Minnesota becoming national leader in solving day-care dilemma — but there's still far to go

Dani Carlin opened a St. Paul day-care center in June, just three months after President Joe Biden directed billions of federal dollars to shore up America's broken child care system.

Carlin was assigned a child-care quality coach, receives licensing training and now gets a monthly $430 subsidy check to help cover the costs of masks, disinfectants and food for the six toddlers attending Carlin's Little Naturalists preschool — all because of the way the state of Minnesota chose to spend the federal aid.

With unprecedented pandemic aid from the federal government, plus additional state funds, Minnesota has developed emergency and long-term strategies aimed at saving an industry in trouble. The state has done as much or more than others to stabilize centers that were facing trouble even before COVID-19.

But even with the progress, a host of child-care advocates, industry and business leaders say more progress is needed, from expanding aid for low-income parents to solidifying some emergency funding measures.

Stopping child-care providers from leaving the industry — and filling the care gap — is crucial. In 2021 alone, Minnesota lost a net 494 in-home child-care businesses, eliminating slots for 10,217 children, according to Minnesota's Department of Human Services. Exacerbating those losses is a shortage of child-care workers, adding further stresses to centers still open.

That's why the aid for new providers like Carlin is a key component of proposals.

For example, an extra, "one time" $1,400 supplemental grant arrived in the mail last month, just as several of Carlin's clients suffered COVID-related setbacks and were late paying their $270-a-week bills.

With all the support, Carlin plans to double the number of children Little Naturalists serves later this year and hopes to add some children from low-income families for the first time.

Trying to stabilize a struggling industry

The vast majority of 20 million working parents who rely on child care pay the bulk of costs on their own. While aid programs are in place for the poor, there are often waiting lists.

Money from Biden's $38 billion American Rescue Plan will triage the system for most states through 2023. Gov. Tim Walz and Minnesota legislators have proposed spending some of the state's $7.7 billion budget surplus to bring long-term relief to the industry.

Minnesota used the federal aid, among other measures, for "stabilization grants" to child-care workers, many of whom eke out a living on just $11 to $12 an hour.

Minnesota's $324 million in grants helped Carlin and thousand of other child-care providers adjust to COVID-19 realities and help replace income lost as the virus forced staffers and children alike to stay home.

"The extra money has been really helpful," Carlin said.

The money helped develop protocols that helped keep kids in the center, "a huge struggle" for many Minnesota providers operating on a shoestring budget during the pandemic.

"You really can't overstate the extent to which early childhood educators are in deep poverty," said state Rep. Dave Pinto, DFL-St. Paul and chair of the House Early Childhood Finance and Policy Committee. Parents can't afford what it costs to cover child-care providers' full expenses.

"So, a quarter of [employees] experience food insecurity. A third of them are on public assistance themselves," Pinto said. "They get more money on their first day [working] at the convenience store down the street than after 10 years working as an early child-care educator."

Minnesota used $180 million in federal aid to increase child care assistance for working families in need. Nearly $10 million will go toward new licensing and training help, college scholarships for new workers in the field and for renovations to bring day-care facilities up to code.

The federal funds only go so far, though, Pinto said. They didn't do much to permanently expand child-care services for all children under 5.

"Early child care is a system that is deserving of the same kind of support as K-12. And that is where we fall short, and where most states fall short," Pinto said.

The Federal Reserve Bank of Minneapolis found the government spends about $10,000 on each schoolchild over the age of 5, but only $900 per child ages birth to 3. It spends $2,500 per child ages 3 and 4.

Parents are waiting for relief

Part of Biden's Build Back Better plan would ensure middle-class families pay no more than 7% of their income on child care. The president's American Families Plan is pitching free preschool for all 3- and 4-year-olds.

St. Paul parents Rachel and Andy Fields would welcome such help. They pay nearly $1,000 a month so their younger, 2-year-old daughter can attend child care three days a week.

"It's a challenge. We don't make a lot of money," Rachel Fields said.

It's unclear if Biden's plans have the support to pass. It's also unclear whether Walz and state officials have the backing for their plans.

In January, Walz proposed using $1.8 billion of Minnesota's budget surplus so another 50,000 infants, toddlers and preschoolers could receive state assistance and tap early learning services via a mix of in-school programs, child-care centers, in-home facilities and Head Start classrooms.

His measure would eliminate waiting lists for hundreds of families who qualify for state aid but don't receive it. The changes could save a rural family of four about $14,000 a year on child care.

The state has roughly 340,000 children under the age of 5, so the idea of helping 50,000 is a "really big deal," said Erin Bailey, assistant commissioner for Minnesota's Children's Cabinet, an inter-departmental group that focuses on children's issues.

Still a long road ahead

If state solutions for child care take hold, more help may soon be available for working parents.

Last month several House bills wove through state legislative committees hoping to secure permanent funding for 4,000 voluntary preschool slots that operate in public schools. The funding expires every two years, prompting biannual funding battles, including one this year.

Fridley School District Superintendent Kim Hiel last month told Pinto's Early Childhood Finance and Policy Committee that the Legislature needs to do the right thing. She has 145 preschoolers, 57% of whom received free or reduced lunch, who depend on the state aid.

If the Legislature fails to renew the funding, "this will put the burden of the cost on parent's shoulders, many of which cannot afford [it]," she said. "Having this funding fully intact at its current funding level ... is very important."

Karl Brown, director of community education for Mounds View Public Schools, said the two-year expiration cycle for some state preschool aid programs means school districts like his don't know until the legislative session ends in May, or later, whether they'll get the money required to teach the town's neediest 4-year-olds.

The uncertainty prohibits proper outreach to families and creates inequities, he said.

Permanent aid, not short-term pandemic funds, also is needed to shore up existing programs that Minnesota's poor working parents depend on, advocates say.

Until recently, Minnesota reimbursed providers who care for poor children at just 25% of the going industry rate. In November, the state used federal funds to raise that pay through 2025 to the 40% range for infants and toddlers and to 30% for preschoolers.

Walz proposes reimbursing providers at 75% of the going rate, which U.S. guidelines recommend.

That would help a lot. Providers often want to help low-income children on state aid, but can't afford the ding to their wallets, said Clare Sanford, a director with the Minnesota Child Care Association and a member of the state's Great Start for All Minnesota Children Task Force.

"Not every provider accepts the state assistance because the reimbursement rates are too low," Sanford said. Without a higher reimbursement rate, the centers can lose money, so "It's a really big deal when a state actually gets their reimbursement level to the federally recommended level."