Some Head Start childcare centers say they can't get federal funds. They're paying staff out of pocket and worried about closing: 'Folks are scared.'

• Some Head Start centers are unable to access federal grants and are struggling to pay staff.
• The federally-funded childcare centers serve thousands of low-income families across the US.
• Maintaining childcare is vital for parents' jobs and financial stability.

Jennifer Bailey is worried about paying her staff.

The federally funded childcare center she runs in Madison, Wisconsin, is one of about 52 childcare providers reporting federal funding disruptions that have left them scrambling to cut paychecks and pay operational expenses.

Head Start, the program through which these centers receive funding, blames President Donald Trump's short-lived pause on federal grants and loans. A senior Trump administration official told Business Insider on Wednesday that the Head Start issues are due to a technical glitch in a government system and not a result of the president's action. The Department of Health and Human Services said Thursday it is trying to restore childcare funding access as quickly as possible.

Whatever the reason, the National Head Start Association said that as of February 6, these centers hadn't received the funds they needed to serve nearly 20,000 children from low-income families. The NHSA also said in a February 4 statement that the centers affected employ about 6,000 staff members.

Due to the way the payment system works, Head Start centers can typically only be reimbursed for immediate expenses. Some told BI they could be forced to temporarily close their doors — a move that will put thousands of employees out of work and parents in a childcare bind.

Bailey said her center, called Reach Dane, has opened a credit line with its bank because it's still waiting on $600,000 from Head Start that it needs to pay 250 employees and continue care for about 1,000 children. It's something Bailey said hasn't happened in her 25 years as a Head Start childcare provider. She's not sure what will happen next, but continuing business without federal grant money isn't sustainable.

"We don't want to continue to spend money from our reserves at this point because we're not sure if we have a guarantee of getting the funds," she said. "It's been very frustrating to navigate."

Childcare employees worry their federally-funded jobs are no longer secure

Just a small slice of the roughly 1,600 childcare and preschool centers funded through Head Start have reported funding disruptions. The program provides free or affordable childcare to families with a household income at or below the federal poverty line. While these childcare providers are not federal employees, the vast majority of Head Start's funding comes from government grants.

The affected centers — which serve children ages zero to five — reported receiving "pending" or "in process" messages when they requested to draw funds from their grant. Those BI spoke with said they haven't received communication from Head Start or the federal government on the cause of the disruption or any resolution timeline.

Jennie Mauer, executive director of the Wisconsin Head Start Association, told BI that some childcare centers are draining their limited savings to pay people. Others, like Reach Dane, opened lines of credit in an effort to stay open. Mauer said making payroll is most centers' biggest concern, but rent, insurance, and food costs are also adding up.

"I just can't imagine a situation where the government is not paying millions and millions of dollars that it is contractually obligated to pay," Mauer said. She oversees all of the state's 39 Head Start childcare providers, and she said seven have experienced a freeze on funding. Those seven facilities serve about 3,000 children.

As of February 6, Mauer confirmed to BI that the centers she oversees are still locked out of funding and can't access the payment website.

Another childcare center in central Wisconsin, ADVOCAP, told BI in a statement Thursday morning that it hasn't received reimbursement from Head Start for its January expenses. The center serves 191 low-income families and said it would have to assess the implications for the future if the issue isn't resolved in the coming weeks. It added that the situation has "impacted the morale and stress levels" of employees.

Staffing childcare centers is a challenge on a good day, Bailey said. In 2022, the latest data available from the Federal Reserve Bank of Cleveland, turnover in childcare work was about 65% higher than other occupations.

Bailey and Mauer are not only concerned about Head Start employees missing paychecks, but they also said funding issues could impact staff retention.

"This uncertainty can make staff nervous," Bailey said. "And I do think that folks are worried about losing staff if they feel like the future of Head Start is not secure."

Low-income parents' financial stability hinges on childcare

Beyond impacting operational costs, Karen Schulman, senior director of state childcare policy at the National Women's Law Center, said that the issue could have a "ripple" effect on families that rely on Head Start centers. Steady childcare is vital for many parents to maintain stable work.

Twenty-three percent of parents reported being fired from their jobs due to lack of steady childcare, per a survey of 806 working US parents published in 2023 by the nonprofit ReadyNation. The vast majority of the parents surveyed said childcare challenges took a toll on their time and productivity at work, contributing to lower earnings and forgone promotions.

Schulman told BI that many of the parents who rely on Head Start childcare centers work roles without flexible hours. Losing childcare access, even for a couple of days, can be "devastating" and put them at risk of losing their jobs. For women and single parents especially, Schulman said losing childcare can have a long-term impact on their career and financial stability.

"Folks are scared," she said, adding "They just want to do their jobs and help kids care for kids and families. This is not the nonsense they want to be involved in."

Are you a parent, childcare provider, or federal worker impacted by funding disruptions? If so, reach out to this reporter at allisonkelly@businessinsider.com or on the secure messaging app Signal at alliekelly.10