Wisconsin Examiner

Child Care Providers Try Again For State Funding

Republican legislators so far opposed, but may consider tax credits.

By , Wisconsin Examiner - Jul 10th, 2023 03:09 pm
Children paint outside with chalk at Big Oak Child Care in Madison. (Courtesy of Big Oak Child Care | Facebook)

Children paint outside with chalk at Big Oak Child Care in Madison. (Courtesy of Big Oak Child Care | Facebook)

The operators of Big Oak Child Care in Madison are contemplating what’s next as child care providers face the loss of $20 million a month in federally funded state aid.

In June, that support was cut in half. Early next year it will go away completely.

“We have to raise our tuition rates,” says Sarah Airozo, program director at Big Oak, a nonprofit center. “Right now we’re thinking that they’ll be raised at least 10%. I honestly think it will be more like 14% when it all comes down to it, because of the raises that we’re offering our staff.”

Big Oak has 40 children enrolled and a staff of 15, including 12 teachers. Airozo says some job openings have gone unfilled for months because no one has applied. Two teachers recently announced they can’t afford to keep working and will have to leave.

“We still need to give our teachers raises this year, in order to retain the staff,” Airozo says. “Our highest-paid teacher has a master’s degree in education, and she is making $18.50 an hour.”

Started during the COVID-19 pandemic, the Child Care Counts stabilization program, funded with federal pandemic relief money, helped providers cover expenses and bolster wages for their employees while avoiding tuition hikes for parents.

Providers and the parents who rely on child care so they can work hoped lawmakers would extend Child Care Counts for another two years. Gov. Tony Evers, a Democrat, called for using $340 million in state revenues to continue the program in the new 2023-25 state budget.

Republican majorities on Legislature’s Joint Finance Committee and in the full Legislature rejected that provision, however, among many others.

In June, the $20 million that the state had been providing each month for Child Care Counts dropped to $10 million a month, and the Evers administration says the federal funds will run out entirely by the end of January 2024. That leaves a shaky future for child care services in Wisconsin, according to child care advocates.

Tuition hikes on the horizon

Ruth Schmidt, executive director of the Wisconsin Early Childhood Association (WECA), said Friday that in a new survey her organization is conducting, 31% of providers who have responded so far say they might have to close and more than 87% have said they will raise fees. So far 425 providers have responded to the survey, which is still ongoing, she said.

“There is some rhetoric around, let the market work itself out,” and an assumption that  “parents will pay to have their children in safe care,” Schmidt says. But without an additional revenue source, child care providers and advocates say there is a disconnect between the wages that providers must pay and the tuition that parents can afford.

“The bottom line is, parents simply will not be able to absorb the tuition increases that programs are going to charge, and the fallout of families not being able to afford it is they’ll pull their kids out of those programs,” Schmidt says. “If those programs don’t have filled seats, those programs will close.”

“Affordable child care is not affordable any more,” says Pam Skeel, who recently stepped into the job of executive director at Red Caboose, a Madison child care provider.

Red Caboose is a nonprofit and subsidized by donations in addition to parents’ tuition. It also charges tuition on a sliding scale based on parents’ income — a policy that Skeel says will not change.

“We’re going to have to keep looking for increased donations,” says Skeel. “We’re going to have to keep looking towards tightening some purse strings.” Even so, she adds, “I can guarantee you that there isn’t one day care that isn’t already trying to tighten those purse strings.”

Corrine Hendrickson, a child care provider and advocate, says she expects “a massive rate increase in the next few weeks” as providers across the state take stock of their financial picture.

Child care closures

Hendrickson says that records from the Wisconsin Department of Children and Families (DCF) show that in the first half of June this year, 42 providers in the state went out of business. DCF provided the data in response to an open records request from Wisconsin Early Childhood Action Needed (WECAN), the advocacy group Hendrickson founded with child care provider Brooke Skidmore.

Evers seeks additional funds

Alongside the question of whether the state Legislature will reverse itself and decide to fund $340 million in child care assistance for the next two years, another question remains: what happens with two other small streams of funds that Gov. Tony Evers wants to direct to child care providers.

Evers has requested the Joint Finance Committee to add another $13 million from unspent pandemic relief money to the remaining Child Care Counts resources. If there’s no objection within two weeks of the request, which he made June 29, Evers can go ahead with the transfer.

The governor also used his partial veto power on the state budget to change a $15 million child care start-up loan program that Republican lawmakers put in the budget into a grant program for providers.

The exact use of those funds, however, remains subject to the approval of the Republican majority on the Joint Finance Committee.

Combined, the two additional allocations add up to less than $30 million. That is less than two months’ worth of the $20 million per month that Child Care Counts made up until May of this year.

WECAN has started to hear from providers who plan to close in February after the federal and state aid runs out, Hendrickson told the Wisconsin Examiner.

Sen. Kelda Roys (D-Madison), one of four Democrats on the Legislature’s Joint Finance Committee, says she and other lawmakers plan to introduce stand-alone legislation soon to revive the Child Care Counts funding proposal.

“My hope is that Republicans will have a chance to correct their error,” Roys says. “We’ve already seen dire consequences for child care providers across the state. They’ve told us what’s going to happen if they lose out on these funds.”

So far, however, no Republicans have emerged to publicly support the proposal.

Rep. David Armstrong (R-Rice Lake), says that because GOP legislators had “no input to the program” when Child Care Counts was established, “the Republican side of the Legislature looked at it as, we know very little about this. We had no discussions of it. And so it was decided that no new programs like that were going to be funded.”

In addition to serving in the Assembly, Armstrong is the economic development director for Barron County. His daughter also works in the child care field. He agrees that there’s a gap between sustainable wages for child care workers and keeping tuition affordable for families.

“The [business] model, it’s kind of broken right now,” Armstrong says. “That’s the fundamental question — is it the government’s role to make up that piece? And how much is that piece that needs to be made up? That’s what we don’t know yet.”

GOP alternatives in the wings

Rather than sign on to the Democrats’ proposal, eight GOP lawmakers have formed a working group to develop a package of their own bills to address the child care need. Five bills are being drafted, Armstrong says, and include measures to “assist both in-home and [group] centers through the licensing process.”

Another one, which he is authoring, would consist of “a tax credit for employers to assist with child care centers.”

In concept, Wisconsin Manufacturers & Commerce, the state’s largest big business lobby, has floated tax credits to reward employers who buy slots in child care centers for employees who need them. Armstrong says his bill could cover business involvement in other ways as well, such as rewarding employers who decide to start their own child care centers.

Hendrickson says she and other providers haven’t seen the GOP proposals yet. “Our biggest questions will be No. 1, does it increase affordability and accessibility for parents?,” she says. “And No. 2, how does this increase wages for the recruitment and retention of highly qualified child care educators. If it doesn’t do those two things, we will not support it.”

Armstrong says he expects the Republican proposals to be ready to introduce in September.

But Roys argues that it’s critical to pass the Democrats’ Child Care Counts proposal for continued direct funding much sooner, before more child care centers go out of business. “Once a provider closes, it’s almost impossible to get them back open,” she says. “This is not just a spigot that you can turn off and on.”

The absence of public support from Republican lawmakers isn’t enough to make her back away from the Democratic proposal, however.

“I still think it’s our job,” she says. “This is essential for our state’s economy. We can’t afford to let these thousands of child care centers close their doors; we have to do everything we can — and that means not giving up and bringing Republicans back to the table.”

Child care providers, their allies and independent analysts see a direct connection between the lack of affordable child care and the difficulty employers have in finding workers.

“If you want to get people back to work, and if you want them to stay working, there has to be some give and take somewhere along the line,” says Skeel, the Red Caboose director. “I’m not expecting the United States to do this, by any means, but there are countries that offer free day care.”

Roys says that if Republican lawmakers “start seeing the notices and hearing from the parents that they’re losing their child care, I think some of them are going to wake up and realize that this isn’t a political stunt — that this is real and the decisions that they’re making are disastrous, and they’ll have a chance to rectify it.”

That is an outcome that Schmidt, the WECA director, would like to see, but one she acknowledges she does not expect.

“If the two parties could come together and settle on something that would be supportive of child care, I think that would still be great,” she says. “I also think that’s probably not highly likely.”

In the meantime, “Everybody’s doing a lot of regrouping right now,” Schmidt says. “We definitely want to continue to be supportive of this workforce in significant ways as we can, but this is a huge blow. And the message that it sends to this industry, I don’t think we can underestimate the impact that it has.”

‘It feels so disrespectful to pay our teachers so little’

Big Oak Child Care Center in Madison has 40 children enrolled and a staff of 15, including 12 early childhood teachers. These comments are excerpted from Program Director Sarah Airozo’s interview with the Wisconsin Examiner, in which she talked about challenges in filling job openings, providing adequate pay and keeping down tuition costs for families. 

On two teachers who recently announced plans to leave: 

One of them is going to a charter school and she’s teaching middle school. The other one was an assistant teacher, but she had a degree in English and Political Science and she got a job as a court stenographer. So I can’t really fault her for that, either — going into an entry level, but still higher-paid, job in the field that she studied in.

She came into my office when she resigned and said, “I don’t want to leave this job. I love this job. This job has been wonderful for me. And I’ve grown so much! But I can’t [stay]. My student loans are kicking in, and I don’t make enough money to pay my student loans and my rent and eat.”

We’re in Madison, so the cost of living is much higher than most of the rest of Wisconsin. Because of that we do pay more than other child care centers … But we don’t even compete with Kwik Trip anymore. You can go get a job at a gas station and make more money than you make at our child care center. And we’re one of the better ones.

I have one teacher who has a master’s degree in English, but she has been teaching early childhood in the classroom for over 20 years. And she makes $16.50 an hour, because that’s how our wage grid works. And then we have another teacher who had her own in-home child care center for 29 years. And she makes $17.50 an hour.

It feels so disrespectful to pay our teachers so little but that’s what we can do.

On the prospect of raising tuition. 

I do think we can charge 10% to 14% more and not lose so many families. But we also have over 200 kids on our waitlist. So it really sucks, because it turns child care into the haves and have nots… It’s not equitable at all … it really hurts the middle class, because if you have two kids in child care, one child in our infant program is $20,000 a year, and if you have two kids, we do a sibling discount of 15% off the less expensive tuition for the second child. We’re talking well over $35,000 a year to send your kids to our center. Who has that? I don’t.

On the rationale for public support for child care funding.

It needs to follow a model similar to public schools. And I do think that taxpayers should take child care as a responsibility. I went to the Capitol a couple days before the Joint Finance Committee met [to vote on funding for child care], and I spoke with Sen. [Howard] Marklein’s aide. And I said, “Don’t you want to invest in our future? Invest in these children?”

The aide said to me, “Well, parents make that decision. If parents want to send their kids to child care, then parents should have to pay.” And I’m, like, “We support K through 12 schools, why don’t we just start it [earlier] for child care?” [The aide said], “it doesn’t feel fiscally responsible to add any more to that,” or something like that.

I’m just like, “OK. You don’t get it. You don’t get it.”

On what lies ahead

Even with raising tuition, we projected [a] deficit this year. But we’ve been pretty fiscally conservative for the last few years, especially in COVID. And so we’ve been able to actually sock away a little bit. So it’s not a detriment, this budget cycle. But if we don’t start to get [additional] funding, there’s only so much time we have before we have to raise our rates to the point where it won’t be sustainable to send your kids to our school. We can’t operate in a deficit forever. We are prioritizing keeping our staff as best we can.

I honestly don’t even really even know how to answer what it’s going to be like long-term. Because everything feels so unpredictable.

Child care advocates will try again for state money to support providers was originally published by the Wisconsin Examiner.

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