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We have opportunity to fix child care

The COVID-19 public health and economic crises raised awareness of both the importance of child care to the state’s economy and the fragility of child care businesses.

As child care businesses and schools closed, parents struggled to find care for their children, and many — disproportionately women — were forced to quit their jobs. Others struggled to juggle parenting and a job while working from home. Employers also felt the pinch, as many could not attract or keep workers because of the lack of affordable child care.

The problems facing Michigan’s child care system are clear:

Child care is not affordable for many Michigan families. Child care consumes 19% of the income of a family at the state’s median income, and 55% of income for a parent working at minimum wage. Child care can exceed the cost of mortgage or rental payments, and rivals college costs.

Child care businesses are struggling. Child care is unaffordable for many parents, but not because child care workers are earning a living wage. In fact, they are some of the lowest-paid professionals in Michigan. Nearly half of child care providers are themselves eligible for some type of public assistance. Low care subsidy payments to providers have exacerbated the problem, making it very difficult for providers to accept children with state subsidies, and especially limiting the child care choices of parents with infants and toddlers who require a higher level of care.

Too few families have been eligible for a subsidy to help with child care costs. Until the income eligibility level for child care subsidies was increased in January of this year, Michigan had the second-lowest threshold in the country, so many families with very low wages could not get any assistance with child care costs. Even now, at 150% of poverty, Michigan’s income eligibility threshold falls well below the national median of 188% of poverty.

Michigan’s investment in child care declined over the last decade. The combination of strict eligibility, low provider payments, and the failure to commit all available funds to child care resulted in a nearly 70% drop in the number of families provided a subsidy — from 62,413 in 2003 to only 19,213 in 2020.

What will it take to fix child care in Michigan?

The first step is to rethink the financing of child care. Currently, child care is “funded” predominantly by parents and underpaid child care professionals. It is a financing system that doesn’t make sense, and doesn’t work for child care providers, parents or children.

State funding for child care fell from $499 million in 2003 to $217 million in 2020. During that time, Michigan fell to fifth from the bottom of all states in its use of federal Temporary Assistance for Needy Families (TANF) dollars for child care, and led the nation in the amount of federal Child Care Development Block Grant dollars (CCDBG) it returned to the federal government for redistribution to other states — because of a failure to provide required state matching dollars.

With growing awareness of Michigan’s child care crisis and its many impacts, business leaders, community leaders, advocates, and policymakers from both sides of the aisle are all working to promote solutions.

The Michigan League for Public Policy has recently released a report on child care financing and county fact sheets on child care that are available at mlpp.org. The League is also a member of the Think Babies Michigan Collaborative, which is a prenatal-to-age-3 policy collaborative working to make Michigan a top state to have a baby and raise a child. Over 1,000 parents, advocates and organizations make up the collaborative, and we encourage you to join here: ecic4kids.org/policy-thinkbabiesmi.

Federal COVID-19 relief funds have provided a cushion for child care businesses and families by helping child care businesses stay open during the pandemic or reopen later, but those federal dollars are time-limited. With the recent passage of the American Rescue Plan, the state is projected to receive an additional $1.1 billion for child care.

And the Michigan Legislature and the governor need to work together to amend the current year budget and adopt a 2022 state budget that ensures Michigan uses those new funds wisely, with an eye on developing a long-term financing plan that makes sense — including better use of federal TANF dollars and new sources of state revenue.

State budget discussions are currently underway on increasing the income eligibility level for the state’s child care subsidy and increasing child care subsidy rates for providers.

Michigan has a historic opportunity to create the child care system parents and business owners need, and policymakers must work together to rise to the challenge and get this right.

Our families and our economy are in the balance.

Pat Sorenson is senior policy analyst at the Michigan League for Public Policy.

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