In January, Minnesota Management and Budget (MMB) released a descriptive analysis report on the Child Care Stabilization Base Grant Program that showed a positive impact on the child care industry. The program offers child care providers with financial support to maintain their operations and increase staff compensation. These grants, funded with the federal stimulus funding through the American Rescue Plan Act, began in Sept. 2021 and are available to eligible providers through June 2023. 

The report found that: 

• Base grants, or monthly payments where at least 70% of funds are used towards compensation, were associated with a 5.5% increase in cumulative monthly compensation per staff hour worked by child care providers. 
• Providers who received base grants were less likely to close than providers who not receive grants. Between Sept. 2021 and June 2022, 20% of non-base grant recipients closed. During that same time, only 5% of child care providers that received base grants closed. 

In a challenging and dynamic market like child care, however, one program is not the complete answer. The report also found that the increase in compensation was limited to child care centers, with no change among family child care providers, and that the base grants had no impact on provider capacity. Family child care providers who employ staff did not show, on average, compensation increases, but this may be due to the way that family child care providers think about and report to DHS their own compensation. For those reasons, the report recommends tailoring future policy to reflect the important difference between larger child care centers and smaller family child care providers.