Why there’s such a big gap in the Minnesota Legislature among child care spending plans

Throughout the pandemic, state and federal governments have approved large sums of money for Minnesota’s child care system, hoping to stabilize an industry that was hurting even before COVID-19.

A tally last October established the influx of funds under the Department of Social Services since 2020 at $858 million. Despite the unprecedented aid, Democrats on the state Capitol have planned to spend some of Minnesota’s record surplus on child care, in an effort to help low-wage providers and employees as well as families struggling with high costs.

The Republican-led Senate, however, has a very different direction. The GOP has no new spending proposals specifically for child care, though party lawmakers are pushing for broad tax cuts this legislative session aimed at helping families, especially amid rising taxes. inflation.

Walz, House, spend big

The split on child care is just one of many areas where Republicans and Democrats on Capitol Hill have starkly different plans. Legislative leaders will have to negotiate how to use the state’s current $9.25 billion surplus over the final three weeks before the Legislative Assembly adjourns. (DFL childcare plans would also benefit from an additional projected surplus of $6.29 billion in fiscal years 2024 and 2025.)

The most important element of Walz’s child care plan is a huge investment in the Child Care Assistance Program (CCAP), which is the state’s main subsidy for low-income families. .

Walz would increase the rates paid to child care providers for accepting families on CCAP. Currently, Minnesota’s maximum reimbursement rates are at the 40th percentile of a market rate survey for what companies charge to care for infants and toddlers and at the 30th percentile for preschool and school-aged children, both of whom are above the minimum required by the federal government.

But Walz would raise maximum rates to what the federal government actually recommends — the 75th percentile — meaning tuition would be fully covered by CCAP rates at about three out of four child care providers. Twenty-two states have set some or all of their maximum rates at the 75th percentile or higher, and Minnesota’s rates place it slightly above the last 10 states.

Walz would also eliminate a waiting list in CCAP and expand the program to include foster families and more. CCAP provisions only total $188,000 in state money in the current fiscal year, in part due to available federal funds, but would be significantly more costly for Minnesota in the following fiscal year. two years. Over three years, the price would be nearly $820 million.

The Walz plan would also maintain some grants aimed at helping child care providers struggling financially due to the pandemic. The U.S. federal bailout had money available for that purpose, and Walz would keep cash for the hardest-hit vendors after the ARP grants ran out.

Another major proposal from the governor is to expand the state-funded pre-K system for eligible 4-year-olds, adding more than 22,000 children at a cost of $155 million this year and $370 million more over the next two years.

There are other programs for young children and young learners. The Walz administration says the governor’s total new child care and early education spending is $1.8 billion over three years.

During interview Thursday at the MinnPost Festival, Lt. Gov. Peggy Flanagan said the state has tried to respond “in a fairly comprehensive way” to help child care throughout the pandemic. But she said the state could do more to not only help raise wages for child care workers, but also help businesses stay afloat and make care cheaper for parents.

“It was a program my mom was using for me at the time,” Flanagan said of CCAP. She “was able to go back to school, find a better paying job”.

The plan presented by House Democrats is similar. It would also raise CCSI rates to the 75th percentile and expand the program. The house plan would also reduce, but not eliminate, the CCSI waiting list. The Chamber would also make permanent larger stabilization grants for the industry, pumping more into ongoing grants that help pay workers’ wages and business costs.

Like Walz, House DFLers would also add new slots to the state-funded pre-K system for 4-year-olds and increase the number of Early Learning Bursaries by 20,000, which pay for high-quality childcare for low-income families. The House’s Total Early Years Budget Plan, which is primarily focused on child care and early learning provisions, and the voluntary pre-K program would cost an estimated $1.4 billion over the next three years and $409 million in the current supplementary estimates.

That’s not counting a major House proposal that’s different from the governor’s plan: a tax credit that gives families up to $3,000 for each child under age 5. The program is capped at $7,500 per family and would cost $182 million in the current fiscal year and $377 million over the following two years.

At a press conference in early April on Capitol Hill, Rep. Dave Pinto, a St. Paul Democrat who chairs the House Early Childhood Finance and Policy Committee, said the state has no slow to spend public money on child care at the start of the pandemic and kept providers better than other states as a result.

“Giving young children a head start is the very definition of a public good, which needs continued public support,” Pinto said. “It allows parents to work, employers to hire, and communities to thrive now and in the future.”

Senate GOP considers tax credits

The Senate GOP, on the other hand, has no new spending on child care programs.

Sen. Jim Abeler, a Republican from Anoka who chairs the Senate Finance and Human Services Reform Policy Committee, argued that Minnesota’s child care sector has stabilized, noting the huge amount of public money already spent in the industry.

Abeler said the state and federal government “heard the issue and responded to it” during the pandemic. And though he said it was proof the Senate GOP was interested in helping the industry, Abeler said child care providers shouldn’t get used to relying on state subsidies to stay. open.

He also said he believed the increase in CCAP rates – which had already been increased significantly in 2021 – helped some providers stay open, especially larger daycares, but did not help families pay the price. service. Many Republicans, including Abeler, have focused more on trying to ease regulations on the dwindling number of small, home-based daycares, which are more common in Greater Minnesota.

Abeler tried unsuccessfully to raise the limit on the number of children workers can care for, which would help companies make more money. Regulators and Democrats have generally resisted increasing staff-to-child ratios, saying it could be less safe or lead to lower quality care and learning. Abeler also offered to tweak a formula for stabilization grants in a way that home-based providers believe would help them financially.

More than anything, Abeler said he was targeting the money at “essentially urgent” issues, namely, helping to alleviate major staffing shortages in long-term care staff; the Republican-led Senate has proposed spending about $1.5 billion on the issue. The GOP also wants to use much of the surplus on major permanent tax cuts, including a reduction in the top-tier tax rate.

The GOP estimates that a typical family earning $100,000 would get $1,064 in savings each year under their tax plan. “Every year of tax cuts is a good way to help people enjoy their own money and live with the means we have,” Abeler said. Walz has offered one-time reimbursement checks for many Minnesotans worth up to $500 for individuals and $1,000 for couples.

Pinto argued in an interview on Friday that the long-term care sector and many others depend on childcare – both to support parents working in long-term care and to raise the next generation of children. workers. Failing to invest now will create problems later, he said.

Abeler said if he had $100 million, $500 million, or $1 billion to work with, he would still spend it on long-term care. “Someone might well think that child care – what the (DHS) commissioner calls the ‘support behind the support’ – is the most urgent thing. Well, we’ll have to have that debate.