Childcare providers fear funding freeze impact

A childcare crisis that's been bubbling for years in Washington County with too few providers may boil over as the federal government has frozen subsidies used to help families pay for childcare.

Local childcare providers are scrambling to figure out what the Trump administration's freezing of federal dollars provided by the Child Care and Development Fund means for them. Only when the ramifications are known will providers be able to decide whether they can stay open or be forced to close their doors.

"We haven't heard anything yet," says Heather Doughty of Maritime Munchkins, the new daycare center in the former Charlotte Elementary School. "I don't know if they'd tell me or just freeze them."

Doughty isn't alone in her confusion. Melissa Boteach, chief policy officer at Zero to Three, a national nonprofit that advocates for infants, toddlers and families, says the move has created chaos across the country. "There's a lot of confusion right now."

The federal action was rolled out over the past two weeks as the result of an unsubstantiated YouTube video that purported to show fraud at childcare providers in Minnesota. Although the allegations haven't been verified, the federal government decided to halt childcare subsidies just after Christmas and on January 5 announced that states would have to respond through new administrative regulations before the subsidizes could be restarted.

The federal Child Care and Development Fund allocates money to states, tribes and territories to help make child care more affordable for low‑income families.

At Lots of Tots in Princeton, owner Penni Theriault says 50% of the children she cares for receive some type of federal subsidies. Included in that count are children who receive subsidies based on family need as well as federal subsidies based on tribal membership.

"This would be a horrendous thing," she admits. "Right now I'm not planning on closing. I'm just hoping to tough it out, but it depends on how long it goes on."

Similarly, Doughty of Maritime Munchkins says her facility would suffer grave financial problems if the halt in subsidies continues long-term. Doughty's facility has 37 children, with 12 of them on some form of federal subsidies.

"If the payments stop, our first course would be to figure out how to keep the costs low enough so we'd be able to deal with it." But at some point, Doughty says her business might have to "close for a while" if the freeze on federal funding continues long enough.

The closure of any childcare facility in Maine would constitute a calamity. The current childcare environment in the state doesn't meet the needs of its residents, where almost three‑quarters of parents report that access to childcare is problematic, according to a 2023 report from the Council for a Strong America.

In Washington County, the situation is even more acute. Here, families are part of the 22% of Mainers who live in childcare deserts, where there are more than three children under 5 for each licensed healthcare slot.

As a result of a lack of local providers, both Doughty and Theriault say their centers have waiting lists. "I have people that drive from Calais and Eastport to Princeton because there's not enough childcare," Theriault says.

If childcare facilities are forced to close, Boteach explains it will be because they "are operating on a very thin margin." National profit‑margin averages hover around 15%, but many facilities may subsist on lower margins.

Theriault, who says her liability insurance alone has doubled this year, says, "It doesn't take long for the money to be whittled away." If the subsidies fail to resume soon, "there's no way I could make payroll. There's no way we could continue for very long."

And the effects would be seen up and down the economic chain. According to Elliot Haspel, a nationally recognized family and child policy expert and author, facilities that might be forced to close because of frozen subsidies serve not only low‑income children but children across the economic spectrum, so such closures would have ripple effects across the entire economy of a region.

"If childcare closes because we can't afford to stay open, parents are not going to have childcare and not be able to go to work," Theriault says. "People don't realize the potential impact."

Boteach also sees potential dark times ahead. "Children and their families will suffer. If you lose your childcare, you can't work. Your employer loses a good employee. Now you've forced providers to close, and now that supply crisis is exacerbated."

Neither the Maine Department of Health and Human Services nor the U.S. Department of Health and Human Services could be reached for comment.