that鈥檚 on the impact of the CCDF cuts on revenue.

More child care closures are expected to come. In an of 443 providers conducted by Early Learning Indiana, nearly 80% said they were receiving decreased funding from CCDF vouchers. Just 16% said they were fully enrolled, about 19% had closed at least one classroom, and 11% said they believe they will have to close entirely over the next year.

Indiana is not expected to be the only state to experience this crisis. All states have been grappling with a severe decline in federal funding. In 2022, the American Rescue Plan sent states $39 billion to prop up the struggling child care sector, but the grants stopped flowing at the end of 2023. The Biden administration鈥檚 鈥淏uild Back Better鈥� legislative package, which included $100 billion for child care, was meant to ensure continued funding, but when it failed to pass it left an enormous, unfilled hole. 鈥淎ll of that is coming down,鈥� said Jennifer Wells, director of care at Community Change, which organizes child care providers to advocate for policy change. 

The events unfolding in Indiana illustrate 鈥渁n example of what happens when this funding gets cut,鈥� Wells said. 鈥淏ut it鈥檚 not going to be isolated to Indiana. We know it鈥檚 going to spread.鈥� Already Arkansas has followed suit; on Sept. 19, the state that it was cutting reimbursement rates for providers and instituting new copays for parents, although after the reimbursement change was paused for 30 days. Its voucher waiting list is . 鈥淲e know it鈥檚 going to snowball across the country,鈥� Wells said.

鈥淚ndiana is in crisis,鈥� said Martha Rae, a former Indiana child care provider and current advocate. 鈥淒umpster fire in a flood zone 鈥� that鈥檚 how we feel right now.鈥�

Indiana has now potentially poured gasoline on the fire. On Oct. 10, OECOSL sent an email, shared with 社区黑料, to families who receive vouchers that said, 鈥淲e understand that some families may be noticing higher out-of-pocket costs since the recent provider subsidy rate adjustments.鈥� After noting that providers set their own rates, in bold it told parents that they 鈥渉ave the right to choose a provider that best fits their family鈥檚 needs and budget.鈥� It added, 鈥淵our child care voucher belongs to you, and you may use it at any eligible CCDF provider.鈥� Advocates and providers fear this message will prompt parents to move to programs that are charging less or aren鈥檛 charging any extra at all. It will 鈥渃reate competition amongst providers,鈥� Rae said. 

Alyssia Thompson, who runs the Agape Learning Academy, a child care center in Merrillville, Indiana, is already watching this happen. It鈥檚 become 鈥渟urvival of the fittest 鈥� shark tank,鈥� she said. Thompson said she knows of providers who are charging 鈥渢he bare minimum鈥� to try to siphon children from other programs. 鈥淧arents are going wherever they can afford,鈥� she said, even places that 鈥渕ight not even have a license.鈥� The only reason she hasn鈥檛 lost families, she said, is because so many of them have been with her for so long. 

As with Miller, Thompson has experienced a far larger reduction in her reimbursement rates than the OECOSL email indicated. Typically, she would be reimbursed $160 a week for a school-aged child, but that鈥檚 dropped to $48, a 70% reduction. The rate for her preschool-aged children was reduced by 24%. 鈥淲e were given false information,鈥� she said.

Thompson had to make cuts to try to make the math work, such as getting rid of her cleaning service. 鈥淎nything I was paying to outsource to do, we have now just picked it up,鈥� she said. 鈥淣ow we have to do everything.鈥� She鈥檚 asked parents to bring in snacks to reduce the cost of food. Even so, she鈥檚 had to ask each family to pay an extra $25 a week. 

Even with those changes, she may not be able to keep the doors open. The possibility of having to close her program 鈥渉as definitely been a discussion,鈥� she said. She鈥檚 confident she has enough money to operate for the next six months. But, she said that over the next four months, if she doesn鈥檛 see any signs that the state is changing course and she hasn鈥檛 been able to make up enrollment with parents who don鈥檛 use vouchers, she will notify her parents about closure. 

Early educators and advocates are mobilizing to push back on the cuts. 鈥淎s soon as these providers got word of these cuts happening, they were immediately set on fire,鈥� Wells said. The Indiana AEYC organized 鈥淚NAEYC Calling Day鈥� on Nov. 5 and the association asked providers and families to call state legislators  to make the case for investing in child care. With a budget surplus of this year, they hope to convince lawmakers to dedicate money to the sector. 

If they don鈥檛, Miller is consumed with fear about what will happen to the school-aged children in her program. 鈥淭hose are the most vulnerable students,鈥� she said. She worries that if they can鈥檛 afford what she now has to charge them parents will decide to leave children home with an older sibling or even by themselves. That, she frets, will put them in danger; they鈥檙e not old enough to be cared for by anyone but an adult, she said.

To the state, Miller has a message: 鈥淔ix this crisis that you have put families and child care providers in.鈥� She added, 鈥淪ome way, somehow, it needs to be fixed.鈥�

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