Tag Archive: child care funding

  1. Voices Supports Proposed Changes to Child Care Payment Rates and Parent Co-Pays

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    Voices supports the proposed improvements to child care payment rates and the parent copayment requirements. These proposed changes will greatly impact the under resourced child care sector as well as help parents who are looking for care, so that they can continue to work. While it has been long recognized that child care programs need more resources to provide quality care, educators need higher wages and parents need lower costs to afford the care. Solutions have often been piecemeal and insignificant with regards to impact in all three areas of need. This proposal has the potential to transform how staff are paid, how parents choose quality, affordable care, and how quality improvement resources are provided.

    Virginia is ranked 10th highest in the nation for child care costs. The average annual rate for an infant is $14,063 and $10,867 for a preschooler.

    In 2021, Voices supported Senator Jennifer McClellan’s proposal to improve child care by funding the true cost of quality care (SB1316 Bill Explainer). The adoption of this legislation prompted the Virginia Department of Education (VDOE) to examine its payment practices and to seek approval from the federal government to use an alternative payment methodology to set rates based on program inputs. During the pandemic, VDOE has had the ability to waive parent co-payments which has provided relief when many families experienced economic hardship. New copayment rates will help to reduce the burden on parents participating in the subsidy program. Recent policy changes have also improved the ability for parents to participate by raising maximum income requirements, removing child support requirements, and ending a lifetime limit of 72 months for receiving assistance.

    Impact of Proposed Changes on Program Funding

    The new payment rates have been set to reflect the costs of program inputs by including wages, program standards, curriculum, and quality improvement activities. Payment rates have been posted online and can be compared to previous rates. Under the previous reimbursement rate process, the market, or what parents could pay in a specific community, drove the costs. The new model considers rates at a regional level and takes into account different types of licensures. In doing this, it recognizes the educators in the classroom as the critical inputs, not the physical location.

    As payment rates are currently set by the age of the child, type of setting, and locality, the impact of the new payment rates in comparison to the old rates varies significantly across these three areas. Voices took a look at the new rates across jurisdictions to better understand impact. While there are a few localities who will not see rates increase for the preschool or school-aged age groups, every locality will see rate increases for providers. Each locality is now grouped into a region where the regional rate is equal across jurisdictions (unless the original market was higher).

    Some providers and jurisdictions will see minimal increases of $5 per day, or slightly less. However, a $5/day increase for child served for 260 days throughout the year would equal a $1,300 increase for the program. Some localities and providers will see much larger increases in the magnitude of $20-35 per day. A $20/day increase (for example, in a center serving infants in James City County) would equal $5,200 additional resources per year and a $35/day increase (for example, in a center serving infants in Wythe County) would equal $9,100 per year.

    As with any cost calculation, there will be some “winners” and “losers”. Providers in Northern Virginia will not see the same scale of increase as providers in more rural areas of the state. However, families looking for infant and toddler care will see significant rate increases as will home care providers serving school-age children. As we look to additional changes for payment practices and participation in the coming years, the state should consider the localities that do not receive significant increases in this proposal as a priority population. In particular, providers in Northern Virginia are not provided significant rate increases despite recent policy changes for Washington DC that increased rates and educator compensation. Failing to compete at the regional level could incentivize Virginia-based early educators to transition to nearby jurisdictions paying more.

    The proposed changes will roll out in three phases:

    • Phase I: Regional payment rates determined by cost to be implemented Oct 1, 2022.
    • Phase II: Create a voluntary wage scale to encourage programs to increase wages over time.
    • Phase III: Provide additional supports for continuous quality improvement based on VQB5 assessments.

    Impact on Early Educator Wages

    While the rate increases could impact programs to a varying degree depending on subsidy enrollment, ages of children, and jurisdiction, those who are receiving the increase will be asked to participate in a voluntary wage scale allowing VDOE to collect information on the current wages and to offer a benchmark to ensure educators are paid higher wages as a result of the rate increase. This wage scale is a very exciting component to help increase the compensation for early childhood professionals and family home care providers. Compensation was modeled to factor in the wages that teachers in public preschool programs were paid to put their private counterparts on equal footing. The voluntary scale will allow Virginia an opportunity to measure progress towards increasing compensation, particularly when other neighboring localities to Virginia have made this a focus.

    Impact on Parent Copayments

    The child care subsidy program can be an extremely valuable benefit to working families, but only if it provides the continuous affordable coverage they need to work. Proposals to reduce the parent co-pays and collapse income levels will help reduce benefit cliffs where families receive diminishing returns for higher wages by reducing their access to public benefits. The impact of the proposed changes would save some families $600 per year while others could save thousands of dollars. Families earning less than the poverty level (who currently make up 43% of children enrolled) would pay no copays under the proposed changes. These families would go from paying about $50 per month to no monthly contribution. Families just over poverty (100-200% FPL) would pay $60 per month in comparison to $135-185/month under the current structure, and parents above that rate would pay $120-180/month. Providers are allowed to charge parents for any difference between tuition rates and what is covered by subsidy reimbursement and parent co-pays.

    Public Comment Opportunity

    The reimbursement rate changes are program manual changes that do not require legislative approval, but will go through the public comment process and will be presented to the Board of Education.

    Public comments on the proposed changes can be emailed to  rr-earlychildhoodaccess@doe.virginia.gov by July 25, 2022. The current timeline has reimbursement rates taking effect October 2022 and copayment changes would take effect January 1, 2023.

  2. Child Care State Plan Advocacy Opportunity: Compensation and Infrastructure

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    The COVID-19 pandemic has disrupted the child care sector in Virginia. Our policymakers must take measures to stabilize the sector and ensure children have safe and nurturing care when parents return to work. One year after the beginning of the pandemic, 90% of regulated child care facilities have reopened in Virginia and leaders have taken positive steps to help stabilize the sector. Congress has provided billions in child care relief, including more than $1 billion to Virginia’s child care sector. State lawmakers have improved eligibility criteria so that more families can benefit and they have passed legislation to change how we pay for child care in the future—through contracts to guarantee availability and income, and to evaluate paying by true costs instead of market rates.

    These are positive steps, but they are taken on shaky ground. The child care sector is not stable. There are continued shifts in parent preferences and waves in labor force participation. Young children are still a long way from being eligible for vaccines and child care providers rely on continuing COVID-19 precautions and avoiding potential risks for students and staff for the foreseeable future. Workforce shortages are being reported where early childhood educators are hard to find, especially when the pay at less risky work environments (Amazon, retail, food service) is much better.

    This month’s opportunity to comment on the Child Care Development Fund State Plan allows advocates to weigh in on what is needed to stabilize the child care sector and how to use state and federal funds. The state plan document creates the framework for how Virginia spends Child Care and Development Block Grant (CCDBG) dollars. In this case, the plan will direct how $305 million in child care funds and $488 million in child care stabilization funds from the American Rescue Plan are spent over the next three years.

    Advocacy Opportunity: Comment on the State Child Care Development Fund Plan

    1. Review the plan online: https://www.dss.virginia.gov/ccecd/.
    2. RSVP to jamie.dungee@dss.virginia.gov to attend a virtual hearing on Monday June 7th 10:00 AM- 12:00 PM or 6:00- 8:00 PM.
    3. Submit written comments to ccdfplan@dss.virginia.gov.

    As in the past, Voices will submit comments on the state plan framework. This year, we are focused on how these funds can be spent to stabilize the sector and promote an equitable recovery with a focus on the child care workforce. Our comments will ask the state leaders to take these steps:

    1. Dedicate a portion of stabilization grants specifically to educator compensation. To increase pay and to attract and retain a workforce, stabilization funds must be dedicated to compensation. With stabilization grants anticipated to be awarded to child care programs as formula grants, there should be an add-on grant for providers who guarantee to raise employees’ pay through hazard pay, recruitment or retention bonuses.

    With child care plans under review in other states, several have taken approaches to dedicate a portion of funds to compensation. Initial plans from Connecticut signaled formula grants using stabilization funds and compensation add-ons would be available. And several states (New Mexico, North Carolina and Washington) have used previous federal relief funds to provide bonus payments. We are also asking state leaders to:

    1. Invest in systems and supports so that all parts of the sector can stabilize. There are opportunities to establish systems and procedures for wrap around supports to the sector. Several options to consider include:
      • Invest in networks to provide “back-end” supports, such as accounting, billing and benefit practices, particularly to the independent family child care providers.
      • Establish processes for any child care program to access mental health consultation for students and staff. Funds can be used to improve access to professionals to consult with educators and to provide services directly to students.
      • Establish systems-level navigators to connect early educators and community health, nutrition, mental health and developmental services. Comprehensive support for the family is a critical element of positive early childhood development. The early childhood sector should lead the way in helping to connect families and the supports they need.

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