Hiring and keeping staff has been the greatest challenge for the Stay ’n Play child care centers in Litchfield and Willmar. Pay is typically around $15 an hour, including a $2 bonus that stems from federal COVID-19 relief money. But raising wages above that would mean increasing tuition, which executive director Kristin Jaquith said isn’t so easy.
“Parents can’t afford to pay any more,” Jaquith told MinnPost. “We’re rural, so our rates are quite a bit lower than what they are in the metro.”
Jaquith’s dilemma is not unique. Industry leaders and politicians — all the way up to Treasury Secretary Janet Yellen — say the economics of the child care sector in Minnesota and beyond have long been broken, creating a system of high prices for parents, low pay for workers, and businesses operating precariously on razor-thin margins.
As a result, Democrats who control Minnesota’s government have proposed a massive expansion of spending on child care from the state’s historic budget surplus in a push to revitalize the industry and cut costs for families. It’s complicated to tally an exact figure aimed at children who are too young for school, but Gov. Tim Walz’s $65.2 billion two-year budget plan would lead to several billion in new state spending with direct ties to child care over the next four years.
That money would increase subsidy rates for low-income families to meet federal recommendations, which is something DFLers have wanted for years but stalled while Republicans controlled the state Senate. Walz would also significantly expand a tax credit that would help parents cover tuition.
And the governor wants to offer permanent monthly payments for child care providers meant to give child care workers pay raises statewide and keep businesses afloat. Regular grants for the sector began during the pandemic, but the idea of turning money meant to stabilize the industry amid COVID-19 into a long-term infusion of cash would be a first in Minnesota.
Republicans have been wary about much of the spending, arguing the family subsidy program was recently troubled by sweeping fraud allegations. Some say burdensome government regulations are more to blame for the continuing decline in smaller family child care providers in mostly rural areas across the state.
[image_credit]Office of the Governor[/image_credit][image_caption]Gov. Tim Walz and Lt. Gov. Peggy Flanagan visiting the YWCA Minneapolis Children's Center at Ecolab in downtown St. Paul earlier this month.[/image_caption]
“It is important that we begin to recognize how critical this sector is for our economy, not only now for parents and employers, but also in the long run for the benefit of kids as well,” said Rep. Dave Pinto, a St. Paul DFLer who leads the House’s Children and Families Finance and Policy Committee.
Low wages, high tuition
For years, lawmakers have studied how the number of smaller in-home, family providers have plummeted across the state. And they have scrutinized why teacher pay remains dismally low while child care prices in the state, especially in the Twin Cities metro area, can cost as much as college tuition.
Those issues predate the pandemic. But they also reached crisis levels as COVID-19 caused parents to withdraw children from child care. That starved providers of critical income while they were asked to remain open to serve the kids of essential workers.
Minnesota tried to keep its industry intact with a series of payments to providers, much of which was paid for by federal cash. But problems remain now that enrollment is back up. The average tuition for an infant in a child care center in Minnesota is more than $16,000 a year, while the average cost for an infant enrolled with a family child care provider is more than $8,500. That’s according to a report issued in February by a child care task force that includes industry advocates, as well as Walz officials, plus DFL and Republican lawmakers.
But the income for providers is limited by regulations, namely small staff-to-child ratios meant to ensure safety and quality. Most of a child care provider’s expenses are staffing costs.
In 2018, Minnesota had about 8,119 family providers and about 1,761 licensed child care centers. The number of licensed family providers, which serve mostly rural areas, has dropped as low as 6,250. The number of licensed centers has ticked up to more than 1,800, though most of the growth is in the Twin Cities metro, said Clare Sanford, government relations chair for the Minnesota Child Care Association, a trade group representing centers. (Jaquith is also on the MCCA board.) Centers and in-home providers are two common types of child care operations, though there are others, including school-based pre-K.
One problem for child care providers has been hiring and retaining employees on low salaries. “Our own child care workforce is still about 8% below the already inadequate levels we had before the pandemic,” Sanford said during a January hearing in Pinto’s committee. “We are not even back to the bad place we were in before.”
Gospel Kordah, an advocate for the Kids Count on Us campaign run by the progressive organization ISAIAH, testified that he opened a child care business during the pandemic, but they closed down because they couldn’t find and keep qualified teachers. Kordah said they lost lots of staff to Amazon, or other nearby industries with higher wages.
Walz budget plan goes big
Since being reelected, Gov. Tim Walz has pledged to make Minnesota the best state to raise a family. And a large slice of the governor’s budget plan is related to child care for infants and kids too young for school. Much of that cash would be distributed as tax credits.
One major item Walz proposed — about $2.33 billion over the next four years — is an expanded child tax credit. That’s not solely targeted for the youngest kids. It would allow some families to get $1,000 a year for each child under age 18, up to a maximum of $3,000. The credit would start to phase out starting at $50,000 in income for married couples and $33,300 for single filers.
But another large tax credit is squarely aimed at who Lt. Gov. Peggy Flanagan has taken to calling our “littlest Minnesotans.”
The Walz budget would expand a child and dependent care credit at a cost of $1.1 billion over four years. Under that plan, families would get $4,000 a year for every child under the age of 5 for child care expenses, up to a maximum of $10,500. This credit would begin to phase out at $200,000 in total household income. Parents of older children would get some money under the proposal as well.
[image_credit]Minnesota House Media Services screen shot[/image_credit][image_caption]Gospel Kordah, an advocate for the Kids Count on Us campaign run by the progressive organization ISAIAH, testified that he opened a child care business during the pandemic, but they closed down because they couldn’t find and keep qualified teachers.[/image_caption]
Early in 2020, soon after the COVID-19 pandemic hit, Minnesota approved $30 million to keep the child care industry running. In the summer of 2021, however, the state began its “child care stabilization grants” program, giving monthly payments to most providers. Most of the cash was earmarked for worker pay, and the program was paid for by money in the federal American Rescue Plan stimulus package. The state distributed more than $146 million between June of 2021 and June of 2022, the program’s first year.
Nearly 8,000 providers received some money from the program in that time frame, and 96% in a survey released by the state said the grants were helpful in keeping their program open and operating. The initiative is set to end in June.
Debra Messenger, another Kids Count on Us advocate and child care provider in St. Paul, testified that one of her staff members cried when they got a bonus from the stabilization grants. “They cried because they were overwhelmed at how impactful a few hundred dollars was for them,” she said.
Walz’s new proposal, dubbed “retention payments,” would have some differences from the stabilization program. But the basic concept would be the same. “What we hear from child care providers across the state is how essential those payments are,” said Erin Bailey, who leads Walz’s Children’s Cabinet.
Another proposal would pump $484 million over the next four years into a full-day pre-K program that would include public schools and private child care programs.
What the Legislature is doing
State lawmakers haven’t promised to adopt all of Walz’s proposals, which even include creating a new state agency focused on children and families. DFLers are advancing a similar child and dependent care tax credit. But so far, the Legislature has made the most progress on raising reimbursement rates in the Child Care Assistance Program, the main program that subsidizes low-income families and serves about 30,000 kids every month.
Minnesota has been lagging behind federal recommendations for the program for years, and as recently as 2020 the state faced sanctions for having reimbursement rates below minimum standards.
The feds recommend rates at the 75th percentile of a market-rate survey for what providers charge, which Democrats have long pushed to obtain. Under those rates, a parent would have the full cost of tuition covered at three out of four providers. Supporters say higher rates would make it easier for more providers to accept kids using the subsidy, and raise income for businesses that already take kids accessing the program.
Following the notice from the feds, lawmakers in 2020 and 2021 hiked the maximum rates incrementally. The state is now at the 40th percentile of what providers charge to care for infants and toddlers, and at the 30th percentile for preschool and school-aged children.
But House Democrats this year wasted little time in approving a bill on a 69-59, party-line vote, to meet the 75th percentile rates. Walz also proposed a rate hike to the 75th percentile in his budget.
The Senate DFL has yet to vote on the measure but the policy cleared a key committee. Raising Child Care Assistance Program rates would cost Minnesota roughly $360 million over four years on top of existing programs costs and comes with some federal cash.
The state House also passed a bill to continue stabilization grants at current rates for a few more months, using $12.25 million in state money. Payments are expected to drop in March without the measure. They end altogether in June unless lawmakers continue them in some fashion. That same bill also had $40 million for early learning scholarships, which help low-income families access high-quality child care programs. The program has bipartisan support, and Walz also proposed expanding the number of scholarships long term.
Pinto said the money for stabilization grants and scholarships was a temporary stop-gap for the industry until lawmakers strike a broader agreement on how much money to spend on what issues. That will come after an economic forecast that will be released Monday.
[image_credit]Minnesota House Media Services screen shot[/image_credit][image_caption]“It is important that we begin to recognize how critical this sector is for our economy, not only now for parents and employers, but also in the long run for the benefit of kids as well,” said Rep. Dave Pinto, a St. Paul DFLer who leads the House’s Children and Families Finance and Policy Committee.[/image_caption]
In December, the Star Tribune reported that two people charged with stealing millions from a federal meals program had continued to collect public money in the Child Care Assistance Program. The Minnesota Department of Human Services distributed at least $22 million in the last five years to centers owned or managed by 14 people indicted on federal charges of fraud in the meals program, the Star Tribune reported.
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“I know that child care centers need funding, and it’s critical we do that,” said Rep. Brian Daniels of Waseca, who is the top Republican on Pinto’s committee. “But I don’t see (how) maybe, possibly, throwing fuel on the fire, if there’s more fraud, is going to help.”
Pinto’s Child Care Assistance Program bill included a provision meant to give DHS more power to stop payments to people accused of fraud in other programs, though Republicans said it wasn’t strong enough.
During a House floor debate, Rep. Anne Neu Brindley, R-North Branch, said the stabilization grants didn’t do enough to stem losses in family child care providers. And so lawmakers shouldn’t pump more money into what she believes was a failed solution. “It is not stabilizing the child care crisis that we have in Minnesota,” Neu Brindley said.
[image_credit]Minnesota House Media Services screen shot[/image_credit][image_caption]During a House floor debate, Rep. Anne Neu Brindley, R-North Branch, said the stabilization grants didn’t do enough to stem losses in family child care providers.[/image_caption]
Who was prosecuted for the Feeding our Future and Child Care Assistance Program fraud? I haven’t seen anything on those charges for awhile. Until lawmakers can control the spending plus stop the fraud, taxpayers should raise the red flag and demand accountability from elected officials.
In the past few days there has been a call here at Minnpost, for taxpayers to cover childcare, sidewalk snow removal, rent control, more money for public schools, more money for alternative police services, more money for transit services, pay for solar and wind, cover delinquent college loans, more money for HUD 2.0, more money for health services, and many more programs. Wow, when does it stop? That was a weeks worth of Lefty demands on taxpayers!
Maybe the blue states and counties should just stop funneling money into the red ones. That would allow the blue areas to pay for everything you mentioned.
Ian, with a national debt of 32+ TRILLION, maybe a bit more scrutiny on what we spend money on at a Government level would help. Not sure you understand this, but debt does come due…… Always has ramifications when it does!
Since national defense is such a huge part of national spending (and the originator of our national debt), maybe we should just send some invoices based on how much various entities benefited from that service. The wealthiest 1% can foot 35% of the bill, the next top 4% can chip in 27%, the next 5% gives 11% and so on. Those in the bottom 50% of wealth holders would only need to provide less than 5%.
Conservatives won’t want that of course because despite their rhetoric their entire belief system is based on keeping the rich rich and the poor poor. This is why the places where conservatives have the most influence are the poorest and most violent. And somewhat ironically, if predictably, the most dependent on government funds.
Just think of all the new taxes that will be needed in two years. Of course none of these programs will be cut in two years.
All this one time money with no idea how it will be funded in the future.
This spending orgy will really hurt in two years.
The people pulling the wagon will be leaving.
Good riddance. I’d certainly prefer to live amongst a community of people that recognize that taxing and spending is a form of investment that often pays for itself. There isn’t much better of an example of this than universal child care.
Tyler, how’s that near Trillion dollar per year public school investment going? How about the 23 Trillion spent for “war on poverty “ since 1065, how’s that going? Please stop with the investment in our future stuff, Government wastes money left and right.
They’re going pretty well actually, good point. If anything, we need to invest more to make sure we utilize our education and anti-poverty programs to their full potential. That way these programs can continue to build our base of middle class consumers and further grow our economy. You’re familiar with trickle up economics, correct?
Joe wishes for the days prior to 1965 when conservatives could at least have the separate part of separate but equal. It made ensuring the equal part of that never happens. Everything conservatives do is working to bring back those days. Well, actually, these days, they seem to be pushing that date back further and are looking to take another shot at the “lost cause” they championed in 1961.
Tyler, your idea of pretty well and my idea of pretty well are very different. The USA is dropping yearly in math, comprehension and reading worldwide. That is not “pretty well” to me.
Agreed. I think a smart course of action would be changing the way schools are funded so they are no longer tied to property taxes. That way we can better fund schools that struggle to get the funding they need and most often have the lowest math and reading scores. Great point, Joe!
No Tyler what the monopoly that is public schools need is competition. Have a voucher system that follows the child from school to school. Bad schools, like poorly run businesses, would just fade away. Now that would help unlike a different tax base that would do nothing.
Redundant schools won’t fix the problem. I’m waiting for conservatives to suggest we use vouchers for funding police departments. People can choose their police force and bad policing will “fade away”.
The absolute blatant ridiculousness of conservative ideas would be unbelievable if they weren’t so widely held. They have the ability to complain about the outcomes of the U.S. education system while continually working to dismantle it. Conservatives want to make teaching history and science illegal, pay teachers to teach propaganda, and fund private/homeschooling that is literally fascist. Meanwhile, they want to compare outcomes to countries that have shown clearly the benefits of having many of the programs they decry as evil socialism. The desire to think that makes sense shows the depth and depravity of conservative indoctrination. This is why they are always looking to make teaching so difficult. Education achievement is, after all, a primary indicator of whether a person will reject their sick ideology.
Asking a conservative for their opinion on education is like asking a creationist for their opinion on evolution.
When did you graduate? If you’re going to gripe about how uneducated everyone is nowadays, you really ought to show how exemplary your education was, including modelling proofreading and punctuation skills on public forums. That’s not what you’re griping about, though. I’m not sure you even know your motives, but they aren’t based on logic or reason. Just like Rep. Neu Brimley at the end of the piece – all noise, no solution. At some point, I’d really like to understand what drives that behavior, but I’m not interested from a political perspective.
This morning, I asked ChatGPT to draft a disorganized, yet angry, right wing rant about government spending. It declined to do so.
There goes that theory.
Not much credibility to that statement when red states and counties are those most dependent on government funds Funds that are gathered to a greater degree in blue states and counties. The data shows that who is pulling and who is riding is the opposite of what conservatives say. Basically the same as any other topic.
None of this actually lowers the cost of providing child care. It just changes who pays for it.
I don’t see a way to lower the cost of childcare without lowering the quality of the childcare.
Well yes, because the only way cost comes down is by the unacceptable removal of safety regulations that keep children from dying as a result of substandard care. So either you accept dead kids, and child care under horrifically overcrowded conditions, or you accept paying higher taxes to allow child care to function in a manner that allows care givers and customers to survive.
There are some regulations that can be relaxed without incurring too much risk. Minnesota is the only state in the US that requires a four-year college degree for those who work in Child Care as full teachers. Assistants don’t have to have a four year degree. This increases the cost significantly. Plus the ratios could be lowered slightly without killing children. Apparently every other state in the US is okay with this. We have some of the highest cost daycare in the US but its mostly because of regulations that could be relaxed somewhat.
Who’s kids are you willing to sacrifice? You act as if the regulations were just created willy-nilly with no thought. Disagree if you like, but don’t pretend that the problems those regulations were created to solve don’t exist.
I’m pretty sure both Wisconsin and Iowa have capacity limits that aren’t as limiting as Minnesota. Here, you can’t have more than 6 kids that aren’t school age, and only 3 under the age of 2. I’m not saying go to 12 like Texas, but it does make it tough to earn anything other than a supplementary income, and absolutely keeps people out of the business and drives people away from it.
I left one of those states, Wisconsin, for a reason, and would never live in the other, even if they paid me to do so. If it’s impossible to make a living safely providing care to children, the answer is not to make caring for children less safe. I’ll ask you too. Why do you suppose those regulations exist? Because those who crafted them don’t want affordable childcare to exist? Or because situations occured that illustrated the need for the regulations.
Well, when families can afford to both feed their children and have only 1 income, and have an unpaid family member take care of their children for them again, we’ll be getting somewhere. But then, if we got there, families could probably afford child care with 2 incomes and no one staying home. I don’t have children, but I’m not all bent out of shape over the idea that I might have to chip in to make sure kids are cared for, even when their parents have to work. There are so many benefits to me, even discounting my desire for humans to be treated humanely, that I am certain the few dollars a year I contribute will pay societal (and tax) dividends in reducing poverty, reducing crime, increasing independence of workers, etc. etc. etc.
so you are going to subsidize the supply side of the equation and raise the cost of doing business and think the cost wont go up dramatically?
DFLers never took economics classes, did they.
Subsidizing the supply side also will bring more suppliers into the market, who will have to compete, which will place a ceiling on prices. Sounds like someone never made it past Reaganomics.
“It’s not a problem for Andy, so there’s no need to do anything about it.”
With that, I’ve saved you the trouble of posting any further on this story.
You’re welcome.
“Baby’s First Market Failure” [NPR]
Daycare costs too much and daycare staff can’t live on their earnings.
Fundamental capitalism failure.
https://www.npr.org/2023/02/02/1153931108/day-care-market-expensive-child-care-waitlists
My wife runs a childcare center and she has to spend a staggering amount of time and effort seeking out funding from a long list of well-meaning non-profits. All of whom have their own criteria for funding which makes compliance a nightmare. What the childcare industry really needs is a permanent and direct funding source from the state to boost the low wages of providers. This is a crisis that cannot be solved by non-profit funding. The right-wing’s belief that private charities can solve this dilemma is not panning out. We have created a nightmare scenario for new parents who require care for their children in order to maintain their employment and are unable to find available openings for their kids. The free market is not working.
Thank you for providing that perspective.
All of this is really a subsidy to corporate profits. Providing government subsidized childcare means companies don’t have to pay wages that are high enough to allow employees to pay for childcare. The government uses long-term debt to boost short-term corporate profit.
Unfortunately, that’s not how it pans out. I’m all for providing a living wage, no matter what the work. The problem is that child care has a much higher employee to business income ratio. If you increase wages to a level where people can afford child care (and I’m all for that), but don’t also increase the incomes of child care workers, those child care workers will work somewhere else. Even McDonald’s pays more on an hourly basis. But if you also increase wages of child care workers, then child care becomes unaffordable again. Unfortunately, without societal support, it’s a rock and a hard place situation.
As wages rise some work becomes uneconomical or subject to automation. Childcare (or almost any caregiving job) is really difficult to automate and you can’t outsource it to a low-wage country. If wages rise we will also see people who are not currently seeking employment take jobs.
There are two choices here that work: force companies to pay enough that their employees can afford to raise children or make them pay more taxes to subsidize the cost of childcare for their employees. We can’t go into public debt to keep corporate profits high. We also can’t have a society where creating the next generation is “uneconomical”.
When Biden raised the minimum wage for federal employees it made a big difference for low wage workers even if they were employed in the private sector. Nobody should be working full time for the state at a wage low enough where they qualify for low-income government subsidies. Pay public employees a living wage and it will force the private sector to match.