‘It just doesn’t add up’: Why the fees parents pay won’t cover the full cost of child care

Over a four-hour Assembly hearing on legislation relating to child care last week, several witnesses returned again and again to a measure that wasn’t on the table.

The official agenda for the Sept. 6 public hearing covered Republican  proposals to address the growing crisis in child care in Wisconsin, including a loan program to encourage new child care providers to enter the field; new rules allowing higher ratios of  children to teachers and allowing home-based providers to take in more kids; and a measure that would lower the minimum age for entry-level child care workers from 18 to 16. 

But providers, advocates and Democratic lawmakers kept bringing up funding through Child Care Counts, a program that is set to expire in January. 

“Vote NO to this and vote yes to Child Care Counts,” Corrine Hendrickson, a family child care provider and one of the leaders of a child care advocacy group, said in her testimony criticizing the Republican bills.

For more than two years the Wisconsin Department of Children and Families (DCF) paid out $20 million a month through Child Care Counts to support thousands of child care providers in the state. The support enabled many of them to raise wages for child care workers without having to charge parents more in fees. 

“It increased the number of programs getting started for the first time in decades,” Hendrickson testified. The money helped increase by 25% the number of providers who participated in the WisconsinShares assistance program for low-income parents who need child care, she added, and it “drastically slowed the closure of family child care.”

The money came from the state’s share of federal COVID-19 pandemic relief funds. Starting in June, the Child Care Counts payments were cut in half, to $10 million a month, and in January they will go away entirely. 

In June Republican lawmakers who hold 12 of the 16 seats on the Legislature’s budget-writing Joint Finance Committee rejected Gov. Tony Evers’ proposal to continue Child Care Counts in the 2023-25 budget with $340 million in state funds. 

Evers has since called a special session for Sept. 20 with an agenda that includes new funding for Child Care Counts — now boosted to $365 million. GOP leaders have openly dismissed the proposals and have since advanced a $2.9 billion tax cut bill instead.

During the Assembly Children and Families Committee hearing Wednesday, Rep. Jill Billings (D-La Crosse) spent several minutes praising Child Care Counts for sustaining child care providers and asking DCF witnesses what other approaches they might suggest to extend that sort of support.

“All right — again, kind of stick with the bills here,” Rep. Pat Snyder (R-Schofield), the committee chair, wearily told Billings. “I know that you’re passionate about Kids Counts, but we kind of get off topic here a little bit.”

But Billings and other Democrats on the committee, along with several providers and their advocates who testified at the hearing, said again and again that only an expenditure approaching the size of Child Care Counts could reverse the skyrocketing hikes in child care fees that parents face and program  closures across the state.

“Without the ongoing support to recruit and retain educators, rates are already going up for parents and providers are considering closing or leaving the field,” Ruth Schmidt, executive director of the Wisconsin Early Childhood Association (WECA), said in her testimony. 

Schmidt cited a survey her organization has conducted of hundreds of child care providers and employees this summer. “It is clear an infusion of state revenue is necessary to work to stabilize this long-challenged industry.”

Quality, affordability and child care wages

That has been a consistent message for months from child care providers and their supporters, and it is coming from outside analysts as well: For child care to be high quality and affordable, relying on parent fees alone won’t work.

Federal pandemic aid “kept doors open, kept children in care, and parents were able to go to work,” said Schmidt. “Our organization has been calling for this type of investment for many years, long before the pandemic.”

DCF legislative advisor Ragen Shapiro testified that Child Care Counts helped bolster accessibility, affordability and quality in child care while also helping to improve wages, drawing more people into the child care workforce. 

A robust system of high quality, accessible and affordable child care “has widespread impacts for children’s well-being, family economic security, the workforce, and local and state economies,” Shapiro said. “This is why [child] care investments, much like infrastructure investments, help build broader economic growth overall.” 

Access to child care makes it possible for more parents to work, she observed. “Solving this is not only essential for family economic security, but it’s necessary for businesses and communities that are supported by the labor force participation of parents.”

Child care “is not a money-making industry by any means,” Shapiro added. When providers hold down tuition costs, they wind up depressing the wages of child care workers, who are “leaving in droves.” 

 “We know providers from all corners of the state that have positions open that they cannot fill,” said Priya Bhatia, administrator for DCF’s Division of Early Care and Education. “Simply put, the usual rules that we use for supply and demand don’t work here because the child care market is broken.”

GOP lawmakers at Wednesday’s hearing seemed unwilling to accept the idea of ongoing support for the child care sector beyond what parents can pay. 

“We have a broken child care model,” testified Rep. Joy Goeben (R-Hobart), the Assembly member listed as lead author on five of the six Republican child care bills. “We have already put a great amount of money into child care, and centers are still closing.”

After Shapiro and Bhatia described the conflicting financial pressures on child care providers and how Child Care Counts had helped alleviate some of those pressures, Rep. Ty Bodden (R-Hilbert) asked, “Is there anything that should have been included or could be included in the future that wouldn’t cost the state any money?”

Rep. Barb Dittrich (R-Oconomowoc) reminisced about her own experiences as a mother. “This problem with child care has been forever — it’s always been low-wage, it’s always been a thankless job,” she said. “When my kids were young, I had tough choices to make. I had in-home child care some days, I had my parents helping me out some days.”

Rejecting the idea of “the government opening up their wallet and paying for the whole thing,” Dittrich insisted that “there are a variety of options” for parents.

She cited a published report that a child care center in the Waukesha County community of Hartland — “not necessarily a low-income community” — had received $443,000 over three years from Child Care Counts. “Those are the kinds of things that concern me,” Dittrich said.

“What can we do structurally to improve this business model?” she asked. “It’s like solving a Rubik’s Cube, and throwing more money at it is not the answer.”

Without much more substantial support, however, outside analysts say that the child care sector will suffer in quality, many parents will likely drop out of the workforce and the broader economy will struggle as a consequence.

Why costs are high and wages are low

Quality child care is expensive. “Right now, child care costs are unaffordable for many families,” says Elise Gould, senior economist at the Economic Policy Institute in Washington, D.C. “And yet what they want is high quality child care, and you have to pay for that.”

Workers are “undervalued and underpaid in that sector,” Gould adds in an interview. “It just doesn’t add up.”

Low-income families can qualify for federally funded assistance, but “it’s only available to certain people who are eligible,” says Brandy Jones Lawrence, a senior analyst at the Center for the Study of Child Care Employment at the University of California, Berkeley. “And if you are making $1 more than the cliff that cuts you off as ineligible, then you have no support for child care and you’re completely on your own.”

Quality child care requires keeping the number of children per teacher small, which means requiring more teachers, Lawrence adds in an interview.

“We know that in order to have a successful early childhood experience, we need low ratios, because we need enough big people in the room to pay attention to the little people in the room to support their learning, development and growth,” she says. Small class sizes, she adds, also make it possible for children in care to have plenty of room to play and interact without overstimulating them. 

While some see the resulting staffing patterns as “expensive,” Lawrence calls them “critical and necessary for this part of the educational continuum to build that foundation for successful learning in those babies and children.”

A May report from the Wisconsin Policy Forum highlighted the tension between the low wages for child care workers, the high cost of having enough sufficiently trained child educators, and the challenge of keeping child care fees affordable. 

In Milwaukee County parents must pay on average more than $12,000 a year to have a 4-year-old in child care and more than $16,000 a year for an infant — 22% to nearly 30% of the median family’s household income, the report found. That’s three to four times more than the federal recommendation that 7% of a household’s income be spent on child care.

“Absent external investments or interventions, the cost of quality can quickly erode operators’ sustainability and further strain families’ budgets without providing compensation to child care workers that reflects the social and economic importance of their work,” the report states.

A public good

The international Organisation for Economic Co-operation and Development (OECD) reports that in 2019 U.S. public spending on child care and preschool education for children up to age 6 amounted to less than half of 1% of U.S. gross domestic product (GDP). That placed the U.S. at 33rd out of 37 countries. (More recent numbers aren’t yet available, according to the OECD.)

“We are one of the only major countries that do not offer support for families in this area — government-sponsored support,” says Lawrence.

The highest-spending countries were in northern Europe — Iceland, Norway, Sweden, Denmark and Finland among them — with public spending on care and education in those first six or seven years ranging from 1.2% to more than 1.6% of GDP.

In raw dollars the difference is even more dramatic: Iceland and Norway, for example, spent $16,000 a year per child in public funds in the first six years. The U.S. spent less than $4,000 per child, ranking 28th out of 35.

“So many of them spend more money on child care,” says Gould. “They also have more benefits as parents in terms of paid parental leave.”

Both Gould and Lawrence view child care as a public good, serving the broad public through the development of the next generation. 

Federal and state governments have an interest in helping sustain child care, Lawrence says. The private sector also has a role, she contends, “in helping to make sure that early education is accessible and provided in the communities that they benefit from and [for their] workforce.”

Some corporate leaders do appear to be recognizing that, she suggests. 

The COVID-19 pandemic “has given us this in-your-face understanding of how incredibly important child care is to the productivity and the economic sustainability of your workforce,” Lawrence says. “They are taking notice in a very intentional way for the first time, probably in the history of child care being provided.”