Michigan’s Child Care System Continues to Struggle

Today, the National Women’s Law Center released its annual state-by-state report on the status of child care. This year’s report, Pivot Point: State Child Care Assistance Policies 2013, examines five critical factors that determine the affordability, accessibility, and quality of assistance in each state: income eligibility, waiting lists for assistance, co-payments required of parents receiving assistance, reimbursement rates for child care providers, and eligibility for parents searching for a job. What the report shows us is that Michigan continues to fall behind other states in these critical areas and must make policy changes to bolster its child care system to truly embed it within our P-20 education system. Here are a few critical pieces of the report.

One area where Michigan has gotten progressively worse is in the area of eligibility. The original intent of the child care subsidy is to support low-income working parents who struggle to afford child care while maintaining their employment. Between 2012 and 2013, nearly half of the states increased their income eligibility limits to keep pace with or exceed inflation; and forty-six states increased their income eligibility limits as a dollar amount between 2001 and 2013. However, Michigan did none of these.  Between 2012 and 2013, our state did not adjust its income eligibility limits for families to access the child care subsidy, maintaining eligibility at an annual income of $23,380 for a family of three. Since no adjustments were made for inflation, this means that families now living at 122% of the federal poverty level (FPL) could access the subsidy. Moreover in 2001, Michigan allowed families of three making $26,064 annually (178% FPL) to access the subsidy. In essence, Michigan has shifted its eligibility such that working families need to be poorer to access this critical support.

Beyond the fact that the subsidy is supposed to help parents maintain family-supporting employment, the reimbursement rates in Michigan make it extremely challenging for parents to afford quality care. Federal regulations recommend that rates be set at the 75th percentile of current market rates – a rate that is designed to allow families access to 75 percent of the providers in their communities. However, Michigan does not come close to meeting this recommendation. In fact, for a four-year-old in center-based child care, a family can receive up to $433 in subsidy per month, though the 75th percentile averages $974 per month. For a one-year-old in center-based care, families can receive up to $650 in subsidy though the 75th percentile of the market rate is $1,000 per month. Clearly, the reimbursement provided is insufficient to ensure families can access high quality care, and families can be charged co-pays to make-up the difference between the true cost of care and the subsidy amount. This is a significant financial stretch for Michigan’s poorest working families who are served by the child care subsidy system.

Beyond the low reimbursement rate, Michigan is one of three states that provides child care subsidies on an hourly basis that’s dependent on a child’s attendance. Most other states provide child care subsidies on a daily, weekly, or monthly rate, which we know is aligned with what high quality child care programs need and charge private-paying families. This consistency in payment, that’s not dependent on attendance, is critical for programs to maintain their business model to provide high quality care and is the way that the child care market operates. Providing an hourly reimbursement makes it challenging for providers to anticipate continued revenue from subsidized families, making it difficult for providers to support quality improvement efforts – efforts that are critical to ensure the best outcomes for children.

Finally, Michigan fails to promote continuity of care, which we know to be critical to the healthy development and learning of young children. Michigan is one of only five states that does not allow families to maintain their child care assistance while looking for a job if they become unemployed while receiving the subsidy. We know this to be problematic not only because families need to be able to access child care to attend job interviews but it also allows parents to start working sooner if they already have child care available when they secure a new job. For children, having consistent care from a high quality provider ensures the best outcomes for their learning and development.

Michigan has a long way to go towards ensuring a robust child care subsidy system that truly supports working parents while promoting the learning and developmental needs of our most challenged children. Other states have shifted their child care subsidy systems to promote school readiness for young children through high quality early childhood settings, promote school success for school-aged children through high quality after-school programming, and support low-income working families to access these quality programs. As a state, we must ask ourselves what is our ultimate vision for children and families served by our child care subsidy system and how can we transform our policies and procedures to achieve that?

-Mina Hong