A Summary of the Finance Committee’s Proposed Budget for Early Care and Education

September 13, 2017

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The 2017-19 budget bill approved by the Joint Finance Committee (JFC) provides a significant increase in funding for the Wisconsin Shares child care subsidy program, adding additional funds to the Governor’s proposal, relative to current spending level, especially in the second fiscal year of the 2017-19 two year budget. Nevertheless, the increased appropriations would be far below the amounts expended in past years, before the state made policy changes that have significantly reduced the reimbursement rates and the number of families and providers participating in the subsidy program. The JFC budget bill also includes additional funding for home visiting. The Legislature will finalize the budget and send it to the Governor for his review and action.

Increase in Wisconsin Shares Child Care Subsidies

The JFC bill figures, shown in the table, indicate that spending for Wisconsin Shares subsidies would increase in the first fiscal year by $8.5 million and by $29.6 million in the second fiscal year, compared to 2016-17 appropriation level, an increase of $38.1 million over the biennium.

A significant portion of the increase in subsidy spending in the second fiscal year is due to implementation of new federal Child Care Development Block Grant (CCDBG) Reauthorization requirements, including a 12-month eligibility modification. Under the updated CCDBG law, all children determined eligible for child care assistance must be considered eligible for a minimum of 12 months. Eligibility in Wisconsin Shares has typically been for six months or less. Research suggests that longer authorizations reduce the risk of losing benefits, support stable parental employment, and increase the continuity of care for the child.

Another positive change is that the bill alleviates the “cliff effect” experienced by families who lose eligibility for subsidies once they reach the income ceiling of 200% of the federal poverty level, which is about $49,000 for a family of four. The JFC bill mitigates the sudden drop-off in benefits that occurs when a family’s income reaches the current limit by allowing working families with incomes above that level to continue to receive child care subsidies, with a sliding scale for copayments. The amended bill includes $4 million in 2018-19 to cover the cost of this change. The 12-month authorization and the adjustment of the income threshold both take effect in fiscal year 2018-19.

A problematic part of the bill is a new requirement that families show they have less than $25,000 in savings, excluding retirement accounts and the value of a car or house. This test could add another complication for families applying for eligibility.

ECE-historical-levelsThe Wisconsin Shares child care subsidy program has shown a serious decline over the last decade, with annual subsidy payments dropping over $130 million in current dollars. There has been an 18% decline in participating child care programs, and a decline of over 20% in children served – particularly in rural areas. Subsidy payment rates continue to be well below market rates in nearly every county. The JFC bill provides some improvements, but the foundation of Wisconsin Shares continues to look shaky without reasonable payment rates.

Impact on Child Care Quality

The budget proposal does not appear to strengthen child care quality. The Quality Care for Quality Kids budget stays basically the same at $15.7 million in each year, with a very modest $200,000 increase, a 1% change.

The budget includes no mention of investments to improve the quality of child care, such as: (1) grants to help programs meet and sustain high quality standards, (2) increased funding for scholarships and stipends to improve the child care workforce, or (3) increased Wisconsin Shares payment rates. Any of these policies would support quality improvement.

Home Visiting Boost

The JFC bill increases the Family Foundations Home Visiting (FFHV) Program’s budget by $3.9 million in each year of the biennium, as proposed by the Governor. FFHV supports pregnant women and families and helps parents of children from birth to age five to develop the skills to raise children who are physically, socially, and emotional healthy. The increase in funding will cover an estimated 400-550 families that would benefit from evidence-based models shown by research to improve child outcomes, family self-sufficiency, and health and safety. In 2016 federal funds for home visiting were reduced by 20%. The JFC bill restores that funding and provides additional resource for expansion.

Dave Edie