About 11% of Indiana’s early child care providers say they may close in the next year, according to a new survey from Early Learning Indiana. The results come as day cares and preschools face significant funding losses from cuts to public subsidies for low-income families.
Early Learning Indiana surveyed 443 providers across 67 counties in August about their challenges. Those providers represent about 15% of the statewide child care capacity, according to a report from the nonprofit.
“Now, there are troubling indications that an historically unstable system is facing even greater uncertainty,” the report found.
About 19% of day cares and preschools who responded said they have already closed at least one classroom. The largest number of closures were in registered ministries, followed by licensed centers.
Indiana used pandemic aid in recent years to expand the state preschool scholarships and Child Care and Development Fund vouchers, federally supported aid to help low-income parents pay for child care so they can work.
But when federal aid ran out, Indiana state lawmakers did not fill the gap. Instead, the state created a waitlist for CCDF vouchers in December 2024. Indiana has not enrolled a single new child in the program since then, according to the Indiana Capital Chronicle.
More than 25,300 Indiana children are on the waitlist for child care assistance, according to the state dashboard.
The Indiana Family and Social Services Administration announced last week that it will also cut reimbursement rates for child care to reduce the costs of the program. Providers will get between 10% to 35% less from the state depending on the child's age.
More than 20% of Indiana’s child care providers heavily rely on support from child care providers, according to earlier research from Early Learning Indiana.
If the survey results reflect the statewide average, and 11% of providers facing closure, “Indiana’s child care supply could shrink by nearly 10K seats over the next 12 months,” the report said.
Indiana also cut the state-funded preschool program — which took years to grow — by more than half this year and reduced reimbursement rates.
Indiana will limit available seats in its state-funded preschool program to 2,500 children this year — less than half the prior enrollment. The state also reduced reimbursement rates for preschools.
FSSA has laid the blame for cuts to child care and preschool with Former-Gov. Eric Holcomb’s administration. Under Holcomb’s leadership, the state overenrolled the programs without sustainable long-term funding, agency leaders have said.