A Modern Economy Depends on Child Care. North Dakota Can Make It Affordable and Accessible.

August 2021

Child care is a critical component of a modern and thriving economy. High-quality and affordable care is essential for parents to stay in the workforce. Businesses across all sectors need workers who have a safe and reliable place for their children during the day. The coronavirus pandemic highlighted how important child care is and the complex challenges the system faces across the country. Child care businesses operate on narrow profit margins, often struggle to pay adequate wages, and have high staff turnover. However, this long undervalued industry played a key role in reopening, allowing businesses to recruit and retain workers.

Even before the pandemic, families struggled to pay for child care in North Dakota. Families paid between $7,000 and $8,700 on average for child care in 2016, as expensive as the cost of in-state tuition at a four-year public college.1,2 Affordability has not improved. In 2020, families paid between $7,600 and $9,500 on average for child care.3

In 2020 and 2021, North Dakota received more than $130 million in federal relief money to support child care and early childhood education, including the most recent $76 million from the American Rescue Plan Act.4 During the 2021 North Dakota state legislative session, policymakers passed two bills related to early childhood.5 One bill consolidated early childhood programs existing across multiple agencies to the Department of Human Services. The second bill created a pilot 4-year-old grant program through 2025 that supports 20 preschool-age classrooms. A better child care system is in reach for North Dakota. To get there, policymakers should focus on long-term solutions and balance the needs of families and child care businesses. This report provides an analysis of the state of child care in North Dakota and offers the following recommendations to improve access to affordable, quality child care:

Access: Some Counties Lack Enough Child Care and Early Education Slots

More than 64,000 children younger than age 6 call North Dakota home, and more than 70 percent of these children have all parents in the workforce.6,7 Children younger than age 6, particularly those with all parents working, likely need some type of child care before attending school. However, 60,000 school-age children in North Dakota (age 6 through 11) may also need care before or after school.6

Child care and early education occurs in a variety of settings. In 2020, North Dakota had an estimated supply of child care and early education slots for 41,089 children. The majority of these came from licensed child care facilities (36,701). Child care and early education supply also comes from providers registered or certified with the state (748), providers licensed with a tribal entity (232), or Head Start (3,408).8 North Dakota offers a voluntary registration or certification to providers that have five or fewer children in their care or are part of a tribal agency. While school-age children can attend licensed or registered child care programs, there are an additional 45 school-age programs that provide 3,320 slots for children age 6 to 11.

The current supply of child care and early education slots is short of the demand for working families with children younger than age 6. In 2020, there was enough child care and early education supply for 88 percent of children younger than age 6 with all parents working.9 Certain areas of North Dakota fall further behind on access to child care and early education. There are 14 counties that meet less than 60 percent of the demand for working families (Benson, Dunn, Eddy, Kidder, McKenzie, McLean, Morton, Oliver, Pembina, Renville, Sheridan, Sioux, Slope, Williams).10 Neighboring counties with supply that exceeds demand may help supplement the shortfall in some areas; however, this also means that families must travel to find child care. Eight of these counties experience both a low supply of child care or early education and either high poverty (Benson, Kidder, Oliver, Sheridan, Slope, Sioux) or unemployment (Benson, McKenzie, Sheridan, Williams).11 These areas could benefit from additional child care supply to ensure families have access to care to return to work.  

Using county boundaries to assess child care has limitations. Families may access care across county lines in some communities. Many counties also share boundaries with a tribal nation within North Dakota.12 Child care and early education slots in these areas may not exactly align with county-level reporting. Additionally, tribal data on child care slots is only included for one of the tribal nations located within North Dakota.

Tribal Head Start programs provide critical access to early childhood education for families living in reservation communities, offering evidence-based and culturally relevant early education to communities that have faced generations of limited access to social and economic resources because of discriminatory policies and decisions. Tribal nations within North Dakota operate tribal Head Start programs and collectively enrolled 1,047 children in 2019.13 On average, tribal Head Start programs provide care for 65 percent of children younger than age 6 with all parents working who live on one of the American Indian reservations within North Dakota.14 North Dakota also has Head Start programs not affiliated with a tribal nation. Head Start programs across the state provide access to early education for diverse families. Children of color make up the majority of Head Start enrollment (66 percent compared to 24 percent of the population in North Dakota), underscoring the importance of Head Start for communities of color.15,16

In 2020, North Dakota experienced a net loss of 60 licensed child care providers and 381 slots, further limiting access to licensed child care during and after the pandemic.3 Families seeking care for non-traditional hours may also struggle with access to care, with only 3 percent of licensed programs open during the weekends, 4 percent open during evenings, and 25 percent open during early morning hours.3

For communities already experiencing child care shortfalls, it is likely worse than these numbers indicate after adding in school-age children who need before or afterschool care. State-licensed school-age programs provide a slot for only 7 percent of children age 6 to 11 with all parents working.17 Other before or afterschool programs do exist that are exempt from state licensing requirements; however, comprehensive data on school-age programs is lacking in the state. Access to school-age care is limited in North Dakota. For every child attending an afterschool program, there are two more children waiting.18 Parents report that cost, lack of programs, and transportation are the top three barriers to finding out-of-school care for their children.18 School-age children are more likely to have all parents working (80 percent), underscoring the importance of school-age care for parents to stay in the workforce.7 Expanding school-age care also provides an opportunity to support the state’s future workforce. Afterschool and summer programs can help students gain news skills and learn about new interests or professions.19

While North Dakota meets the estimated demand for child care for children younger than age 6 in many counties across the state, some areas come up short. This includes certain high-poverty areas, care for families with school-age children, and care during non-traditional hours. In communities without enough child care, parents are left to make difficult decisions about how or if to return to work. This has been particularly evident during the pandemic, where mothers of young children left the labor force at a higher rate than women without children. Labor force participation for mothers with young children dropped 7 percentage points between 2019 and 2020 in the three-state region of Montana, North Dakota, and South Dakota.20 Inadequate child care impacts businesses. When workers cannot access child care, businesses experience lower productivity and struggle to recruit and retain workers.

Quality: Not All Available Child Care Is High Quality

High-quality child care provides a safe and nurturing environment for children, involves their families, and creates a supportive environment for workers. Licensed facilities meet basic health and safety standards set by the state, establishing a baseline standard of care. Little is known about unlicensed facilities; however, they exist in North Dakota. The U.S. Economic Census records businesses that report income as child daycare services. More than 900 businesses report income from child care than are licensed, registered, or certified with the state.21 

Child care facilities that provide high-quality care go above and beyond licensing requirements. Providers in North Dakota can participate in a voluntary quality rating and improvement system (QRIS, also called “Bright & Early ND”). Providers advance through four rating levels as they demonstrate improvement on health and safety standards, enriching learning environments and curriculum, and supportive relationships for children with their teachers and peers. A provider at QRIS level two begins receiving financial incentives to use for continued improvement.

A clear gap exists in the availability of high-quality child care. In North Dakota, the majority of licensed providers (88 percent) do not participate in QRIS.22 Child care providers must invest time and resources to offer high-quality programs, and it takes about nine months to move through one QRIS level. North Dakota needs solutions that encourage more providers to participate in QRIS in addition to ongoing support for current high-quality providers to maintain high standards of care.

Affordability: Parents Often Cannot Afford Child Care, and Child Care Businesses Struggle to Stay Open 

North Dakota families struggle to afford child care. On average, families pay between $7,600 and $9,500 per year for child care, as expensive as in-state tuition at a public university.3,23 This means a household making $67,400 spends between 11 percent and 14 percent of their income on infant child care.24 Child care is more expensive for younger children and at a center or group facility.

The federal Child Care Assistance Program provides money towards child care costs for families with lower incomes. In 2020, nearly 5,000 children received child care assistance.25 However, more eligible children could benefit from the program than are currently participating. Estimates from the U.S. Census Bureau show that at least 21,000 children younger than age 6 live below the income guideline for eligibility (income eligibility depends on household size; for example, a family of three is eligible if income is less than $50,796 per year).26,27

Child care businesses must balance the true cost of providing high-quality care with what parents can afford. Because of this, many child care businesses operate on narrow margins and often cannot pay employees an adequate wage. Employee wages and benefits make up more than half the cost for most child care businesses (67 percent for infants and 57 percent for toddlers and preschool-age), with other expenses going toward rent and utilities, administrative costs, and classroom materials.28

Low wages for child care workers leads to staffing instability, making it challenging for child care businesses to retain workers and remain open. In North Dakota, 5,650 individuals work in the early childhood field, about the same as the number of elementary school teachers in the state.3,29 Child care workers predominately identify as female (94 percent) and 1 in 8 (12 percent) are workers of color.30 In North Dakota, the median wage for child care workers was $11.61 an hour in 2020, which means making $24,150 per year if working full-time.31 This is barely hovering above the poverty level for a family of three. Child care workers make less than half the wage of a kindergarten teacher, even though 55 percent of child care workers in North Dakota have a bachelor’s degree or higher.32,33

The child care system in North Dakota is in dire need of solutions that consider the cost of care for parents while providing adequate funding for child care businesses that continue to play a critical role in North Dakota’s economic recovery.

Recommendations

North Dakota lacks strong state investments in the child care and early childhood education system. Federal funding contributes 16 percent of the estimated cost to provide care to children younger than age 6 with all parents working (not including one-time relief money related to the pandemic recovery).34 Parent payments or other private funds make up 83 percent.35 State investments make up only 1 percent of the total estimated cost to provide care.36 These percentages will shift in the next few years with the influx of federal relief funding for child care and early childhood education. A more stable and equitable early childhood education system is in reach for North Dakota. However, state policymakers should prioritize investments in quality early childhood education to make that a reality.

North Dakota needs innovative, long-term solutions to build a better child care system that works for children, parents, and businesses. As North Dakota begins infusing the millions of dollars in federal relief into the child care system, policymakers should reimagine what child care can and should be in our state and invest in infrastructure and programs that set North Dakota up for long-term success. Specific recommendations include:

Access

Quality

Affordability

Footnotes

  1. Child Care Aware of North Dakota, “State Child Care Profile Data 2016.”
  2. National Center for Education Statistics, Table 330.20 Average undergraduate tuition and fees and room and board rates charged for full-time students in degree-granting postsecondary institutions, by control and level of institution and state or jurisdiction: 2016-17 and 2017-18.
  3. Child Care Aware of North Dakota, “State Child Care Profile Data 2020.”
  4. Federal relief money for child care and early education came from three rounds of allocations: The Coronavirus Aid, Relief, and Economic Security (CARES) Act, Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act, and the American Rescue Plan Act (ARPA). Totals include money from state allocations, tribal allocations for tribal nations located within North Dakota (Spirit Lake Nation, Standing Rock Sioux Tribe, Three Affiliated Tribes/Mandan, Hidatsa & Arikara, Trenton Indian Service Area, and Turtle Mountain Band of Chippewa Indians), and Head Start allocations. CARES State Allocation: $6,037,905. U.S. Department of Health and Human Services Office of Child Care, “2020 CARES Act CCDBG Supplemental Funding Allocations for States and Territories,” Apr. 2020. CARES Tribal Allocation: $2,271,940. U.S. Department of Health and Human Services Office of Child Care, “GY 2020 CCDF Final Tribal Allocations,” July 2020. CRRSA State Allocation: $19,448,230. U.S. Department of Health and Human Services Office of Child Care, “Coronavirus Response and Relief Supplemental Appropriations Act (CRRSA) of 2021 Allocations for States and Territories,” Feb. 2021. CRRSA Tribal Allocation: $6,491,066. U.S. Department of Health and Human Services Office of Child Care, “Coronavirus Response and Relief Supplemental Appropriations Act (CRRSA) of 2021 Allocations for Tribes,” Feb. 2021. ARPA State Allocation: $75,760,496. U.S. Department of Health and Human Services Office of Child Care, “ARPA Supplemental Stabilization and CCDF Discretionary Funding Allocation Tables – States and Territories,” Apr. 2021. ARPA Tribal Allocation: $27,419,317. U.S. Department of Health and Human Services Office of Child Care, “ARPA Supplemental Stabilization and CCDF Discretionary Funding Allocation Tables – Tribes,” Apr. 2021. ARPA Head Start Allocation: $2,231,000. Federal Funds Information for States, “Estimated State Funding in the American Rescue Plan,” on file with author.
  5. Rep. Robin Weisz, “Relating to the four-year old program approval and the North Dakota early childhood council,” HB 1416, North Dakota 67th Legislature, as introduced on Jan. 18, 2021. Rep. Robin Weisz, “Relating to establishing four-year old program grants," HB 1466, North Dakota 67th Legislature, as introduced on Jan. 18, 2021.
  6. KIDS COUNT Data Center, Child population by single year of age, 2019.
  7. KIDS COUNT Data Center, Children with all available parents in the labor force by age, 2015-2019.
  8. State-licensed or registered providers: KIDS COUNT Data Center, Child care providers, by type, 2020. State-licensed or registered capacity: KIDS COUNT Data Center, Child care capacity, by type, 2020. Head Start data: Office of Head Start, Head Start Program Information Report, 2019, on file with author. Tribal-licensed or registered: Mongram, B., Mandan, Hidatsa and Arikara Nation, “RE: Licensed child care facilities,” email to Xanna Burg, North Dakota KIDS COUNT, July 9, 2021, on file with author.
  9. Includes slots that are licensed, registered, certified with the state or a tribal entity, or are part of Head Start. School-age licensed capacity is not included. A total of 41,089 slots compared to the estimated demand of 46,914. Demand is estimated as the population younger than age 6 (64,724) multiplied by the percent of children younger than age 6 with all parents working (72.5 percent).
  10. Supply as a percent of demand for working families by county is calculated using: Supply: State-licensed or registered capacity: KIDS COUNT Data Center, Child care capacity, by type, 2020. Tribal-licensed or registered: Mandan, Hidatsa and Arikara Nation provided data for tribal registered child care as of July 2021, on file with author. Head Start Enrollment: Head Start Program Information Report, 2019, on file with author. Note: Head Start enrollment is matched to a county at the program level due to data availability. Some Head Start programs operate sites across multiple counties and data will not exactly reflect each Head Start site.  Demand: Population Age 0-5: KIDS COUNT Data Center, Child population by single year of age, 2019. Percent of children with all available parents working: KIDS COUNT Data Center, Children with all available parents in the labor force by age, 2015-2019. Note: The Standing Rock Sioux Tribe overlaps with both North Dakota (Sioux County) and South Dakota (Corson County). The child care and early education supply from Head Start includes slots located within South Dakota. Therefore, the estimated demand for Sioux County also includes the population for Corson County (502) in South Dakota.
  11. Supply is considered low if a county meets less than 60 percent of the demand from children age 0-5 with all parents working. Poverty is considered high if greater than or equal to 16 percent. Unemployment is considered high if greater than or equal to 6 percent. Cutoffs were chosen to reflect one quarter of counties scoring highest (poverty and unemployment) or lowest (supply). Poverty: KIDS COUNT Data Center, Children in poverty (1-year estimates), 2019. Unemployment: KIDS COUNT Data Center, Annual unemployment (all ages), 2020.
  12. Some state-licensed or registered facilities are matched to a tribal community and not county. In these instances, data is matched to only one county even though tribal communities often overlap in boundaries with multiple counties. Turtle Mountain Band of Chippewa Indians is matched to Rolette County; Standing Rock Sioux Tribe is matched to Sioux County; Three Affiliated Tribes is matched to Mountrail County, but also overlaps with Dunn, McKenzie, McLean, Mercer, and Ward counties. Spirit Lake Nation is matched to Benson County, but also overlaps with Eddy, Ramsey, Wells, and Nelson counties.
  13. Office of Head Start, Head Start Program Information Report, 2019, on file with author.
  14. Children needing care estimates (denominator of the percent) are from Census estimates at the American Indian Reservation geography. U.S. Census Bureau, “Age of Own Children Under 18 Years in Families and Subfamilies by Living Arrangements by Employment Status of Parents, American Community Survey 5-Year Estimates, Table B23008,” accessed on Apr. 22, 2021.
  15. Children of color include those identifying as American Indian or Alaska Native, Asian, Black or African American, Native Hawaiian or other Pacific Islander, Biracial/Multi-racial, other, or Hispanic. Data from: Office of Head Start, Head Start Program Information Report.
  16. National Center for Health Statistics, Bridged Race Population Estimates, 2019.
  17. Includes slots that are state-licensed for school-age only. A total of 3,320 slots compared to the estimated demand of 47,915. Demand is estimated as the population age 6 to11 (60,092) multiplied by the percent of children age 6 to 17 with all parents working (79.7 percent).
  18. Afterschool Alliance, “North Dakota After 3PM,” accessed on Aug. 2, 2021.
  19. Afterschool Alliance, “Building Workforce Skills in Afterschool,” Nov. 2017.
  20. Boesch, T., Grunewald, R., Nunn, R., Palmer, V., “Pandemic pushes mothers of young children out of the labor force,” Federal Reserve Bank of Minneapolis, Feb. 2021.
  21. 959 more businesses reported income as day care services (2,751) than are licensed, registered, or certified with the state (1,792). Data includes businesses that report income as child day care services under NAICS code 6244. Employers, Individual Proprietorship, and Partnerships are all included. U.S. Census Bureau, “Nonemployer Statistics for the U.S., States, Counties, Metropolitan Areas, and Combined Statistical Areas; and by Legal Form of Organization and Sales, Value of Shipments, or Revenue, U.S. Economic Annual Survey, 2018,” accessed on Apr. 22, 2021. U.S. Census Bureau, “County Business Patterns by Legal Form of Organization and Employment Size Class for the U.S., States, and Selected Geographies, U.S. Economic Annual Survey, 2018,” accessed on Apr. 22, 2021. Licensed, registered, or certified facilities in North Dakota in 2018 is from: KIDS COUNT Data Center, Child care providers, by type, 2018.
  22. KIDS COUNT Data Center, Child care providers, by quality rating, 2020.
  23. Estimates for a ND resident undergraduate tuition during the 2021/22 school year is $9,048 at UND and $8,950 at NDSU. University of North Dakota, Estimate Your Tuition and Fees, accessed on June 29, 2021. North Dakota State University, Undergraduate Tuition – Fall 2021, Spring & Summer 2022, accessed on June 29, 2021. 
  24. The median household income in North Dakota. KIDS COUNT Data Center, Median household income, 2019.
  25. KIDS COUNT Data Center, Child care assistance recipients ages 0 to 13, 2020.
  26. Eligibility for the Child Care Assistance Program depends on household size and ranges from 187 percent to 236 percent of the federal poverty level. Estimates from the Census for less than 200 percent of the federal poverty level are used as the closest cutoff, which means this number may underestimate the true eligibility. U.S. Census Bureau, “Age by Ratio of Income to Poverty Level in the Past 12 Months, American Community Survey 5-Year Estimates, Table B17024, 2015-2019,” accessed on Apr. 16, 2021. Population estimates are multiplied by poverty percentage. National Center for Health Statistics, Bridged Race Population Estimates, 2019.
  27. North Dakota Department of Human Services, Child Care Assistance Program, accessed on June 29, 2021.
  28. Estimates are for center-based child care. Center for American Progress, “Where Does Your Child Care Dollar Go?,” Feb. 2018.
  29. There are an estimated 5,180 elementary school teachers in North Dakota, including kindergarten teachers and special education teachers. U.S. Bureau of Labor Statistics, Occupational Employment and Wage Statistics, May 2020 State Occupational Employment and Wage Estimates North Dakota, accessed on June 29, 2021.
  30. Percentages calculated using only valid responses. North Dakota Growing Futures, Workforce Demographics – 1st Quarter 2021, accessed on June 29, 2021.
  31. U.S. Bureau of Labor Statistics, Occupational Employment and Wage Statistics, May 2020 State Occupational Employment and Wage Estimates North Dakota, accessed on June 29, 2021.
  32. The equivalent hourly wage for kindergarten teachers was $30.61 in 2019 compared to $11.44 for a child care worker. Center for the Study of Child Care Employment, “Early Childhood Workforce Index 2020,” Feb. 2021.
  33. Percentages calculated using only valid responses. North Dakota Growing Futures, Professional Qualifications: Credentials – 1st Quarter 2021, accessed on June 29, 2021.
  34. Federal estimates include: Child Care Development Fund (CCDF) both for the state and tribal nations located within North Dakota; Head Start/Early Head Start; Tribal Head Start/Early Head Start; Temporary Assistance for Needy Families (TANF) funds transferred to Child Care Assistance/Non-Assistance; Individuals with Disabilities Act Part C (Grants for Infants and Families) and Part B, Section 619 (Special Education for Preschool-Age Children). Total federal estimates are for $65.7 million. Exact amounts from each program are on file with author.
  35. The cost of care coming from parent payments or other private sources is subtracted for the estimated total cost of child care for the 24,384 0-2-year-old children with all parents working and 24,806 3-5-year-old children with all parents working. Using the average cost of care for these age groups across all facility types, it is estimated that the total cost in North Dakota for the child care system is $411 million ($8,587*24,384 infants/toddlers=$209.4 million; $8,120*24,806 preschool-age=$201.4 million). Parents or other private sources are estimated to cover the gap of $340 million that isn’t covered by state or federal funding sources. Calculations are on file with author.
  36. State estimates include $5.5 million per year included in the General Fund to support the state match for CCDF or towards the 4-year-old program grants passed during the 2021 session. Estimated appropriation comes from the North Dakota Office of Management and Budget, Department 325 – Department of Human Services House Bill No. 1012, accessed on July 2, 2021. Estimated cost of the 4-year old program is from the fiscal note in HB 1466: Department of Human Services, Fiscal Note Requested by Legislative Council on 2/18/2021, Amendment to HB 1466, on file with author.
  37. National Head Start Association, “State Investments in Head Start to Support At-Risk Children and Families,” Dec. 2020.
  38. Center for the Study of Child Care Employment, “Early Childhood Workforce Index 2020.”
  39. Eberhardt, B. North Dakota Head Start Collaboration Office Needs Assessment Summary 2019, on file with author.