Childcare costs pinch working families

Roadblocks in childcare funding
Childcare costs pinch working families
Making it work: Amy Shannon and her husband, Jim Cumming, holding their son, Rowen, are looking for quality childcare options within their budget and another child on the way.

In the College Club tutor room at Verona Area High School, Kionna Moore, a single working mother, explains to a student why a number sequence is neither arithmetic nor geometry. Math is her thing.

Moore has worked as a tutor for the Boys & Girls Club since 2013, and for the University of Wisconsin-Madison’s summer PEOPLE Program prior to that. Through her work, she is helping to close the achievement gap. But employment gaps have created professional barriers for Moore; not for lack of opportunity or motivation, but simply because she couldn’t afford to work.

Moore, a 2006 graduate of Howard University in Washington, D.C., with a degree in business, had no intention of being what some call a “welfare mom.” But in 2011, while she was rethinking her career path and working a minimum-wage job to support herself and her daughter, Aalayah, now seven, she faced a difficult choice. She’d been dropped from Wisconsin Shares–the childcare subsidy program run by the state’s Department of Children and Families, or DCF–when Aalayah began receiving Social Security survivor benefits after her father passed away. Moore says she also got a fifty-cent raise about that time. The benefits figured into Moore’s low-income salary, so her childcare aid was cut. Without Wisconsin Shares, her childcare costs exceeded her wages. And while Moore preferred to work, she felt she had no alternative. So she stayed home for two years.

Once Aalayah qualified for half-day kindergarten, which was fully funded by the state, Moore was able to get back into the workforce. But Moore once again faces mounting childcare expenses–this time with her second daughter, Emory, who was born in April. With her second child, staying home is not on the table; so she and Emory’s father are scrambling to find an affordable childcare option.

“I know how the system works,” says Moore. “I get that people bilk it, but it’s frustrating for those of us who want to work, want to get ahead but simply can’t afford it; not quality daycare, anyway.”

Moore’s predicament highlights what some childcare experts say is pervasive in Madison’s childcare industry. Although it’s considered a national model, the system is often hard to access for parents like Moore, and for hardworking parents in general.

Take Amy Shannon and her husband, James Cumming. She’s a UW-Madison academic career counselor and he’s a state-employed physical therapist. Their combined income puts them in the upper-middle-class bracket. They have one child and a second one on the way. Currently they pay slightly less than $300 a week in childcare. The monthly cost for two children will be equal to or more than Shannon’s monthly salary. For the couple, also making student loan payments, that’s out of reach. “We have refinanced the house to get a lower rate, refinanced and cashed out our cars to pay down debt and my husband does not contribute to retirement to make just one childcare option work,” says Shannon.

Whereas Shannon and Cumming may have to find funds through their own resources, many families in a low-income bracket are less fortunate. One option for low-income families with young children is to apply for state aid through Wisconsin Shares, which can help them get by until their children reach school age.

And quality matters. Recent studies on brain development underscore the critical need to provide a stimulating environment in all childcare settings from birth to age five. A study by Harvard University’s Center on the Developing Child found that the way to dramatically decrease gaps in achievement caused by poverty, and to increase success, is to provide rich learning experiences much earlier than traditional school age.

Striking that balance between affordability and quality can be tricky for working parents, whether they are single or a couple. But for low-income families in Dane County, the issue of accessibility can be an even greater concern. For them, the Wisconsin Shares program is an option that can help working families solve part of their childcare funding equation. But some parents and childcare providers say it’s not enough.

Navigating the System
Before 2005, there were only two levels of childcare quality in Dane County: state licensing standards and City of Madison accreditation standards. Back then, accessibility was so inequitable that a large percentage of poor kids on the Wisconsin Shares subsidy were funneled into a very small percentage–about eight percent or just ten centers–of low-quality family and group centers with repeat violations, according to George Hagenauer, data coordinator for Community Coordinated Child Care, an accredited, nonprofit Wisconsin childcare resource and referral agency that provides advocacy and support services for childcare in Dane and other counties. From 1990 to 2005, the agency conducted periodic comparisons among facilities with serious violations and places where Wisconsin Shares children were enrolled.

Since then, DCF developed the YoungStar rating system. This has helped low-performing centers increase in quality to get a state rating. Now families on the Wisconsin Shares subsidy can use only a YoungStar-rated center. Since the change, seventy-two percent of all kids in Dane County on the Wisconsin Shares subsidy are in programs that have standards higher than state licensing standards (two stars), including centers with Head Start programs, and one-hundred percent of Wisconsin Shares kids are in accredited programs. So the quality level has improved in the past ten years.

For those who can pay out-of-pocket rates, Madison has an extensive stable of high-quality childcare facilities, from birth to preschool to three-year-old kindergarten, or 3K. In May, the state’s YoungStar rating system boasted roughly sixty-one four- and five-star-rated centers in Madison proper, not including special programs and “family child care.” Of those sixty-one, roughly thirty-five percent of attending children were on city assistance or Wisconsin Shares. There are no Shares children in programs lower than the licensing standard.

If you’re poor in Wisconsin–that means living below two hundred percent of the Federal Poverty Level–and need childcare to work, the state’s Wisconsin Shares subsidy program picks up some of the slack of childcare payments for kids under the age of thirteen, and up to nineteen for special-needs kids. Nearly everyone interviewed for this article agrees that the Wisconsin Shares maximum payment is much less than the childcare market rate, and the maximum amount–$250 per week for infants and toddlers, for example–is rarely disbursed. The aid helps many, but the pricing structure also squeezes many financially. How so? When the Wisconsin subsidy doesn’t provide a market rate, the co-pay required to meet the childcare center’s rate is often too high. When low-income families can’t make their Wisconsin Shares co-pay, childcare centers that choose to cater to low-income families have to make up the difference, which often results in rate increases.

When asked to address this conundrum facing working families, a DCF spokesperson responded via email that Wisconsin Shares “was never intended to cover all of the cost” of a participant’s childcare. The program is funded in part by the federal Child Care Development Fund and Temporary Assistance for Needy Families, and that the federal government requires states to establish a co-pay system so that families who receive the subsidy also share in the cost of childcare.

“It is important for families who receive Wisconsin Shares [to] understand the true cost of care and take responsibility for their portion of the cost,” writes the DCF spokesperson. “Co-pays help prepare families for a time when they have moved from government dependence to independence and can assume full responsibility for the cost of child care like the majority of Wisconsin families.”

Seeing Stars
To encourage quality care, and to help childcare providers administer a higher level of care, YoungStar trains and gives technical assistance to Wisconsin providers. Attaining a higher YoungStar rating is a pretty simple concept: The more services the childcare center offers–with hiring educated teachers as a big star rating booster–the higher the star rating.

Things get complicated when you look at how YoungStar is coupled with the Wisconsin Shares program. For a center to get Wisconsin Shares kids, they must have a YoungStar rating. The higher the rating, the more a center can charge for services. This forces some Shares families to either find a childcare center that offers scholarships through fundraising efforts to help pay the co-pay, or to enroll in a lower-starred center.

And this is how the rating system affects centers overall: Two-star centers get five percent less of the Wisconsin Shares subsidy rate than three- and four-star providers, and thirty percent less than five-star centers, which are rewarded an extra twenty-five percent above the subsidy’s flat rate. This structure is challenging for two-star-rated centers and can actually hold them back from moving up the ratings. And the twenty-five percent extra given to five-star centers is sometimes used to backfill losses from Wisconsin Shares off-market rates.

In defense of the rating system, the DCF spokesperson cited a study by UW-Extension that showed over sixty percent of childcare in Wisconsin was mediocre or worse before YoungStar. Now, seventy percent of children in Wisconsin Shares are in higher quality programs rated three-star or higher, a movement that DCF says has been dramatic and rapid as compared with other states that have implemented quality rating systems.

According to DCF, in 2014 the Wisconsin Shares program distributed over $240 million dollars to benefit an average of 46,300 children per month. Everyone who meets eligibility requirements–that’s anyone who lives below 185 percent of the federal poverty level (and the state will cover them as their income grows up to two hundred percent)–gets a piece of the pie. Some say it’s a sliver.

Hagenauer says he has concerns about implementation of the rating system. He says the YoungStar program produces major challenges due to its close ties to the Wisconsin Shares system because state childcare funding is mainly tied to federal funding for low-income families. As a result, he says, the YoungStar incentives are built on a system plagued by rate freezes that today pays rates at best eighteen percent below the current market rates. “Wisconsin Shares is a free-market voucher system that sadly ignores the free market. That creates challenges in the community for providers and families in all income levels.”

Dave Edie, early childhood policy analyst for the Wisconsin Council on Children and Families, says Wisconsin’s low-income families, which are disproportionately of color, face a range of challenges as they try to improve their economic status, including their inability to afford high-quality childcare. He says the Wisconsin Shares program provides childcare subsidies for more children now than when Wisconsin had a free-market system a decade ago, but that he has seen a decline in use of the program over the past five years.

“There has been a drop of more than twelve-thousand children participating combined with a drop of $100 million in the annual childcare budget,” says Edie. “This decline in childcare funding has had a particularly negative impact on working low-income parents struggling to support their families and prepare their children for school. Insufficient reimbursement rates for quality childcare centers is also squeezing providers.”

A Community in Need
So who are the children most in need of accessing quality childcare environments and early education? In Wisconsin, nearly eighty percent of African American children live in households below two hundred percent of the poverty level while thirty percent of white children do, according to the Wisconsin Council on Children and Families’ 2014 Race to Results index. Nationally, Wisconsin had the tenth best index score for white children, but ranked “dead last” for African American children (forty-sixth out of forty-six).

Jen Bailey, director of Head Start and Early Head Start for the Dane County Parent Council, oversees programs that serve the “neediest of the needy and the poorest of the poor.” She understands their need for quality early education. “Childcare is a difficult business to be in,” says Bailey. “There is a high level of compliance, for a very good reason. You want that in a childcare program, but to provide true quality care, particularly for infants and toddlers, it is extraordinarily expensive. As a community, we all have to be behind investing dollars into that process in order for these providers to be successful. It absolutely can be done, but it does take a good deal of investment financially in futures.”

Head Start programs are five-YoungStar-rated, and all of its City of Madison programs are city accredited. Its programming offers comprehensive services that include high-quality learning environments with 4K collaborations, and family, health and mental-health support. Because its families are chosen on a most-needed basis, some needy families don’t make the cut.

“Madison is a community of great need,” says Bailey. “Unfortunately, what we are seeing as a trend is the level of need increasing, particularly in the number of homeless families … families living in cars and shelters to capacity.”

In Dane and Green counties, six thousand low-income children are in need of quality services. Head Start benefits 972 children in Head Start and Early Head Start combined, and 361 more are on an active waiting list. Those numbers do not account for families off of the agencies’ radar.

The City Factor
So what happens when you’re a single parent with one child and you’re living just at the two hundred percent federal poverty level, or $23,340 annually, and you get a raise, even a small one? Or take an extra shift to pocket a few extra dollars? Or you move in with a family member to save some money so you can eventually get off of the childcare subsidy? Like Moore, you get bumped from Wisconsin Shares. This is where the City of Madison can help.

Monica Host is the childcare programming coordinator for the City of Madison, which runs the Childcare Tuition Assistance and Accreditation Program that funds families at about 185 percent of the federal poverty level and greater. One of the origins of the program is linked to a group of female students at UW-Madison who in 1975 asked the city to fund a childcare program. The council agreed to put money toward childcare costs for low-income and high-need families whose kids were in high-quality childcare facilities. They later accredited those centers. Back then, funding childcare was so unique, Madison’s program became a national model.

Last year the city spent $750,000 of property tax dollars to fund roughly 140 kids. And while the program works well for those it reaches, it reaches only a portion of those who need help.

“We have an income eligibility requirement. But we look at things like outstanding hospital and medical bills and subtract them from their monthly income,” says Host. “If a salary is over eligibility, we look at how much income is coming into the family; how many kids makes a difference. Everyone has a co-pay, and they can only use a city-accredited program, which is a high-quality center.” Families eligible for Wisconsin Shares are not eligible for city assistance.

The City of Madison trains childcare providers to run their accredited programs. Once a facility has met the city’s requirements, it becomes accredited and is awarded a five YoungStar rating without having to meet the state’s rating requirements which, Host says, are reliant on education levels of staff. “But if you know anything about childcare, you know that people aren’t being paid an adequate living wage,” she says.

In fact, low wages drive high turnover that makes it hard to build consistent and trusting relationships between children and providers. The Wisconsin Early Childhood Association, or WECA, published a report in December that says the average industry turnover rate is 8.1 percent. For the childcare industry, it’s twenty-one percent. And while WECA helps teachers attain credit-based education for the childcare field with its T.E.A.C.H. Early Childhood WISCONSIN scholarship program, Host points out that it’s hard for the profession to require four-year degrees from people when they’re making $14 an hour.

“This is the vicious cycle,” says Ruth Schmidt, WECA executive director. “If you want to pay your staff more, you have to raise your rates. But you can’t raise your rates because if all providers tried to pay their staff comparable to what other workers are making … no one could afford to have their children in childcare. And because there’s inadequate public support for early childhood education, we can’t correct this market-rate issue.”

Host praises what the city’s been doing for the past forty years, but sees hardship for high-rate providers to cover copays that are unaffordable for some families. “We want those folks to get to work, we want good quality care, but the centers cannot support the co-pays that aren’t paid by the families. They’re just small businesses. I’m not quite sure I’d like to blame it on the state, but certainly the state in this governance has made different choices in the support of children and families.”

Formulas for Change
Red Caboose, a play-based childcare center on Williamson Street, was Becky Ebbott’s saving grace. She’s a single mom whose daughter, Jordynn, now twelve, attended the center from the time she was a toddler until last year, when she became age-ineligible for the program. When Ebbott first brought Jordynn to Red Caboose, she was struggling to pay her Wisconsin Shares co-pay. That changed. Here, all families who need it receive some kind of discounted rate.

The center offers toddler, preschool and school-age programs. It also has after-school contracts with MMSD in Lapham and Marquette elementary schools so it can serve children in the Transitional Education Program and other kids whose families qualify for free and reduced-priced lunch programs.

“Our mission is to be accessible to all families regardless of income,” says Wendy Rakower, Red Caboose executive director. “Some ways we do that is to offer a sliding fee scale and fundraising to have scholarships, and also our contracts with MMSD. And since Wisconsin Shares rates had been frozen since 2006 until just recently, the gap between what the state pays and our rates keeps on getting bigger.” As a result, Rakower struggles with how to maintain equity in her programs but somehow meets the need year after year.

“We want our center to reflect the community we work in, the schools our kids go to,” she says. In an effort to make that happen, seventy-five percent of Red Caboose families receive a scholarship or discount. Since 2005, the center gave $350,000 in scholarships to make childcare affordable. Last year alone it gave $48,000. Also, thirty percent of the kids’ care at Red Caboose is subsidized by Wisconsin Shares or City of Madison tuition assistance. And those parents pay their co-pay plus forty percent of the difference between what the state reimburses the center and what the center charges. This is what Rakower calls “the child care gap.” Rakower’s tough-to-sustain model for quality and equitable childcare also includes paying Red Caboose workers a living wage.

There are others who share Rakower’s mission to level the childcare playing field.

Abbie Kruse, early childhood education administrator who was struck by the disparity in services, has started a nonprofit childcare center called The Playing Field, slated to open September 8. With an Early Head Start childhood partnership grant from the Dane County Parent Council, a partnership with Bethany United Methodist Church and The Road Home, a nonprofit that assists homeless families in transition, Kruse seeks to build a childcare community that will serve families who pay by using public aid, scholarships or private funding. Initially, the program will fill slots for sixteen children experiencing homelessness before filling the other slots.

On the south side of town, former Urban League of Greater Madison CEO Kaleem Caire is on another mission for change. Caire’s project, One City Early Learning Centers, has a similar goal to a center that operated from 1969 to 2014 at the same Fisher Street location. Set to open this fall, One City seeks to prepare children for school while helping parents also gain skills. The Attic Angel Association recently made a $100,000 investment alongside other generous donors toward that effort.

“We are dedicated to ensuring that every single child in our community has the type of early developmental and learning experiences that will enable them to succeed in school and life,” says Caire.

As Madison’s childcare community galvanizes to provide quality childcare for all kids, WECA’s Ruth Schmidt says funding remains a roadblock. “While we know what to do to fix a system of early care and education … we fail at figuring out how do we pay for it.”

Click here to read a letter to the editor in response to “Childcare costs pinch working families.”

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