This story was first published 19th.
For more than a decade, Erin Farias has watched how low-income families who send their children to the day care centers she runs navigate America’s broken child care system. Many of those parents received government aid for tuition, but in half of the cases, Farias could not rely on her parents to pay her out-of-pocket costs. It was still too expensive.
Subsidies should make child care more accessible to those most in need, but families in many states still struggle to pay for child care. To be considered affordable by the Department of Health and Human Services, it must cost less than 7 percent of a family’s income. but, over half of the states Families receiving aid, including in Michigan, where Farias operates two day care centers, have to pay much more.
Over and over again, Farias said she had to either cover her own co-pays or ask her family to rack up large balances and ultimately find alternative treatment. “I was generous because I have a passion for people who are disadvantaged. I want to help kids break through barriers and become something different. I don’t want to give up,” Farias said. “But I was barely making a profit, and my employees had very little income.”
She said these challenges have often led her to question whether she should accept more children from low-income families. About 40% of the children at Little Smiles Day Care, which Farias opened in 2013 and where she is the director, receive subsidies. About 25 percent of the children at her second center, Little Her Smiles Her Christian Her Learning Center, are also low-income.
But the landscape of child care support is changing, and its costs are finally coming down.
In late February, President Joe Biden’s administration announced that states would require out-of-pocket spending caps so that households receiving subsidies pay no more than 7% of their income for child care.
It would make a big difference in places like New Hampshire, West Virginia, and Ohio that are burdened by these costs. 18-27% About the family budget. The new rules do not apply to thousands of other households, mostly low-income households, who pay exorbitant costs even though their incomes are too high to qualify for subsidies. It addresses urgent needs among people. families of color. More than 100,000 households are expected to benefit.
According to , this change is expected to save families about $200 a month on average. White House. new rules Some states can make changes quickly. Others would require parliamentary approval. All must be compliant by 2026.
“Affordability is key. It’s always the hardest thing families go through,” said Nina Perez, national early childhood campaign director at Moms Rising, a national network that promotes child care and other family policies. ” he says. She said, “It’s not the same in every state, but it’s amazing that this is having an impact in some of the states where people are suffering the most.”
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Biden administration announced Last summer, the state announced it was looking at ways to reduce child care costs by renewing the federal child care funding program, the Child Care and Development Block Grant. This block grant sends federal money to states to cover the cost of care for approximately 800,000 families in need. The administration proposed changing some terms of the subsidy, specifically to improve family savings and increase payments to health care providers to stabilize livelihoods. sick childcare system.
The child care industry has been under threat for years, but COVID-19 has brought it to the brink of collapse.Nursery schools are closed and there is a shortage of childcare workers almost 4 years To recover to pre-pandemic levels.Congress passed Additional childcare support Although they temporarily helped keep the center open during the pandemic, those funds ended in september.
During the pandemic, the state used additional funds to: try new methods The goal is to improve the childcare system, cap or completely eliminate out-of-pocket costs for families, and improve the pay structure for childcare workers.Both are general changes and are currently made permanent Targets all low-income households and the daycares that serve them.
just about 14 percent A report by the First Five Years Fund, a child care and early learning advocacy group, found that a smaller percentage of families eligible for child care subsidies actually enroll in the program. Part of the reason is copays. From 2005 to 2021, out-of-pocket costs rose faster than inflation, increasing by about 18%, the Department of Children and Families found.
Anne Hedgepeth, director of policy and advocacy at national advocacy group Child Care Aware, said low-income families eligible for the program are not taking advantage of it because of these high co-pays. .In fact, these families may be sending their children to more institutions. informal careor lose an opportunity There are no daycare centers available, so I have to work.
“For some families, the very existence of copayments is a barrier,” Hedgepeth said. “Even if only 100,000 households decline, those 100,000 households may still have difficulty scraping together their out-of-pocket payments.”
Improving provider stability is another part of the equation. The new rules will narrow the disparity in how households that take advantage of subsidies and high-income households that do not pay for care. This change could allow day cares to receive funding sooner and more regularly, making it easier to budget and hire staff.
Families who are not eligible for the subsidy system pay in advance when registering for a daycare center, and tuition fees do not change even if their child takes a day off due to illness or other reasons. But that’s not the case for students who receive aid in half of the U.S. states. For those children, the state pays child care providers based on the child’s daily attendance, not enrollment. rear Consideration will be given. This means that providers base their budgets on expectations of stable attendance, but may receive less than expected if attendance declines.
And children frequently miss childcare, especially due to illness. However, day care has fixed costs that must be covered, such as salaries and rent. These are difficult to manage because fluctuations in state payments can result in shortfalls. The rule change would require states to use the same payment structure for both high-income households and households receiving subsidies. The White House says about 140,000 childcare centers and home-based childcare centers are expected to benefit.
“I don’t think that’s possible. [overstate] “We are highlighting the importance of change in payment practices for providers,” Hedgepeth said. This change will encourage more providers to participate in the grant program, knowing they will continue to be compensated for serving low-income students in the same way they serve other children. There is a possibility that it will become possible.
about 73 percent A survey conducted in August by the National Association for the Education of Young Children, a child care advocacy group, found that a higher percentage of child care center directors and administrators would accept subsidized families if the subsidy was based on registration fees. I answered that it is highly likely.
Farias said changing billing practices during the pandemic is a game-changer for the health of a business. At the time, Michigan used temporary child care funding to switch to an enrollment-based billing model, a major change for the state. made permanent.
Farias said pandemic-era fundraising is the reason both of her centers are still open, especially the transition to registration-based billing. She said: “It was almost traumatic for her to imagine going back in time.”
For her business, the new rules “will change everything,” she said. She could better serve more low-income families, and more stable funding could lead to better pay for staff.
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The new rules also recommend other changes states can adopt to strengthen the child care sector. Among the key recommendations are improvements to the digital application process. 17 States still use paper forms and more prominently notify parents of exactly what their out-of-pocket costs will be.
States are encouraged to further reduce copayments or waive them entirely for certain families, such as very low-income families, families experiencing homelessness, foster care, and families with children with disabilities. ing.
“We hear many stories from families of children with disabilities who were unable to find care, or because child care providers had to foot the bill for higher needs. , childcare costs can be very high,” Perez said. “I think these are some of the biggest hits in parenting, and this is a really important part.”
Brittany Gregory, a North Carolina mother whose 3-year-old child receives child care assistance, said she thought her work at a children’s nonprofit helped her understand the subsidy system. But she said it was only when she had to apply for the grant herself that she realized “how complex” the system was. Few facilities accept subsidized children, and the out-of-pocket costs were higher than she expected. Changes that would make it easier for parents to go through this process are desperately needed, she said.
Although Gregory’s out-of-pocket costs are small (about 1% of his family’s income), he said it’s heartening to see the changes coming to his family.
“It’s really encouraging to see something being done instead of doing nothing,” Gregory said.
However, how much each state takes under the new rules will depend on funding. The rule does not include any additional funding, meaning existing funding will have to be shuffled from other parts of the child care system.
State legislatures can choose to provide additional funding beyond the federally appropriated appropriations at the request of the state. new mexico I’ve done it. However, insisting that childcare is a priority among other competing needs is an ongoing challenge.
For years, states have struggled to comply with child care and development block grant requirements, but some states still years past the deadline For compliance regarding safety issues. At the heart of this story, and this story, is funding.
In Ohio, where out-of-pocket costs are the highest at 27% of household income, advocates are concerned about the state’s ability to comply. Ohio had already received the following orders from the federal government: Improve your payout rate For providers, Increasing childcare options for low-income families person receiving assistance. From now on, the government will have to bear most of the child support costs for such families.
“Who is really going to bear the burden of this change? And at least now in Ohio, the focus is consistently on child care providers, as the Legislature supports the healthy expansion of child care programs. Because we’re not consistently investing money in it,” budget researcher Katherine Poe said. She collaborates with Policy Matters Ohio, a nonprofit policy research organization.
A spokesperson for the Ohio Department of Children and Youth Affairs, which administers the child care program, said in a statement that Ohio is “currently reviewing the new federal requirements in light of current rules and processes to evaluate the potential impact and necessary changes.” We are making a comprehensive evaluation.” The changes may not take effect until 2026, as the department expects to apply for a two-year exemption granted as part of the rule to get more time to make the changes. is high.
At the end of the day, what’s happening in Ohio’s child care system is that many stakeholders are “fighting over the same stuff,” says Policy Matters Ohio’s operations specialist and worker center network liaison. says Ali Smith.
How well states are able to allocate funds to actually comply with the new regulations will determine how far-reaching the impact will be.
“If the federal government is actually going to do something like this, it needs to ask the states to actually monitor how these funds are being used,” Poe said. . “Because we already know in states like Ohio that there are risks if it’s not fully implemented in the way that we think the federal government actually has in mind.”