Child care providers wait months to be paid. The city told the Council it doesn't cover their loan interest

Most of the city's child care programs are tiny businesses. At a joint Council hearing Thursday, members pressed the city on why so many of them still wait months, sometimes more than a year, to be paid for city-funded seats.

Why it matters to residents: the city is trying to expand free and low-cost child care. That depends on these small providers staying open. Council members said late payments, insurance costs and thin margins are squeezing them.

The hearing was held by the Committee on Small Business, chaired by Shanel Thomas-Henry, and the Subcommittee on Early Childhood Education, chaired by Jennifer Gutiérrez (meeting page).

What was said

The squeeze. Thomas-Henry cited a 2024 U.S. Small Business Administration report finding that child care prices grew 230% from 1992 to 2022 (2:26). Gutiérrez said for-profit child care centers nationally run on profit margins under 1%, compared with the 15% seen as healthy in most industries (6:30).

The city's numbers. Emily List, executive director of the Mayor's Office of Child Care and Early Childhood Education, said the city has more than 10,000 licensed child care programs. They include more than 2,200 day care centers, about 5,600 group family day cares and about 740 family day cares. More than half of child care businesses employ fewer than five people (10:33). She listed what the city has done: a $43 million overhaul of the public schools' early childhood division to speed contracts and payments (12:33); $40 million in rate increases, including 5% for family child care providers; and a $3 million emergency microgrant fund for home-based programs (14:35). She said 2-K seats will open in fall 2027. A survey of current contracted providers is due Nov. 9, and a request for information for new partners is open until Nov. 12 (15:36).

Locked out of contracts. Council Member Rita C. Joseph said about 5,000 family child care providers are left out of contracted network seats, and asked why some are charged network fees. List said networks "should not be charging providers a fee" and asked for specifics (19:19).

Unpaid for a year. Council Member Simcha Felder said he had heard from at least 10 providers who had not been paid for the previous year (45:55). List asked him to send the list.

Who pays for the delay. Council Member Frank Morano cited Independent Budget Office figures: the average early childhood contract was registered 83 days after its start date in fiscal 2021 and 247 days after in fiscal 2024. He asked whether the city reimburses interest when providers have to borrow. List said providers with delayed contracts can get interest-free bridge loans. Interest on a provider's own loan is "not typically part of the reimbursable expenses," she said (1:01:05). She blamed past delays partly on staff cuts under the previous administration.

Next door at the PASSPort hearing, Council Member Gale A. Brewer said payment and insurance were the two biggest issues she had heard from the child care panel (39:34).

What our records add

The bill on the agenda, Int. 445 from Althea V. Stevens, would widen NYCHA's Business Pathways program beyond food and child care. The city said the program has enrolled 189 public housing residents in its child care track since 2014 (17:37). The bill was laid over after 274 days.

Other child care bills are also waiting:

• Int. 820, Gutiérrez's child care workforce grant program, has been laid over since an April 15 hearing.
• Int. 8, Stevens's pilot to convert vacant storefronts for child care, has been laid over since March 2.
• Int. 135, from Tiffany L. Cabán, on inspections and closures of child care centers, has been laid over since April 22.

Two child care laws passed this year without the mayor's signature. Int. 580, from Gutiérrez with 37 sponsors, created the office List now leads. Int. 9, from Linda Lee, ordered a study of child care permitting.

What's next

The subcommittee's next listed meeting is Dec. 2. Int. 445 stays in committee until a vote is scheduled.