Hundreds of New York City 2-year-olds will turn out for their first day of free preschool Thursday — realizing Mayor Zohran Mamdani’s signature policy pledge to deliver more affordable childcare for parents.

But the debut of 2-K along with a growing number of publicly-funded seats for 3- and 4-year-olds comes amid an ongoing payment crisis, with some providers owed months of funding and others on the brink of closing. Some program directors told Gothamist they didn’t have money to pay their staff, cover their rent or buy school supplies — but decided to open anyway.

“We have taken a line of credit to keep operating, to keep the payroll going, to keep paying the rents,” said Kamila Faruki, who owns four Manhattan childcare centers offering 3-K and pre-K. She said while payment delays are typical, providers usually receive an advance either through their contracts or no-interest loans before the year starts.

“When you start like this, you're constantly catching up,” she said. Faruki said the city owes her $1.6 million and was working on approving a loan in the meantime.

Officials with the Mamdani administration said all 2-K programs would be able to open on Thursday and they were working around the clock to issue no-interest bridge loans to providers waiting for their contracts to be approved. They also reassigned staff to bolster the education department’s ability to process contracts and payments, and vowed to spend $43 million to restore the agency’s ranks.

Mamdani said the city had issued more than 300 loans, registered 500 contracts and was approving loans within five business days.

But some providers said they still hadn’t received bridge loans as of Wednesday and at least one site in Brooklyn offering 3-K and preK told parents in a letter obtained by Gothamist it would open a week later due to lack of funds.

Slow payments are common but childcare providers said they usually have funds to start the school year. Many provider contracts also expired this summer and needed to be renewed, adding further lags to the process.

“The contracting and payment delays that we’ve seen are unacceptable and do not reflect how the city should be dealing with childcare providers,” said Emmy Liss, executive director of the Mayor’s Office for Child Care.

Providers said late payments due to bureaucratic delays are not new for the city’s publicly funded preschool programs or for community organizations as a whole. What’s different this year is many have run out of savings, maxed out on personal loans and are frankly fed up with covering costs for the city — especially given Mamdani’s high-profile pledges around universal childcare.

“This is the perfect storm of new contract actions that had to take place because old ones had expired. A new program that's getting a ton of attention. And provider frustration because this is the same problem we've been having for many, many years, and there's no fix,” said Nora Moran, director of policy and advocacy for United Neighborhood Houses, which represents settlement houses that provide services to the community.

In all, Gothamist spoke to nine childcare providers ahead of the start of the school year. Staff at four home-based programs said they hadn't experienced delays and were ready to welcome 2-year-olds. Five said Wednesday they were still working with the city on their loan applications as they waited for their contracts to get approved.

Providers usually receive a three-month advance for the start of the school year, which can mean hundreds of thousands of dollars.

“These types of delays are catastrophic,” Danielle Demeuse, director of policy for the Committee for Hispanic Children and Families, a child advocacy group that contracts with the city on behalf of smaller family providers. “The fact that any programs can survive this is a miracle.”

One Queens provider said she considered delaying opening her 2-K classrooms until next week but was promised her city loan would arrive by Thursday. Two other 2-K providers said they would open their doors on Thursday even without city funding, hoping the money would arrive soon. All asked Gothamist to withhold their names, saying they feared the city would retaliate against them by further delaying their payments.

”There has been a pattern of always looking at these providers as the ones that will make do with less … we take advantage of women, mostly women, that are deeply, deeply committed to serving children and families in populations that sometimes are marginalized,” said Maria Mavrides Calderon, who is an assistant professor in early childhood education at Hunter College and a former childcare center director.

“There was a lot of hope that this administration, that was really focused on labor rights, and was really focused on families in New York City, were going to actually do something about this. So there has been a disillusionment.”

A breaking point

Providers said the payment crisis is just the tip of the iceberg and warned that even when their delayed payments arrive, the city still needs to fix inherited issues with outdated contract rates, long processing times and pay disparities between providers who labor in daycare centers and those who do the same work in school settings.

“We have reached a breaking point. We have to acknowledge that,” said Mavrides Calderon. She said the city prioritized expanding childcare with its new 2-K program, rather than rectifying underlying problems that have long tormented providers since former Mayor Bill de Blasio launched pre-K more than a decade ago.

The Mamdani administration boosted reimbursement rates for centers by 2% and for family providers by 5% in this year’s budget but providers said that still falls short of what’s needed. The city is also grappling with a hollowed out early childhood division at the education department that happened under a reorganization by the Adams administration, childcare advocates said.

A report by the 5Boro Institute think tank found a 45% vacancy rate in the Department of Education’s Division of Early Childhood Education in 2022 contributed to payment delays, leading some sites to shutter.

“We feel great urgency to expand access to care because we know that New York City families cannot wait and we cannot delay getting care to families that are struggling in the city but we also know that we have to do better by our childcare providers if we are going to ask them to go on this journey with us,” Liss said.

“We are committed to doing both things at the time.”

This week, the education department announced Erica Phillips' appointment as the new deputy chancellor for the early childhood division. Phillips, who has spent 20 years in the early childhood space and most recently led a nonprofit advocating for home-base providers, will replace outgoing Deputy Chancellor Simone Hawkins, who resigned earlier this year as the city revved up its plan to roll out 2-K.

The city plans to expand 2-K to 12,000 seats next year and offer it to every 2-year-old by the end of Mamdani’s first term.

Jessica Gould contributed reporting. This story has been updated with loan information from the Mayor's office.