It’s been a challenge for Vicki Duggan to recruit new staff for the daycare center she manages in Midwest City. 

Over the last few years, Kinder Castle was able to offer a $1,000 signing bonus and free child care to staff thanks to federal pandemic funding. Staff were able to get a few additional paid days off. That made it a bit easier to recruit, Duggan said. 

But that extra money ran out last year. The margins are back to being razor-thin, even though Kinder Castle is a five-star facility that gets the highest level of reimbursements from the state for accepting children who get subsidized care. Starting pay at Kinder Castle is $11 an hour for someone with no experience or degree. The facility does offer paid time off, but not until year two. Often, hiring comes down to money.

“You have to find somebody that can afford to work here,” Duggan said. One woman Duggan interviewed had no experience but was willing to learn. But she needed $15 an hour. “I know that that’s a reasonable request at this day and age. It’s just not something that we can meet. I have people who have worked for me for over a decade that aren’t getting that.” 

For years, Oklahoma has only minimally contributed to its child care subsidy program, which helps low-income families access child care. Advocates say without additional state funding, the industry won’t be able to meet the growing demand for care. 

Despite encouragement from industry professionals, Oklahoma Human Services did not ask lawmakers for an increased budget for child care for the upcoming budget cycle. The agency didn’t ask for a funding increase last year, either. Instead, the agency is looking to bring down spending to what it calls a sustainable level.

“That’s not because I don’t think child care is important. It is certainly an important thing for the state, and it’s an important part of what we do,” Jeffrey Cartmell, Oklahoma Human Services’ new director, said during a budget hearing. “But it’s not all that this agency does. And so any additional dollar that I put in child care is another dollar that I can’t put in adult protective services, that I can’t put in adoption services.” 

Child care deserts and staff shortages

Advocates say the lack of stable funding is forcing some daycare providers to shut down. Since extra pandemic funding ended in September, 2,300 child care slots have been lost as facilities in Oklahoma closed, said Carrie Williams, director of the Oklahoma Partnership for School Readiness.

“It really is a market that is very fragile and needs some additional support,” Williams said. “The most logical solution is to make a larger investment as a state to ensure that this industry can be stable and can operate to the betterment of children and families.” 

Thirty-four of Oklahoma’s 77 counties were considered child care deserts in 2022, with 55% of people living where the number of providers doesn’t meet demand, according to Oklahoma Human Services. A 2023 study by the Greater Oklahoma City Chamber said the state’s child care crisis costs $1.2 billion in economic losses as people quit or change jobs because of child care problems.

Staffing and training to meet required teacher-to-student ratios is expensive, and costs have increased in recent years. In 2019, the state increased the eligibility threshold for families to qualify for a child care subsidy, leading to 10,000 additional children receiving subsidized care, the agency said, and just under $100 million in new costs to the program.

But funding from the state Legislature to Oklahoma Human Services to help cover costs in the child care subsidy program have remained relatively flat since 2019, dipping to a low of $13.7 million in 2021 and a high of $18 million this year. The program instead is 96% funded by federal dollars, according to 2024 budget documents. 

One study commissioned by the Oklahoma Partnership for School Readiness suggested that Oklahoma would need to increase reimbursement rates by $10 a day to meet market rates. 

Most providers accept subsidy payments, and many are operating below their licensed capacity because they can’t keep staff, said Rachel Proper, who owns seven child care centers in the metro and formerly served on the Oklahoma Child Care Association board of directors. 

Kinder Castle is nestled in a busy shopping and residential district in Midwest City, near Tinker Air Force Base, a major employer for the area. But it is hovering at roughly 75% capacity because it’s been so challenging to find staff, said Proper, who owns the facility. In February, nearly 30 families were on the waiting list. 

“The reality is, without additional money from the federal government or additional money from our state government, we’re not going to be able to keep serving the need as our population growth is going up and eligibility increases,” Proper said. 

Searching for new solutions 

Oklahoma, like many other states, ties reimbursement rates for child care to the level of care provided at each facility. The more staff, educational opportunities and family interaction, the higher the star level, and the higher the subsidy reimbursement rate. 

In 2022, only about 300 facilities in the state were able to reach the highest star level, which at the time required national accreditation. Smaller providers say accreditation is too costly and time-consuming, so many were stuck at the mid-tier reimbursement rates. 

In 2023, Oklahoma Human Services rolled out a plan to change the state’s star-rating system. The new rating system had an alternative pathway to get to the highest rating levels without the need to get national accreditation. Within two years, about 1,000 child care facilities were newly rated at the highest level, according to agency data. 

For providers, access to high star levels and increased reimbursement rates meant increasing wages for staff and investing in programming. For DHS, the jump in high-level providers meant thousands of kids had their subsidy amount increase.

“It has significantly increased the cost to the agency to run the subsidy program,” Cartmell told lawmakers earlier this year. A sustainable child care budget is closer to $240 million, Cartmell said. After the new rules go into effect, the agency will get spending down closer to $255 million, he told lawmakers.

To reign in the new rating system, the agency tried to roll out emergency rules last year that would reduce the number of families eligible to receive the child care subsidy and make it easier to lower provider’s star ratings, as well as bring back national accreditation requirements for the highest star levels. But they pulled those rules after immense public backlash.

In January, the agency held a hearing for a new set of rules. The subsidy eligibility for families wouldn’t change, but five-star ratings would again require national accreditation. Dozens of people spoke out, warning of facility closures and staff cuts if the rules are approved. One business owner said she already started the process of expanding her business based on having the funding of a five-star facility. Those plans would be in jeopardy.

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“To me, it’s just a way that (Oklahoma Human Services) is trying to reduce funding,” said Kent Lynn, who owns R Kids Childcare in Bethany, during the hearing. Lynn’s facility is rated as a five-star provider, but is not nationally accredited. They are going to try to get accredited by the state’s new deadline, Lynn said. 

The new rules will go into effect this year.

The rating system changes are one high-interest piece of the industry’s funding challenges that could impact up to roughly 40% of the state’s 3,116 licensed child care providers, as of last August. 

But there are other investments that could benefit providers that accept subsidies across the rating scale. These could include subsidizing child care for child care staffers, formalizing an extra $5-per-day for every child, and extending the number of days a kid can be absent but the facility can still get paid for providing care. 

This spring, Rep. Suzanne Schreiber, D-Tulsa, is running a bill that would incentivize employers to help cover the cost of child care for their employees. She has another bill that would make it easier for family child care homes to meet building code requirements. A third bill would make it easier for child care workers to receive a subsidy for child care, costing up to $11.5 million per year.

“There are a lot of things squeezing child care and parents right now,” Schreiber said. “If we want to grow our economy and have a workforce, we have a responsibility in being a part of the solution.” 

New rules from the federal government will also change how Oklahoma pays child care providers, basing payments on enrollment rather than the number of days a child attends. Oklahoma asked to delay when those rules go into effect, giving the state until 2026 to implement changes. 

The change is one providers have been pushing for, saying it will help stabilize the industry by offering more financial predictability for employers and employees.

By 4 p.m. at Kinder Castle, school-aged kids are off the bus and eating their afternoon snack. Their room is full of chattering and laughs, and the chaos is only going to get busier as summer approaches. 

Duggan had several staff leave last year for better-paying jobs. She planned to fill their roles by Christmas, but now she hopes to hire new staff at least by March so there’s time to train them before school is out. Parents are already calling about the summer waitlist. But who can get a slot will all depend on how many staff she can find. 

“I just hope this summer we get back to normal — please, let us get back to normal,” Duggan said. “I just have to have staff.”