Why is child care so costly in Minnesota?

Minnesota child care leaders are meeting this winter to address a lingering dilemma: the high cost that produces quality child care in licensed centers -- but prices some families out of the market.

While officials have long known that Minnesota's child care costs are among the highest in the nation, they have been reluctant to propose cuts that might sacrifice quality. The urgency to address cost has grown, though, as the economy has eroded family incomes and child care has eaten up more of the average family budget.

Minnesota now ranks No. 3 nationally by one measure of child care expenses. The average cost of full-time care for one infant in a licensed center reached $13,650 in 2009, exceeding 15 percent of household income for a two-parent family. Only New York and Massachusetts were higher, as a share of income.

Ignoring such costs will cause stress for parents -- and that in turn harms children, said Karen Fogolin, associate director of the Minnesota Child Care Resource & Referral Network.

"If we step back from this, then we're not really putting the children at the center" of our concerns, she said.

Jill Hafstad leaves her two children, ages 3 and 1, at New Horizon Academy in Champlin each work day -- and spends more than tuition for most private schools, or even a year at the University of Minnesota. But Hafstad said the curriculum is great and the center's drop-off and pick-up times are more flexible than those at home day cares.

"If it's the best thing for my children," she said, "then it's a good sacrifice."

Until now, the marketplace has suggested that families will pay higher rates for improved quality, said Richard Chase, who has studied child care for St. Paul-based Wilder Research.

Whether the bad economy has changed those attitudes will become clearer this week when Wilder and the state Department of Human Services release results from a statewide survey of parents about child care. The last such survey was conducted in 2004.

Subsidies shrink

Aggravating the squeeze, eligibility for Minnesota child care subsidies has plummeted in the last decade. In 2001, a family of three could initially enroll for state subsidies if their income was less than $42,304, according to data from the National Women's Law Center. In 2009 the qualifying threshold had dropped to $32,167.

That was the steepest decline in the nation, and it dropped Minnesota from being one of the most generous states to the middle of the pack.

That is also widening the gap between haves and have-nots in securing quality care, Chase said. "It becomes more difficult, even with the subsidies, because the cost gets beyond what they can afford."

The high cost of center-based care might explain why Minnesota has a high rate of children in home day care or family child care homes. (These are distinct from informal care, in which parents leave children with relatives or neighbors.) The average cost of family child care in Minnesota is $7,600 -- $6,000 less than it costs at the average center. That gap between center-based and family home costs is the largest in the nation.

What bothers Chad Dunkley, president of the Minnesota ChildCare Association, is that high costs and low subsidies might force families to settle for whatever care is affordable and available, even when it isn't a good fit for their kids.

"In their guts, they know this isn't the best place, 'But it's the only one I can afford,'" he said.

Dunkley, an administrator for New Horizon, said the state should restore subsidies to higher levels because of the evidence that quality child care encourages better school performance.

However, child care advocates don't expect much progress at the Legislature with the state facing a $6 billion budget deficit. They also don't want to weaken state teacher-to-child ratios or other standards that raise costs as well as quality.

Cost puzzle

Explaining Minnesota's high costs isn't easy. The state requires one teacher for every four infants in licensed centers -- but a 2007 national report shows 35 states have ratios that are at least equivalent.

Minnesota's high-cost status might be a mirage, said Ann McCully, executive director of the Minnesota network. In all states, child care is more expensive in metro areas than in rural areas. Minnesota simply might have more center-based care in metro areas, and family home care in rural areas.

Mirage or not, McCully hopes the network's working group can find examples of child care centers locally and nationally that have found ways to become more efficient. Some centers have aligned with others to buy bulk supplies, or to share administrative services.

Jill Hafstad will celebrate the day her family is relieved of the big child care bill. But she wouldn't trade New Horizon for anything. Her children look forward to child care each morning. Hafstad knows other parents who can't say that.

Melissa Aumer has similar feelings about her boys, 2 and 4, going to New Horizon. Center-based care is a big chunk of the family budget, but Aumer and her husband view it as an investment. And they don't expect a windfall when their kids graduate to elementary school.

"Then it'll be sports and whatever else," she said.

Jeremy Olson • 612-673-7744