House Bill 574 essential to building strong, equitable childcare system in NC

Next week, the state House Committee on Families, Children, and Aging Policy will consider a bill that would provide a significant boost to the state’s early childhood education system.

House Bill 574 would revise the reimbursement rates paid to those who care for children who receive childcare assistance. Increasing these rates is an important step to fully investing in North Carolina’s youngest children and the skilled educators who care for them. This bill would help build the strong and stable childcare system that our state needs to recover from COVID-19. 

Parents who are returning to work need accessible and affordable high quality educational opportunities for their children. This is especially true for working mothers who have been far more likely than men to leave the workforce during the pandemic because they’re caring for children. 

The Budget and Tax Center has just released Equitably Financing Child Care for North Carolina Families, a newly revised version of our 2020 report on implementing a statewide floor for childcare subsidy reimbursements. HB 574 would put this statewide minimum reimbursement rate in place, driving investment to childcare providers and creating greater equity across counties. Federal and state dollars are available to make this investment; it is not only possible but essential to our recovery.

North Carolina’s childcare subsidy program serves over 100,000 children in low-income families each year; childcare providers are reimbursed each month by the N.C. Division of Child Development and Early Education (DCDEE) for delivering this care. These reimbursement rates are based on a market rate survey of private fees and are different for each of the state’s 100 counties. Current rates use data collected in 2015, and they can differ by hundreds of dollars from county to county. 

Higher subsidy reimbursement rates are associated with higher-quality care in both childcare centers and family childcare home settings. But in many counties — especially in rural areas — the current rates do not meet the true costs of providing high-quality care. Childcare providers are small businesses that are anchors in their communities, but they frequently operate on razor-thin margins because the price of high-quality care is so far out of reach for many parents. Reimbursement rates that don’t reflect the cost of delivering high-quality early education replicate the problems with the private-pay model, leaving providers with little financial cushion and unable to hire and retain skilled educators.

Currently, huge differences in reimbursement rates among the counties exceed differences in the cost of living. This leads to major geographic inequities and financially strains providers in rural areas where access to child care is already a major problem. The graph below shows current reimbursement rates for five-star centers caring for infants in three neighboring counties, and the increased rate they would see under HB 574. 

Our analysis found that 98 counties would see a boost in investment, and the greatest increase in reimbursement rates would go to economically distressed, rural counties where the gap between current market rates and the state floor is the largest.

Many childcare providers remained open throughout the pandemic, and most of those that temporarily closed have re-opened. Yet many providers are still facing low enrollment, and the families they serve are struggling to make monthly payments. Higher and more equitable subsidy rates will not only stabilize bottom lines so that providers can remain in operation, but they also will help providers pay educators more competitive wages, support facility improvements, and encourage more providers to serve children who participate in the subsidy program, expanding families’ access to care. 

In the long term, North Carolina needs to develop a better method for calculating subsidy rates so that providers receive payments that reflect the true cost of delivering quality care. The Division for Child Development and Early Education should move quickly to pursue a new method, but the early education system needs action now. Too many providers are teetering on the edge and facing increased costs due to COVID-19. HB 574 is an interim step that will provide a key support that these small businesses need to stay open and serving North Carolina’s families and children. 

New survey: North Carolina voters want more public investments in child care

The importance of early childhood education has never been clearer than during the COVID-19 pandemic. High-quality child care and early childhood education are critical for children’s development, for supporting working parents, and for thriving communities. The lasting, transformative benefits of early childhood investments require sustained commitment from North Carolina leaders, and voters want to see more public investment that makes early childhood education accessible and affordable for more families.

According to a survey conducted by Data for Progress in January, 73% of voters support more public funding to expand access to child-care assistance and early childhood education in the state, including 68% of rural voters and an overwhelming 82% of urban voters. A bigger, bolder public commitment can break through the constraints of the current private pay model for child care, which burdens families with high costs and hampers progress toward quality care for all. Our collective dollars can fortify a system that prepares the youngest children for future learning regardless of their family’s income or which community a child happens to live in.

The low compensation of early childhood educators makes clear the limitations of our current private model for early childhood education. These educators are “the workforce behind the workforce,” and have literally risked their lives during the pandemic to make it possible for other essential worker parents to keep North Carolina running. Yet their pay remains far below what it takes it to make ends meet. Educators on average earn $12 per hour, and fewer than half of child-care centers provide their staff with health insurance. These realities make it a huge challenge to retain high-quality educators.

Before COVID-19 hit, too many families couldn’t afford high-quality early childhood education. Today, thousands of eligible families are on the waitlist for child-care subsidies, and many more don’t even bother to get on the wait list. The need has only increased during the economic downturn.

While the early childhood system has received some crucial relief funds during the pandemic, North Carolina needs a permanent commitment of public funds to build a system that will help all our communities thrive — and voters agree.  That means not just deploying federal dollars available now but committing state dollars to this investment in our state’s future.

Not only can North Carolina currently afford to direct state dollars to early childhood education, but a clear majority of North Carolina voters also support progressive tax policies that can help raise additional revenue to make these investments. In particular, voters support increasing taxes on high-income households. Seventy percent of voters support raising income taxes on households making over $400,000 a year in the state, while 60% support higher tax rates on corporations. This includes support from over half of rural, suburban, and urban voters for both policies.

State policies that prioritize equity are also popular: 61 percent — including a majority of voters in rural and suburban locations — agree that investments should prioritize low-income communities and communities of color.

It is critical to focus on equity when it comes to rebuilding an early childhood education system that works for every community in our state. The majority of early childhood educators in North Carolina are women of color, and across the country Black and Latinx educators are paid less than their white peers, even at the same levels of education. Black and Latinx working parents also pay a higher percentage of their income on child care, and occupational segregation means they are less likely to work in jobs that allow them to work from home, elevating the importance of affordable child care. Decades of research shows that high-quality early education benefits all children, but especially low-income children. Substantial public commitment to this system can bolster low-income communities across the state and support the well-being of all families and educators — Black, brown, and white.

We know the benefits of investments in early childhood education, and these findings show that these policies are popular with voters as well. Ensuring that higher-income earners and corporations pay their fair share of taxes can provide a valuable revenue source to fund popular public investments that prioritize low-income communities and communities of color. It’s time for North Carolina leaders to make the equitable investments in our state’s future that voters overwhelmingly support.

More about this voter modeling

The NC Budget & Tax Center partnered with Data for Progress to conduct this survey. Data for Progress uses state-of-the-art data science to understand voters’ policy priorities. From January 5 to January 15, 2021, Data for Progress surveyed 1,968 likely voters in North Carolina using SMS and web panel respondents. The sample was weighted to be representative of likely voters by age, gender, education, race, and voting history. The survey was conducted in English. The margin of error is ±2.2 percentage points.

Logan Rockefeller Harris is a Senior Policy Analyst with the Budget & Tax Center, a project of the NC Justice Center.

NC early childcare system is left behind by inadequate COVID relief

As North Carolina parents juggle working, supervising remote learning and providing child care for their youngest kidssurvey data from August shows that our state’s childcare infrastructure needs more support. 

Early childhood educators have provided crucial supports for essential workers during the COVID-19 pandemic. As more people return to work, we’ll need a strong childcare system for a successful economic recovery.  

While many programs are re-opening, those that are currently operating reported serving about 30% fewer children than before the pandemic. Persistent low enrollment threatens the long-term viability of our childcare system. 

Family childcare homes are now serving about 85% of the children who were attending before the pandemic, and enrollment has been fairly steady since May. Childcare centers had steep declines in enrollment, but attendance in open centers has increased since May and now stands at 59%  

 

Early childhood educators depend on parent fees to cover the costs of running a program, which in turn enables them to earn a living and support their own families. This is why declines in enrollment are such a problem. 

For family childcare homes, even relatively small declines in enrollment make it hard to stay open, as they tend to run on razor-thin margins. Even before the pandemic, early childhood educators made less than $11 per hour on average in North Carolina, frequently with no benefits. Low wages make it challenging for program directors to retain staff, an issue that is heightened by the pandemic.  

At a virtual town hall hosted in August by the North Carolina chapter of the National Domestic Workers Alliance and Moms Rising, early childhood educators spoke passionately about their commitment to the youngest North Carolinians and their struggles to stay afloat during COVID-19. 

In the words of Darlene Brannon, a childcare center director with 15 years of experience:  

It was a real honor to come into this field  [but] we’re are not getting paid to do all that we’re doing. A lot of our parents have not been able to come back to the childcare center, because they’re not working yet  Even the parents that are still coming, that are essential workers  they’re not making enough money to pay the parent fee as well as pay for food for their children. 

Darlene’s experience shines a light on the need to build a childcare system that works for parents and educators. Instead, chronic underinvestment coupled with a lack of meaningful COVID response creates false choices between directing assistance to parents of young children or to educators.  

HB 1105, the Coronavirus Relief Act 3.0 passed by the NC General Assembly on Sept. 4, didn’t go nearly far enough to sustain and strengthen our childcare system. The bill provided $35 million for operating grants to early childcare programs, and while this funding is desperately needed, it is a one-time investment unlikely to cover more than one to two months of bonus and retention payments.  

The bill offers $8 million in additional childcare assistance payments for parents, but this is far below what is needed. The money would serve only about 1,300 kids for one year, leaving too many behind.

According to the NC Early Education Coalition, at least 14,000 eligible families are on the waitlist for childcare support The NC Division of Child Development and Early Education had been covering co-pays for parents receiving childcare subsidies during the pandemic, but without any additional funds, that support has now ended.  

In addition, the funding is is limited to support for remote learning opportunities, which creates unnecessary hurdles for families seeking assistance. 

Instead of providing more support to low-income families, HB 1105 allocated $440 million to the poorly designed Extra Credit Grant Program, providing one-time direct cash payments of up to just $335 to North Carolina parents.

These grants are not targeted to the parents who need them most. Because the grants will rely primarily on tax filings to distribute paymentsthey may even exclude many of the state’s lowest-income families who do not earn enough to file taxes but who do contribute through sales and other taxes. 

Furthermore, our current childcare subsidy system does not cover the actual cost of providing quality care. Our state needs to adjust reimbursement rates for the programs that provide care to families receiving subsidies in order to ensure they are adequate, equitable, and offer early childcare educators a living wage. 

North Carolina needs long-term public investment in early childcare. It is necessary to support our recovery from COVID-19, to ensure that programs are open as parents return to work, and to continue for a stronger state.

Childcare providers see the value of their work every day, and comprehensive public funding would show that North Carolina recognizes their value as well, and the value of the children in their care and the families that rely on them. As Stephanie Shell, a family childcare home provider, said at last month’s town hall: 

I ask that our legislators think aboutthe studies that show the first five years of a child’s life are the most critical of their development, and that we are the people helping with those first five years. We would like to see that reflected in theirdecisionmaking in terms of funding and support for us through this crisis.

 

Logan Harris is a Senior Policy Analyst with the Budget & Tax Center, a project of the NC Justice Center.