Making Affordable Child Care Available to More Minnesota Families

The Minnesota Budget Project supports policies to ensure that more Minnesota families have affordable, reliable child care that meets their needs. These policies include: 

  • Increasing funding for Basic Sliding Fee Child Care Assistance. 
  • Increasing reimbursement rates to child care providers participating in the Child Care Assistance Program (CCAP), which includes Basic Sliding Fee.
  • A targeted increase in the state’s Child and Dependent Care Tax Credit to help more low- and moderate-income families struggling with the high cost of child care.

Issue Overview

Too many parents cannot find stable child care that meets their family's needs. In Minnesota, the average annual cost of enrolling an infant in a child care center is $14,826. When child care is inaccessible and unaffordable, parents struggle to find and keep good jobs while their children may suffer long-lasting consequences from a lack of consistent and dependable care.

Basic Sliding Fee Child Care Assistance supports the varied needs of Minnesota children and their parents by reducing the cost of child care for working families. It covers children from infancy until they turn 13, is available in every county and allows parents the freedom to choose a provider. When parents have stable care, employers have an easier time finding the reliable workers their businesses need.

A 25 percent inflation-adjusted decrease in spending since FY 2003 means that many eligible Minnesota families are unable to access Basic Sliding Fee. About 4,000 fewer families are able to find affordable care today through Basic Sliding Fee than in FY 2003. The decreased capacity has been felt throughout Minnesota, with 54 percent of the lost capacity occurring in Greater Minnesota over roughly the same period. More than 5,000 Minnesota families are on waiting lists. 

When parents participate in Basic Sliding Fee, they may face an additional barrier: limited options. The state's payments to providers accepting Child Care Assistance are out of date and are often set far below what the median provider charges. This means providers may lose money if they choose to serve families using Basic Sliding Fee. Increasing reimbursement rates would increase parental choice.

Policies like Basic Sliding Fee that reduce the monthly costs of child care are essential to reach the Minnesota families that struggle most to afford it. In addition, Minnesota also helps low- and moderate-income families with the cost of child care through the Child and Dependent Care Tax Credit. This credit offsets a portion of the cost of child care so that parents can work or look for work. But the credit has not kept up with the rising cost of child care. It is time for a targeted increase in the Dependent Care Credit that increases the size of the credit and reaches more low- and moderate-income families.

Status

Basic Sliding Fee: During the 2017 Special Session, the Legislature passed and Governor Mark Dayton signed Senate File 2 (Senator Michelle Benson and Representative Matt Dean), a Health and Human Services omnibus bill which contains an investment in the Child Care Assistance Program that will make Basic Sliding Fee work better for families. These changes make it more likely that eligible families will not suffer gaps in assistance that can be caused by administrative complexity rather than actual changes in eligibility, and will also simplify the administration of Basic Sliding Fee for child care providers.

Senate File 2 also cut funding for Basic Sliding Fee based on savings from new integrity measures, and increased spending on child care licensing. The net result: the same number of families will be served, but they will be better served by the new rules and regulations within Basic Sliding Fee.

Governor Mark Dayton's proposed budget included these (and more) policy changes, including an increase to provider rates in CCAP to the 25th percentile of the 2016 market rate survey. The portions of the Governor's proposal that were most beneficial to the families served by the Child Care Assistance Program were also contained in House File 1458/Senate File 1278 (Representative Mary Franson/Senator Tony Lourey) along with a provider rate increase.

During the legislative session, Representative Roz Peterson's House File 723 and Senator John Hoffman's Senate File 823 proposed increasing funding for Basic Sliding Fee and increasing the rates paid to providers to the 25th percentile of the most recent market rate survey. Representative Rena Moran's House File 724 and Senator Jeff Hayden's Senate File 560 would have fully funded Basic Sliding Fee to provide access to all eligible families and would increase provider reimbursement rates to reflect the 75th percentile of the most recent market rate survey.

In January, the bipartisan Legislative Task Force on Access to Affordable Child Care released a set of recommendations based on input from parents, providers and others in the child care industry. Their recommendations included higher provider rates, and investments in and expanded access to Basic Sliding Fee Child Care Assistance.

Child and Dependent Care Tax Credit: The omnibus tax bill passed during the 2017 Special Session, House File 1 (Representative Greg Davids/Senator Roger Chamberlain), expands the Child and Dependent Care Tax Credit by $36 million over the two years of the FY 2018-19 budget cycle. About 42,800 Minnesota families  will benefit by an average of $342. The bill increases the maximum credit amount a family can qualify for to $1,050 for a one-child family and $2,100 for a two-child family. It also makes more families eligible by raising the maximum income a family can earn and qualify for the credit to $62,000 for a one-child family and $74,000 for a two-child family.

This expansion was included in the House's omnibus tax bill (House File 4, Representative Greg Davids). Similar expansions that had higher income limits were included in Governor Mark Dayton's budget and in House File 1499 (Representative Jenifer Loon)/Senate File 1803 (Senator Paul Anderson).

Get Involved

The Minnesota Budget Project is part of the Kids Can't Wait Coalition, which is committed to affordable, accessible child care for all Minnesota families. You can read more about the coalition and sign on as a supporter

More Information

Staff contact: Ben Horowitz, Policy Advocate, 651-757-3065

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