Minnesota child care providers are struggling to keep their electricity on and their doors open. Families are struggling to pay for their services. It’s a chicken-and-the-egg scenario for many providers: If they pay their workers more, the cost for families will go up and they’ll lose business. If they pay their already low-wage workers less, they’ll lose workers and the ability to take care of all of their enrolled kids.
Democrats are looking to solve — or at least help solve — this child care dilemma as part of the Build Back Better Act, their $3.5 trillion federal spending bill. Among a host of new policies and programs in the bill are several new federal funding streams aimed at providing what advocates are calling “universal child care.”
The plans are ambitious. “This is the biggest thing to happen to the early childhood field ever in our country’s history, that [universal child care] is even being debated right now at this scale,” said Clare Sanford, government relations chair for the Minnesota Child Care Association.
But the child care industry is complicated. What, exactly, do Democrats mean when they say they’re delivering universal child care to American families?
How will Congress achieve universal child care?”
In general, the plans outlined in the Build Back Better Act achieve “universal” child care by significantly increasing the amount of funding provided by the federal government to states to subsidize citizens’ child care costs. The funds appropriated for this program are so far expected to be $20 billion for fiscal year 2022, $30 billion for 2023, and $40 billion for 2024 to remain available through 2027.
While most states, including Minnesota, already have programs that subsidize child care for low-income families, the Build Back Better Act creates new programs that subsidize child care for all families.
“The money is not going into existing programs that states already have. It is creating new funding streams,” said Sanford, who has been working with lawmakers on some child care sections of the Build Back Better Act. “There are existing government structures that federal money flows through to families and child care providers at the state level. But the way this bill is written, those will be vastly overhauled and two brand new funding streams will be created at the federal level.”
The new federal programs would still consider a family’s income when determining the level of subsidy, but the subsidies for all families would be more generous than under the current system. An amendment to the bill introduced by Fifth District Rep. Ilhan Omar, who is the whip of the Congressional Progressive Caucus, establishes caps for the amount of a family’s annual income spent on child care, with no family paying more than seven percent of their income.
As for what types of child care is eligible for the programs, the bill would cover both large institutional child care and family-based child care programs, according to Minnesota Sen. Tina Smith, a long-time advocate for expanded child care who is following the legislation in the House closely.
“This was designed specifically to not push out family providers, specifically to recognize and respect the crucial role that they provide,” Smith said.
The bill also outlines plans for universal preschool in which each state would receive “100 percent of the State’s expenditures in the year for preschool services.”
There is other child-care related spending in the bill’s current form, as well, including a permanent expansion of the Child and Dependent Care Tax Credit and an expansion of the Child Tax Credit, $15 billion for child care facilities, and the establishment of a Child Care Wage Grant program to increase wages for child care providers, among other investments that support working families.
During the House Ways and Means Committee’s markup of the bill, chairman Richard Neal (D-MA) said that this bill would “help raise the floor for child care provider pay” by investing in child care wage grants for small businesses.
The Build Back Better Act outlines a grant program that reserves nearly $1.5 billion for awarding grants to qualifying child care providers who need the funds to offset operating costs and provide “competitive wages, benefits, and other supportive services, including transportation, child care, dependent care, workplace accommodations, and workplace health and safety protections.” A grant awarded under this program will last for 3 years, and can be renewed.
Is it enough?
All that new spending might still not be enough to meet child care needs, according to the Minnesota Child Care Association’s Sanford. Even if every family is able to afford child care thanks to the subsidies, there will not be enough spots at child care facilities to keep up with the new demand.
A report by the Minnesota Center for Rural Policy and Development found that “most rural regions” in Minnesota are “child care deserts,” meaning that there are not enough providers to fulfill the demand for child care in those areas. Providers and advocates are hoping that the Build Back Better Act will give enough money to states so that providers can raise wages for their workers and cover operating expenses. Some say that grants from earlier this year — both for providers and for families — have already run dry.
“A lot of families had gotten off waiting lists [for scholarships] this spring, but it was like if your application happened to be at the top of the pile you got funding,” said Christina Valdez, director of Listos Preschool & Child Care in Rochester. “Now, they’re back to long waiting lists again.”
For now, the economics of the child care industry are tough for providers. Valdez said that the caregivers at Listos, a bilingual child care provider, make around $18 per hour, and the company is unable to sponsor health insurance.
“If you’re not getting health care through your spouse, it’s really hard to get good health care…so it really puts you in a hard position,” Valdez said.
Mary Solheim, director of Playschool Child Care Center in Maplewood, said that Playschool has been operating at a loss for the last two years.
“We’ve done a lot of decreasing of the excess expenses,” Solheim said. “Payroll is the thing we always pay first, and everything else becomes what we try to prioritize.” Solheim said her Playschool location has had to put off paying essential bills like electricity in order to pay their workers.
These providers expressed hope that with more federal money in the system, conditions could improve for families and workers alike.
“I just really feel like we have a true opportunity right now to make huge changes,” Valdez said. “We know that spending money on children ages zero to five is going to have a lifetime, positive impact. We know that. I mean, it’s a good investment. And so I want to see real, true changes being made that will really benefit families, children and early educators.”