TKW Consulting

With the start of the new state legislative session in St. Paul, some lawmakers would have us believe that the massive cutbacks in state child care investments they engineered in recent years have improved our child care system. Nothing could be further from the truth. Child care is an investment in the future of Minnesota's children, families and economy, and each dollar spent comes back to taxpayers many fold. Economists at
the Minneapolis Federal Reserve Bank tout early care and education as the best economic investment a state can make, bringing a 12 percent public return on every $1 invested.

Here is the current reality of child care in Minnesota. More than $200 million has been removed from the Child Care Assistance Program since 2003. It's not "rhetoric," as some contend, to say that this has hurt families, businesses and communities — to say nothing of the 11,000 kids from struggling families who no longer access child care assistance because of the cutbacks. The changes have not improved efficiencies or improved the integrity of the program.

In fact our child care infrastructure has been crippled largely due to the funds that have been siphoned out of the system. Since the cutbacks were enacted, a net total of 1,127 licensed child care providers have gone out of business.

That's more than one Minnesota business per day, and it means a lot fewer choices for families who need a safe, reliable place for their kids. This is especially hard on families struggling to stay in the work force and off of welfare. More than 75 percent of moms with young children in Minnesota work outside the home. Those families need child care. Recent research shows that child care in Minnesota is expensive, and that the vast majority of the cost is paid by parents. In fact, the state pays for less than 10 percent of all child care. Some say Minnesota's system is still among the most "generous" and highest ranked in the nation, but consider this: with the cutbacks, Minnesota now ranks
40th in the nation in entrance eligibility at 175 percent of the federal poverty guidelines ($29,050 for a family of three). That's below Mississippi, which is dead last in overall child well-being. While Minnesota does allow families to receive assistance up to 250 percent of federal poverty guidelines — with the entrance eligibility level so low, that figure is useless for so many families who don't qualify for assistance in the first place.

And contrary to assertions that the legislative changes target funds to those most in need, the massive cutbacks have forced nearly 5,000 of those families to a waiting list for help.

Except for a slight bump in January — rates have been "frozen" for three years at 2001 market levels. Imagine telling your local grocer or pharmacist that you would only pay them what they charged in 2001. Do you think they would agree? And if they did, how long could they stay in businesses?

With their rates essentially frozen, providers, who often just break even financially, have been forced to absorb rising business costs, charge struggling families more to stay afloat, or close their doors altogether. Families and providers have both suffered from these changes. Even the federal government is concerned about Minnesota's reimbursement situation. In September, a letter from the U.S. Health and Human Services Department to the State said: "We are concerned that a system of child care payments that does not reflect the realities of the market makes it economically infeasible for many providers to serve low-income children — undermining the statutory requirements of equal access and parental choice."

When it comes to child care, it should not simply be about budgets and reimbursement formulas. It should really be about smart investments to ensure our kids have a safe, reliable place to be and to learn when their parents are at work or school. The recent disinvestment in child care has not been good for families, businesses or taxpayers. It is shortsighted, and it is wrong.

Ann Kaner-Roth is executive director of Child Care WORKS, a statewide coalition of
organizations and individuals that educate about and advocate for quality, affordable child care in Minnesota. Jim Koppel is Director of Children’s Defense Fund Minnesota, which advocates on behalf of children.