Minnesota should do more to support families and child care providers

Becca O'Donnell
May 04, 2022

Before the COVID pandemic, families struggled to afford rising child care costs, while at the same time, child care workers often received low wages and minimal or no benefits, such as health care and paid time off. When the pandemic hit, many child care providers struggled to keep their businesses going and some were forced to close their doors due to health concerns and unstable demand for care. While the pandemic’s hold on the economy is lessening, lack of affordable child care is a major barrier keeping parents from getting back into the workforce.

The House Early Childhood Finance and Policy Committee’s omnibus bill (House File 4735) seeks to support and strengthen child care options, especially through improvements to Minnesota’s Child Care Assistance Program (also called CCAP). These provisions have been included in the House’s Health and Human Services omnibus bill, which was passed by the House on May 3rd. In total, the child care provisions would invest an additional $80 million in FY 2022-23 and $475 million in FY 2024-25 to make affordable child care options available to more working families and support our state’s child care infrastructure.

The Child Care Assistance Program helps bring down the cost of care so that lower-income parents can work and go to school. The House omnibus bill increases CCAP reimbursement rates paid to child care providers, expands who is eligible for child care assistance, and reprioritizes waitlists to meet families’ needs faster. The bill also extends child care stabilization grants that protect and expand the child care workforce, and would expand access to early learning scholarships.

As the two bodies of the Legislature lay out their budget priorities and get ready for end of session negotiations, the Senate has taken a very different approach. The Senate has not passed any significant provisions to expand child care and early learning opportunities or to support child care providers.

Let’s take a closer look at the House’s proposed improvements to child care, and the actions policymakers should take this year to support Minnesota families and the “workforce behind the workforce” that allows parents to succeed at work, employers to find the workers they need, and kids to thrive.

Increasing provider reimbursement rates

Federal law recommends that states reimburse child care providers at the 75th percentile of the most recent child care rate survey. Currently in Minnesota, the maximum rate a child care provider participating in child care assistance can be reimbursed is the 40th percentile for infants and toddlers, and the 30th percentile for older children. The House bill would increase child care provider reimbursement rates to the 75th percentile of the most recent rate survey. Increasing reimbursement rates would enable providers to better compensate their workers for the essential work they do. It would also encourage more providers to serve families who participate in child care assistance, expanding the number of child care options available to families.

Reprioritizing waitlists

Last year in response to the pandemic, legislators temporarily reprioritized waitlists for child care assistance. This allowed families to be served faster and more families to be reached overall. The House omnibus bill would make that change permanent. There are currently 579 Minnesota families on waiting lists for child care assistance.

Expanding the definition of family

The House bill expands the kinds of families that can qualify for child care assistance to include foster families and custodians, recognizing the value of the care that they provide.

Early learning scholarships for infants and toddlers

House File 4735 expands early learning scholarships, which currently can be used for eligible 4- and 5-year-olds and are aimed at preparing children for kindergarten. The bill would expand early learning scholarships to include children ages 0 to 3.

Continuing child care stabilization grants

As part of the American Rescue Plan Act, child care stabilization grants were designed to help providers who were struggling due to low enrollment and increased costs as a result of the pandemic. House File 4735 extends the grants past their planned expiration date of June 2023 to June 2025 and provides an additional $31 million. At least 70 percent of the funds must be used for increased child care staff compensation.

Minnesota families can’t wait for affordable child care

The House’s bill includes many important steps forward. Earlier this year, Governor Tim Walz’s budget proposed an even stronger investment in child care. Walz’s proposal contains many provisions similar to the House, including increasing provider rates to the 75th percentile, expanding the definition of families that can qualify for child care assistance, and continuing child care stabilization grants. And it goes further by fully funding child care assistance. Not only would this eliminate waitlists, it would serve an additional 16,000 families once fully implemented. His budget would also expand the availability of other early learning options, including early learning scholarships and pre-K.

Minnesota policymakers must take the strongest possible action this year on child care and early learning, drawing on the strong proposals that the governor and the Minnesota House have put on the table. Minnesota families can’t wait.

The U.S. Department of Health and Human Services considers child care affordable if it costs less than 7 percent of a family’s income. But many Minnesota families are paying well above that standard. For example, the average cost of child care for an infant in a child care center is around $17,000 per year, meaning a family of three earning $80,640 (that’s 85 percent of state median income) would pay over 20 percent of their income toward child care. Family child care is less costly at an average of $9,000 per year for an infant, but that still amounts to nearly 11 percent of income for this example family. 

 Graph showing the percentage of income paid for center and family child care by income level compared to the affordable rate of 7.5% of income. 

Families can’t afford to pay more, and child care providers can’t afford to charge less. Minnesota must act so that more families have affordable child care and early learning options. Policymakers should ensure that what child care workers and providers are paid reflects the value of their work by increasing reimbursement rates and continuing stabilization grants. The benefits of affordable child care and early learning to children, families, and our economy are clear; the time to act is now.