Inflation has caused providers to experience an increase in the overall cost of operating their programs, yet reimbursement rates that enable them to purchase goods and maintain quality care have failed to keep up with rising costs. This combined with the continued use of a market rate survey that is based on a well documented failed market has made child care an unsustainable business. Although we are grateful for improvements implemented by the California State Legislature last year, provider reimbursement is still grossly insu cient, resulting in an untenable number of providers across the state leaving the industry and considerably impacting working families’ ability to seek and access care.
Moreover, in ation has impacted the cost of essential items such as milk, baby formula, and baby wipes necessary for providing care. Figure 3 illustrates how sta ng costs, gas, milk, and even eggs have all risen by over 30% since 2018. To addres this, shifting away from a market rate cost model to a cost of care model can have an immense impact on the scal constraints felt throughout the child care industry. An immediate 25% increase to providers can e ectively move child care providers closer to earning livable wages they deserve to provide quality care. In addition, suspending the family fees and sustaining hold harmless measures (subsidy payment based on enrollment vs. attendance) can further protect California parents from rising costs.
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