Governor Pawlenty’s supplemental budget makes minimal cuts to the Department of Education’s early childhood programs, yet it would be a mistake to say his proposal spares early childhood programs and school readiness. Access to programs that serve young children has multiple benefits for the community. Enrollment in a quality early childhood program can positively impact a child’s social development and properly prepare the child for entering kindergarten, helping close the achievement gap. For many low- and moderate-income parents, access to safe and affordable child care also affects their ability to get and keep their jobs. On top of that, the child care industry is a source of jobs around the state and cuts will affect employment.
In total, the Governor’s supplemental budget proposes $11.7 million in cuts to child care assistance programs funded through the Department of Human Services (DHS).
The Governor proposes to reduce reimbursement rates for child care assistance programs for low- and moderate- income families by five percent (a $1.9 million reduction). Under Minnesota’s child care assistance programs, the state pays a capped reimbursement rate to providers and some parents (those with incomes over 75 percent of the federal poverty guideline – about $13,600 annually for a family of three) pay a copayment. If the state’s reimbursement rate doesn’t cover the full cost of care, parents must either pay the difference themselves (in addition to their copayment), or find a lower-cost provider. The state’s current maximum reimbursement rate is already below the cost of child care at about half of family child care providers and over 60 percent of child care centers. The Governor’s proposed five percent reduction in the reimbursement rate would mean more out-of-pocket costs for families. Some families would be unable to afford the additional costs and are expected to drop from the program.
These cuts could have significant impact on access to quality child care in Minnesota communities. Cisa Keller of New Horizon Academy, which runs a number of child care centers, told legislators that New Horizon permanently closed four high-quality child care centers – in Burnsville, Crystal, Minneapolis and Richfield – after the state cut child care assistance funding in 2003. “If the [Governor's] proposed provider rates are realized, New Horizon will have to close probably 14 centers,” she said. “And the rest of our locations will probably have to stop taking children who receive child care assistance.”
The Governor proposes two other reductions to the Basic Sliding Fee child care program.
- Reduces funding for Basic Sliding Fee program by five percent (a $4.6 million reduction). As a result of the reduced resources, the Basic Sliding Fee program would serve fewer low- and moderate-income families. This cut is in addition to the five percent reduction in reimbursement rates mentioned above.
- Transfers $5 million of unspent Basic Sliding Fee reserves to the general fund. Although funded by the state, the Basic Sliding Fee child care program is administered by counties. Counties often budget their child care funds conservatively and may end up with unspent funds at the end of the year. Under normal circumstances, the state redistributes these unspent funds to counties in the next calendar year, enabling more families to access child care assistance. As a result of the Governor’s proposal, approximately 470 families would not get child care assistance.
The Governor proposes tightening income eligibility for child care assistance for families receiving disability payments, saving the state $116,000. Under the Governor’s budget proposal, families who have at least one severely disabled person in their household that qualifies for Supplemental Security Income (SSI) would start to have that SSI income count as income when determining eligibility for child care assistance. As a result, about 450 families that receive child care assistance would pay higher child care copayments and up to 100 families would lose child care assistance entirely. These changes would create one more financial challenge for families struggling to raise young children at the same time that they are handling a severe disability in the household.
In addition to the child care cuts in the DHS budget, the Governor also proposes cutting $500,000 in child care grants from the Office of Higher Education budget in FY 2010-11.These grants help low-income students pay for child care while attending classes.
-Scott Russell and Christina Wessel
(Note: we updated information on the Basic Sliding Fee program on Tuesday, March 9 to reflect some helpful feedback from an alert reader.)
