Child Care Becoming Harder to Afford, State Report Finds

Gov. Tony Evers visits Mariposa Learning Center in Fitchburg on Sept. 20, 2023, to emphasize the need for more child care funding in Wisconsin. A new report from the Wisconsin Department of Children and Families finds that child care has become less affordable in the state. (Erik Gunn | Wisconsin Examiner)

Rising costs are making Wisconsin child care more expensive and reducing how much the state’s subsidy can help low-income parents who need care for their children, according to a new report from the state agency that oversees child care providers.

With the increased cost of care, the Wisconsin Shares subsidy program for low-income families matches the cost of only about half of child care slots available in the state, the report finds — dramatically below the threshold set by Wisconsin law and federal child care policy.

The 2024 Child Care Market Survey report, published Wednesday by the Wisconsin Department of Children and Families (DCF), says that even the higher prices providers are charging may not reflect “the true cost of providing quality child care.”

“The price of child care in this state is too darn high, and working families and child care providers across our state have been sounding the alarm on this issue for years,” said Gov. Tony Evers, announcing the report’s release.

He criticized Republicans in the state Legislature for having “consistently refused to provide meaningful investments to support the child care industry,” citing lawmakers’ repeated rejection of proposals to continue the Child Care Counts program that stabilized child care providers during the COVID-19 pandemic.

“Working families in our state can’t afford to lose any more affordable child care slots, and our economy and workforce can’t afford to lose more workers because they can’t find or access the child care they need,” Evers said.

Care for low-income families

The market survey report is required annually by the federal government, which funds Wisconsin Shares. The subsidy program offsets the cost of care for families with a gross income of up to 200% of the federal poverty guideline. (Until this July, the ceiling was 185% of the guideline.)

For a family of two, the ceiling is $3,407 a month. For a family of five, it’s $6,097.

The survey draws on reports collected in the fall of 2023 by Wisconsin’s Child Care Resource & Referral Network, with data from 1,178 providers in the state. DCF said the sample was validated to accurately represent the mix of providers in the state.

Federal regulations require states to certify that child care subsidy payment rates “are sufficient to ensure equal access to care” for eligible children compared with the private pay market for care, according to the report.

The analysis compares the price of each provider’s child care slot with the maximum that Wisconsin Shares pays for a slot in that provider’s county. If the maximum Wisconsin Shares rate was at or above the cost of a child care slot, “that slot was considered affordable,” the report states.

With that calculation, the survey found 50% of Wisconsin child care slots met that definition of affordability — 28,569 out of a total of 56,794 slots in the state.

“Fifty percent is well below the target for affordability,” the report states. “The affordability threshold set by both the federal Administration for Children and Families and Wisconsin Statute is that 75% of child care slots should be affordable.”

The report’s measure of child care “affordability” is based on a stipulated definition, however, the report observes.

“It is not a general measure of whether the price of child care is affordable for families,” the report states. “For example, most families who utilize Wisconsin Shares are authorized for less than the maximum Wisconsin Shares rate. Likewise, many families are not eligible for Wisconsin Shares and pay the full price out of pocket.”

The share of slots meeting the affordability standard is a sharp drop from last year’s Market Rate Survey, “which found that in 2022, 74% of child care slots were considered affordable,” the report states.

Reduced Child Care Counts resources

Child care providers’ prices have been increasing over the last two decades, but the increases from 2022 to 2023 were larger than previous years’ trends would have predicted, the report finds.

One factor that increased prices was that state payments to providers in 2023 under Child Care Counts were cut in half, according to the report. Child Care Counts was funded as part of pandemic relief in the 2021 American Rescue Plan Act (ARPA). It enabled providers “to cover core expenses such as payroll, materials, rent, and utilities, avoiding passing those costs along to families,” states the report, citing a UW-Madison Institute for Research on Poverty paper.

Despite repeated efforts by providers and their allies, along with Democratic legislators and Evers, attempts to continue Child Care Counts by replacing the ARPA funds with state dollars have been rebuffed by Republican lawmakers who command a majority of the Legislature.

In October 2023 Evers redirected some remaining ARPA dollars and extended the funding, which originally would have expired this past January, into 2025, although still at the reduced rate.

“The Legislature must get serious about reducing out-of-pocket costs for working families to afford child care,” Evers said in a statement issued with the report Wednesday. He reiterated his call for “long-term, meaningful investments in our child care industry” and a renewal of Child Care Counts.

Child care advocates told the Wisconsin Examiner that the report’s findings were expected.

Ruth Schmidt, executive director, Wisconsin Early Childhood Association. (Courtesy WECA)

“That’s not a surprise at all,” said Ruth Schmidt, executive director of the Wisconsin Early Childhood Association. “I think it’s indicative of what the early childhood field is experiencing as Child Care Counts has been reduced in our state. Child care programs are struggling to make up revenue that they were getting through Child Care Counts.”

Corrine Hendrickson, a New Glarus child care provider and cofounder of an advocacy group for providers and parents, said some providers have stopped taking Wisconsin Shares clients because “what the state pays is not nearly enough.”

Child care provider Corrine Hendrickson speaks in May 2023 at A Day Without Child Care. (Wisconsin Examiner photo)

According to a recent report from the First Five Years Fund, an advocacy group for federal child care and early education support, just 9% of Wisconsin children under 5 who are eligible are getting subsidized child care.

As she and other providers have had to raise rates to meet their expenses, some parents have opted out of child care, Hendrickson said. She has also heard from as many as 10 providers in southern Wisconsin who are considering whether to shut down in the next six months.

Schmidt said surplus federal funds are available that could boost the Wisconsin Shares subsidy if the state Legislature authorizes doing so, but that would be just a temporary respite.

Stabilizing child care so it’s sustainable requires “moving toward needing a public investment in care with an understanding that care is a public good,” Schmidt said. Without that sort of action, “I think this affordability issue is going to get worse.”

Wisconsin child care is becoming harder to afford, state report finds was originally published by Wisconsin Examiner.