For a single parent like Shirray Johnson, the Children's Castle was almost too good to be true.

Until the end of September, Johnson, 28, would drop off 4-year-old Ashlyn at the child care center near her Ascutney home, then head off to her job as a Windsor County Head Start instructor.

Even with a subsidy from the state of Vermont, the $125 in tuition that Johnson paid per week took up about a third of her salary. But the Children's Castle was a place where Johnson knew her daughter would be able to play with other children and develop skills that she would need in kindergarten.

Like most parents, Johnson says, “I need to know that I have a place where I can send her where she's safe, where she's happy, where she’s well taken care of.”

Then on Sept. 11, the owners of Children's Castle informed their employees and customers that the five-year-old facility would close at the end of the month due to a lack of business. With rising joblessness and economic turmoil, many of the families using the center could no longer afford even its modest rates, and had pulled their children out.

Nancy Fairbrother, the center's director and infant teacher, says those parents had little choice.

“It was either put food on the table or make the (child care) payment,” says Fairbrother.

Such stories are becoming more common across the Upper Valley. Where once there were waiting lists, there is now an overabundance of openings -- which leaves the day care providers struggling to make ends meet, and in some cases deciding to close.

Close to the banks of the Connecticut River in White River Junction, Babble-On Daycare operates in the basement of the Masonic Lodge. In keeping with the season, the windows are decked with “The Pumpkin Patch Kids,” paper pumpkins colored in orange marker, each bearing the photo of a child enrolled at the center.

Inside, the center is organized chaos. The older children, 4- and 5-year-olds, work on a coloring activity with Vicki Covell -- that's “Miss Vicki” to the kids -- in one corner. In a gated area in the center of the room, substitute instructor Jodi Mohn, 29, rocks a wailing 6-month-old back to sleep.

Covell and Nancy Russell, seasoned child care workers, were employed at the center before they purchased it from their employer in 2004. For the first time since, the center, licensed to hold up to 32 children, has openings -- six of them.

Even after living in Vermont for 12 years, and Richmond, Va., before that, Russell, 61, still speaks with the accent of her native Odessa, Texas. Like Fairbrother, she has observed more and more children being taken from the day care as their parents look for ways to save.

“They take the children into what we call non-licensed providers: a family friend, a family member, a grandma. And I'm a grandma, so I can say those kinds of things,” she says.

“But that starts another whole domino effect, because then it pulls the children out of the licensed providers, who then have less children. And it affects us, because we can't afford to pay the staff that we need to have here. It's a whole vicious circle.”

At the beginning of the year, there were a total of 1,141 licensed day care providers in New Hampshire, a number that has dwindled to 1,036. In Vermont, the number rose slightly from 2008 to 2009, with 36 new providers bringing the number to 1,814. (These figures include stand-alone day care centers and home-based providers.)

Reeva Murphy, deputy commissioner of the Vermont Child Development Division, said that while the official number of providers in her state appears to be stable, there are a number of home-based providers who have shut their doors and have not yet informed the department.

“They're certainly seeing vacancies both in centers and family child care homes,” says Murphy. As a center decides whether or not it can stay open, she adds, “a few vacancies will make a big difference.”

“I have child care providers who have been in the business 20 to 25 years who have never had openings. These are providers who are now calling me and saying, ‘We have openings,' ” says Cathy Paradis, director of the child care resource and referral program at Family School Connections, a group that helps parents with children in Claremont schools. But the child care business is cyclical, and Paradis is already concerned about another shortage of providers in the future.

“What happens when things pick up and parents go back to work?” she says. “It's kind of a double-edged sword here.”

The effects of a bad economy have yet to hit The Kid's Place in Newport on a large scale. Still, the possibility that parents may be laid off is in the back of director Vicky Welch's mind. Should that happen, she’s concerned that several families would have to remove their children from her care.

“You don't want to lose them,” she says, “but in the economy today, I can't afford to not have the slots full and not have money coming in.”

From her office at the Dartmouth Child Care Project, Susan Lloyd has been observing changes in the child care landscape in the Upper Valley since 1981. Back then, there was only an informal program for Dartmouth employees; in recent years, the Child Care Project had been assisting between 500 and 600 families in searching for a child care provider, while also serving as a resource for people interested in starting their own in-home daycares.

In the most recent fiscal year, however, only 327 families contacted the Child Care Project. Lloyd is already expecting fewer calls for referrals this year.

“We are hearing from fewer families,” she says, “and we are finding that the families we are talking to are more financially stressed than I have ever known.”

In the past year, the number of providers with which the center works, based both in private homes and larger centers, has dropped from roughly 300 to around 275.

“It's the unseen ripple effect of the economy,” Lloyd says. “A lot of small businesses are really feeling the pinch, and child care is among them.”

Even in a strong economy, it's unlikely that Jessica Bagley would be able to find affordable child care.

On a weekday afternoon, Bagley, 23, has come to retrieve her 4-year-old daughter Cassidy from the Claremont apartment of her friends Glen Morton and Cameo Watrous. They watched her for free after Bagley babysat for Morton's two daughters during his night shift at the Price Chopper in Lebanon.

It's been a rough year for Bagley and Cassidy. Cassidy's bouts of sickness -- the colds and coughs that affect any child -- caused her to miss many days of work as a pharmacy stocker at the Claremont Wal-Mart. If she missed any more work, she feared she would be fired. So she quit in August 2008, and has struggled to find work since. The pair are currently living in the family shelter operated by Southwestern Family Services.

Before Bagley quit her job, her neighbors in the apartment complex she was living in agreed to watch Cassidy, free of charge, while Bagley was at work.

“That's really hard to find,” Bagley admitted. When Cassidy got sick, however, the neighbors didn't want their own child to get sick, and Bagley was left to find another arrangement for her daughter. Most of the day cares that Bagley considered charged an average of $200 per week; the most she ever brought home for a week of work at Wal-Mart was $300.

“Right there, if I had to pay for that by myself, that was almost my entire paycheck,” Bagley said.

As Bagley was talking to a reporter, an advertisement for a popular doll came on TV, and Cassidy jumped up and down in excitement. Jessica glanced at the TV, and sagged a little.

“OK, we'll look for Christmas,” she told Cassidy. “We'll tell Santa.”

In the Upper Valley, the average tuition per week for a full-time slot at a day care center runs between $200 and $300, while home providers typically charge $150, officials say.

Ideally, they say, child care expenses shouldn't take up more than 10 percent of a family's budget. “But that is not the status quo,” says Susan Lloyd. In many lower-income families, up to 30 percent of a family's income may go to child care costs. “It’s a huge financial burden for many families.”

That burden has led to increasing demand for state subsidies.

During the last week of September, the New Hampshire Child Development Bureau, which oversees the state's subsidy program, began a waiting list for child care assistance in response to the number of new applications to the program. Currently, more than 8,400 New Hampshire families receive child care assistance. The CDB told the Concord Monitor that the waiting list could top 1,000 families by next summer.The situation seems better in Vermont, where 7,500 families receive child care subsidies. There is no wait list for childcare financial assistance, and officials will change eligibility requirements beginning in January to allow more families to receive child care subsidies, say officials at the Child Development Division.

“It's a very slight expansion, but we're hoping to stay more current,” said Murphy.

Additionally, the Vermont Legislature approved $3.3 million in new funding for the child care financial assistance program, $1.5 million of which came from the federal stimulus program.

Nancy Fairbrother believes that many parents pulled their children out of The Children's Castle and placed them with a family member or a friend who would either take their children for free or charge less than the average $185 per week, or $42 per day, that Children's Castle charged parents. Other families are rearranging their work schedules so that one parent is home with the child at all times.

“I think you'll find a lot of parents are trying to work around scheduling, so they don't have to have day care, or they have very minimal day care,” says Fairbrother. Children's Castle founder and owner Claire Plamondon couldn’t be reached for comment.

It was an emotional announcement for Shirray Johnson, and one that sent her scrambling. She managed to enroll her daughter in the last spot available at the full-day, onsite child care center at Windsor County Head Start, where she pays $58 per week, a relatively low amount thanks to a sliding fee scale and the subsidy that she receives.

The subsidy has been instrumental in making sure that she could keep Ashlyn in daycare, and Ashlyn's father helps out as best he can. Still, “sometimes it didn't contribute enough, and sometimes I had to take (money) that I would pay for something else to make sure that day care was paid up,” says Johnson.

“I know from past experience with families myself, sometimes you can't afford to pay for it, and you're left without child care,” she added.

Fairbrother, meanwhile, says that she hasn't given up on the idea of perhaps opening her own day care one day.

“But it's a matter of financing, and at this moment in time, I don't see that happening,” she says.

Katie Beth Ryan can be reached at kbryan@vnews.com or at (603) 727-3234.