Just about everybody would agree that child care is expensive, and many, but not all, would say that it’s a necessity in 2023. For the past several years, Wisconsin child care has been supported by federal funds that buoyed the industry through the COVID crisis via its “Child Care Counts” program. But beginning on September 30th, states will face a steep dropoff in federal child care money as pandemic-era funding ends. There’s evidence to suggest that as a result Wisconsin’s child care industry would see the closure of 2,110 of its programs, forcing the families of 87,425 children to make difficult choices. Those options include finding another provider that didn’t close and has an opening, cutting corners on the family budget in order to pay high costs, and possibly having one parent stay home to care for the kids.
It’s that last option especially that Governor Tony Evers says makes state-supported child care a workforce issue, and he’s called a special session of the Wisconsin State Legislature on September 20th in order to stave off what he called a “looming fiscal cliff” facing the industry, one which could potentially cause around a half a billion dollars in economic impacts between parents leaving the workforce and reduced employer productivity, and that could also means less in state income tax. It’s a point the Governor made when he visited Plymouth in March, when he’d already begun touring the state with his message that: “If more resources don’t come from the State, there are gonna be a lot of places closing their doors, which is going to be bad for kids, and frankly it’s going be bad for the businesses of Wisconsin because most of those kids have parents that work, and they won’t be able to work.”
And while child care comes in many forms, the Governor told WHBL news that they are all needed, and that Wisconsin has to go to work to keep it available and affordable because, as he put it: “At the core of that, though, whether it’s a private individual, or a public or a nonprofit, we’re gonna need the resources to do it or people will start to leave our workforce, and we can’t afford that.”
The idea that over 87,000 of Wisconsin’s 113,000 children now in child care might soon be without that care comes from a report by the Century Foundation, which according to its website, is “a progressive, independent think tank that conducts research, develops solutions, and drives policy change to make people’s lives better.” The report also indicates that over 4,880 child care jobs would disappear if nothing is done to make up for the loss of federal funds, and the Governor would like the legislature to use more than $1 billion of the state’s available $4 billion surplus to do the job. Besides supporting the industry his plan would expand paid family leave, invest in higher education to help educate, train, retrain, and recruit talented workers, and support targeted solutions to workforce challenges in high-need areas, specifically the state’s healthcare and education workforce sectors. Those are all aspects of the business familiar to one Sheboygan provider.
One View From Inside the Industry
Angel Berry is the director of A Million Dreamz, a daycare that’s now open 7 days a week and hopes soon to expand to its planned 24-hour operations. The former Sheboygan Christian School on Euclid Avenue was renovated during the pandemic and opened this past February to welcome its first customers, some of which also have special needs and aren’t necessarily the toddlers and youngsters most think about when the topic of child care comes up. Berry said that since they’re new and growing, many of their challenges are different than those many operators will face when federal funds disappear. But other issues are universal, and she echoed the Governor’s concerns about ending the Child Care Counts program, telling us that: “Well, yes, I think that the Child Care Counts came at a time when the child care industry was in the process of collapse, and it has really kind of held it up by a string. We have a lot of work to do, but if we cut that string, it WILL be catastrophic. It’s been on its way down for years. And you’re seeing more and more families, particularly after COVID and learning that they could get by on one income, choosing to stay that way, choosing to work at home, choosing not to go back to work. If you cut out child care, you will not have employees. It’s just a simple fact.”
Like all industries, A Million Dreamz is struggling to attract and keep qualified employees, workers whom Berry says are not what typically come to mind with those who see child care as some kind of babysitter. She told WHBL News in an interview last month that: “You know, we have people with Masters degrees, we have people with Associate degrees, right now we are offering apprenticeships. It is a field in which you have to have some level of education, even if it’s just beginner classes to get into it, and they have continuing education. So we’re talking…we’ve got some people that have taken a couple of classes to learn about development or safety with children and things like that. But we also have people that have spent 35 years in this field and have continued to educate themselves every single year for 35 years. And so when you look at that level of knowledge base and say “you’re worth $12 an hour”, who’s going to stay in that field at that point?” Berry said that it was a problem that A Million Dreamz needed to deal with immediately, and the extra federal funds helped.
“So I actually, shortly after we opened, I was watching every quality teacher that I interviewed pass on A Million Dreamz, and I said to my Board Treasurer “We have to make a change here, we have to pay them more. We have to. With “Child Care Counts” we’re able to pay them a little bit more. Now, we’re still talking people with Masters degrees and 35 years of teaching experience making $14 an hour, and high school students at McDonald’s flipping burgers for $15, and that needs to change! But we can’t ask childcare centers to come up with enough money to keep them at 14, 15, 16 dollars an hour and then cut the additional funding that’s caused that to happen. It’s going to create a really big negative effect.”
The Costs to the Customer of Child Care
Many businesses, like the cable company or an auto manufacturer, will simply raise their prices whenever they want to get more money coming in, but they can afford to price themselves out of one income range as long as the next income bracket will still be able to afford their product. But that’s not an option for many families when it comes to child care, which can quickly strain the household budget.
According to Berry, a recent MIT study concluded that child care should stay below 20% of a family’s income. While costs vary widely depending on family and arrangements, 2022 data shows that 51% of parents spend more than 20% of their household income on childcare alone.
Our calculations indicate that this may be impossible for a majority of Sheboygan County families to maintain under current funding, and could become even more difficult with the end of Child Care Counts funds. Consider that:
. Childcare Aware of America did a 2019 study on the price of Child Care and provided Sheboygan County data which said that during that year, annual spending for an infant in center-based child care was $11,588. Adjusted for inflation, that’s now $13,855.
. Angel Berry of A Million Dreamz said their annual cost would be $16,380 per child based on 45 hours per week care.
. Using the above examples, annual care costs for two children adds up to $30,235.
. The 2020 census listing of median household income in Sheboygan County was $65,352…adjusted for inflation in 2023 that comes out to $77,189.
Child care then represents 39.17% of median annual income, a figure far above what’s recommended by MIT. One may also consider that the median family with two children (infant and child) in daycare will have $46,954 left to cover rent or mortgage, utilities, transportation, food, clothing, education, healthcare and entertainment…and property taxes…or just under $4,000 per month.
Childcare as a Workforce Issue: What Does Madison Think?
Within hours of announcing his special session to avoid what Governor Evers called a “catastrophic loss” of child care providers, majority Republicans led by Assembly Speaker Robin Voss and Senator Devin Lemahieu of Oostburg roundly rejected the proposal to use surplus dollars to address the strain on families and child care providers. LeMahieu reacted by saying that “Instead of returning the state surplus to hardworking Wisconsinites, Governor Evers used his veto pen to raise taxes on every Wisconsinite making more than $27,630. Now he wants to use that same surplus to grow government and create new entitlement programs. The best way to fix Wisconsin’s workforce shortage is to create a competitive tax structure that will attract talent and private investment to our state. The Senate remains committed to providing meaningful tax relief for Wisconsin families and addressing our workforce shortage without growing government entitlement programs.”
Reacting to LeMahieu’s statement that tax breaks are the solution, and that Evers’ child care plan is an entitlement, Berry disagreed sharply, saying: “Absolutely not. We are talking dollars that are much bigger than that”…”And so we have all these families who are not going to be able to afford child care unless we start supporting it as a community and offering it to everybody. You know, I had to kind of giggle when you said “entitlement”. Because if we can’t keep it affordable, the only people who will be able to access quality child care are people who are on the upper end of their income.
(WHBL News) So that further divides society?
(Berry) “It absolutely does, and it perpetuates poverty in a way that I think absolutely will be catastrophic. Without supporting child care, you’re going to create a strain on the state benefits that exist, and you’re going to cause a huge punch to the tax base, and workforce development.”
The idea of universal child care does fall solidly within the progressive Democratic mindset, and as such serves as a wedge issue with Republicans. Many conservatives would say that if parents would just be parents, and be home for the kids, then we’d be better off. Berry sees that as clinging to out-dated and unworkable models. She said that…”…and I think that’s probably where a lot of people are coming from…you know, ‘Let’s go back to the 50s when everything was all jolly and wonderful’, but the cost of living today is not going to support that. And so you can send everybody home with their children, but that’s going to put more of a strain on all of the systems throughout the state to benefit those, and to carry those who aren’t working for themselves, and create a bigger problem there than we have with child care.”
What does Business Think?
While child care providers have their own unique interests woven solidly into the discussion, businesses occupy a much broader spectrum and, as a result, can have differing views. Representing Sheboygan County businesses in front of the legislature is the job of the Sheboygan County Chamber of Commerce, whose Chief Executive Officer, Dierdre Martinez, is also the Board Chair of A Million Dreamz, and Berry was given the opportunity to speak to a Chamber’s local Workforce Development Symposium that was held several weeks ago. But she feels she hasn’t been able to contact enough of the County’s power players she needs to in order to get her message about the child care problem heard and supported.
Berry was given needed help by the Sheboygan County Economic Development Corporation in developing A Million Dreamz’ first budget and financial projections, for which she said she was grateful, and she later approached the organization about speaking to them. However, SCEDC Executive Director Brian Doudna told WHBL that the SCEDC does not offer its services as a fundraising platform, and instead, guides and mentors businesses in how to become successful and spur general economic growth in the County. Doudna also told WHBL that the organization does not lobby in Madison, but that the Wisconsin Economic Development Corporation does, and he provided us with a link to its legislative agenda.
That agenda said that “As the ‘Voice of Economic Development’ in Wisconsin, WEDA is committed to working with lawmakers to promote pro-growth policies that encourage private investment, increase business productivity, and allow Wisconsin families to prosper.” Among its agenda points were many changes to the state’s business tax climate, a position shared by Senator LeMahieu, and many other points were noted, such as attention to infrastructure, and the housing issues faced by many workers and their families. And solidly within their Workforce Development agenda is the statement to “encourage residents who are not currently employed to re-enter the workforce by breaking down barriers to employment, including efforts to increase the state’s housing stock for working Wisconsin families and improve access to affordable childcare.” (emphasis added)
On that last point, the agenda stated that WEDA backs efforts to “Support programs, policies, and tax incentives to strengthen the early childcare workforce and increase access to affordable childcare for Wisconsin working families.”
What Do Republicans Propose?
Wisconsin Republicans in the Assembly, lead by Robin Vos, hav proposed several bills to address the child care issue in Wisconsin. None of those forward funds directly to families, but instead loosten existing regulations, and establish new programs that would make available either loans to child care providers, or reimbursements to families.
Under Assembly Bill 389, the Department of Children and Families would be directed to establish a category of licensed child care centers that provide care and supervision for four to 12 children (“large family child care centers”). The bill requires DCF to regulate a large family child care center in the same way that it regulates smaller family child care centers with two exceptions:
1) DCF must require that, for a group of nine to 12 children, two employees must provide care and supervision to the children at all times, and
2) DCF’s regulation of large family child care centers may differ from those of smaller family child care centers to the extent necessary to safely accommodate a larger group of children. The bill prohibits a large family child care center from providing care and supervision for more than eight children at one time who are two years of age younger. Under the current DCF rule for family child care centers, that limit is four children at one time who are two years of age or younger.
Another bill (AB 390) would lower the age of eligibility to become an assistant child care teacher or school-age group leader from 17 to 16, and lower the minimum age at which an assistant child care teacher or school-age group leader could provide sole supervision to a group of children from 18 to 16. The bill also removes the restrictions that a supervising assistant child care teacher may provide sole supervision to a group of children in full-day centers only during opening and closing hours, and during the center’s designated naptime, and only for up to two hours, and that a supervising assistant child care teacher may provide sole supervision to a goup of children in full-day centers only during opening and closing hours, and during the center’s designated naptime. And then, only for up to two hours, and that s supervising school-age group leader or assistant child care teacher may provide sole supervision to a group of school-age children only for up to 45 minutes. The bill changes a requirement that such persons are at least 18 or 17 years old, depending upon their qualifications.
Assembly Bill 338 creates a child care center renovations revolving loan program, under which the Wisconsin Economic Development Corporation must award loans to licensed child care providers for the purpose of making renovations to their facilities. Under the bill, 60 percent of the loans must go to in-home licensed child care providers, and 40 percent must go to licensed child care providers that are not in-home. An in-home child care provider could receive up to $30,000 per loan, and a licensed child care provider that is not in-home may receive up to $100,000 per loan. The loans must be interest-free. Also, under AB338, an in-home child care provider must establish or maintain enrollment in the in-home child care facility within one year of receiving the loan. If enrollment is not established or maintained, the corporation may claw back the loan.
Finally, Assembly Bill 387 would require the Department of Financial Institutions to establish a child care reimbursement account program under which a parent or other legal guardian may create a tax-advantaged account to pay qualifying expenses of a qualifying child. A “qualifying child” is a dependent who is less than 13 years of age. “Qualifying expenses” are, with limitations, expenses for the care of a qualifying child or household services incurred to enable the parent or legal guardian to be gainfully employed. Under the bill, after a parent or legal guardian (account owner) of a qualifying child has established a child care reimbursement account, any person, with the account owner’s permission, may contribute to the account, but the maximum total contribution per account per calendar year is $10,000. Persons may deduct contributions to an account for state income tax purposes. A person may not establish an account if the person or the person’s spouse participates in an employer-sponsored dependent care assistance program that for federal income tax purposes excludes any amount of income used to pay dependent care expenses. Only an account owner may withdraw funds held in an account, and the account owner may withdraw these funds only to pay for the qualifying expenses of a qualifying child. Generally, if funds contributed to an account are not expended for qualifying expenses in the calendar year they were contributed, the funds are forfeited. The bill requires Department of Financial Institutions to contract with a vendor to administer the program. The program vendor may charge fees to account owners to cover the cost of administering the program and may retain any unused contributions that are forfeited at the end of the year. The contract between DFI and the vendor must require the vendor, upon request, to provide information to the Department of Revenue for purposes of verifying account contributions and withdrawals.
What’s Next?
The next planned action, if any, will come tomorrow, September 20th when the Legislature will gavel in and, according to most pundits, immediately gavel out of the session, killing the Governor’s proposal as it has done with several others before. It’s a move designed more to exercise political will than to solve problems. Republican leadership has already made it clear that they have no intention of using part of Wisconsin’s $4 billion surplus to address the child care problem and has proposed its own agenda of reducing regulations and reimbursing families for the costs of child care.
If Republicans are right, families will see their child care costs reduced once their taxes are filed, and child care providers will find it easier to attract workers, albeit not the highly-trained and credentialed workers it feels are needed to provide proper care. If Governor Evers and his supporters are right, more challenges await providers and consumers alike.
