Making Affordable Childcare Available to more Minnesota Families

Ben Horowitz, The Minnesota Budget Project, website information

 

The Minnesota Budget Project supports policies to ensure that more Minnesota families have affordable, reliable child care that meets their needs. These policies include:

  • Increasing funding for Basic Sliding Fee Child Care Assistance.
  • Increasing reimbursement rates to child care providers participating in the Child Care Assistance Program, which includes Basic Sliding Fee.
  • A targeted increase in the state’s Child and Dependent Care Tax Credit to help more low- and moderate-income families struggling with the high cost of child care.

Too many parents cannot find stable child care that meets their family’s needs. In Minnesota, the average annual cost of care for a four-year-old in a center is $10,812. When child care is inaccessible and unaffordable, parents struggle to find and keep good jobs while their children may suffer long-lasting consequences from a lack of consistent and dependable care.

Basic Sliding Fee Child Care Assistance supports the varied needs of Minnesota children and their parents by reducing the cost of child care for working families. It covers children in every county and allows parents the freedom to choose a provider. Basic Sliding Fee covers kids from infancy to age 12. When parents have stable care, employers have an easier time finding the reliable workers their businesses need. Unfortunately, more than 6,000 Minnesota families are on waiting lists for Basic Sliding Fee.

When parents are able to pay for child care with help from Basic Sliding Fee, they may face an additional barrier: limited options. The state’s payments to providers caring for children through Child Care Assistance are set far below what the median provider charges. This means that providers may lose money if they choose to serve these families. Increasing reimbursement rates would increase parental choice.

Policies like Basic Sliding Fee that reduce the monthly costs of child care are essential to reach the Minnesota families that struggle most to afford it. In addition, Minnesota also helps low- and moderate-income families with the cost of child care through the Child and Dependent Care Tax Credit. This tax credit is available to families to offset a portion of their child care costs needed so that parents can work or look for work. But the credit has not kept up with the rising cost of child care. It is time for a targeted increase in the Dependent Care Credit that increases the size of the credit and reaches more low- and moderate-income families.

The House, Senate and Governor are headed into final budget negotiations with different proposals on Basic Sliding Fee and the Child and Dependent Care Tax Credit.

  • The Senate Health and Human Services omnibus bill (Senate File 1458) contains an additional $19 million for Basic Sliding Fee, which would reach 700 more families in an average month. Governor Dayton included $12 million for Basic Sliding Fee in his supplemental budget. The House Health and Human Services omnibus bill (House File 1638) did not include any new funding for Basic Sliding Fee.
  • Governor Dayton’s budget includes a $103 million expansion of the Child and Dependent Care Credit. It would increase the maximum credit to $2,100 for families with two children, and raise the income at which such families can qualify for the credit to $124,000. The House omnibus tax bill (House File 848) contains a more targeted $35 million expansion that increases the maximum credit to $2,100 and the income limit to $68,000 for families with two children. The Senate tax bill (Senate File 826) contains no expansion of the Dependent Care Credit, but it expands the K-12 Education Credit to include some pre-kindergarten programs.

Earlier this session, legislators proposed several bipartisan bills that would help more families afford child care. These included:

  • House File 1064 (author Representative Jenifer Loon) and Senate File 1494 (author Senator Chris Eaton) would raise the income at which families can qualify for the Dependent Care Credit to $94,000 for a family with two or more dependents, and increase the maximum credit to $2,100 for such families. This represents a $73 million expansion in the credit in FY 2016-17, and would benefit an estimated 72,400 households by an average of $407.
  • House File 1057 (author Representative Mary Franson) and Senate File 1199 (author Senator Jeff Hayden) would increase funding for Child Care Assistance by $270 million in FY 2016-17 to provide more families access to affordable care through Basic Sliding Fee, including all of the current waiting list, and increase reimbursement rates to cover about half of child care providers.
  • House File 1059 (author Representative Mary Franson) and Senate File 1200 (author Senator Jeff Hayden) combine House File 1057/Senate File 1199 with House File 1064/Senate File 1494.

The Minnesota Budget Project is part of the Kids Can’t Wait Coalition, which is committed to affordable, accessible child care for all Minnesota families. You can read more about the coalition and sign on as a supporter.

Legislators can take an important step forward by providing needed funds for affordable child care this year. But it will all come down to priorities as the Minnesota House of Representatives and Senate enter final budget negotiations. Contact your representatives today to ask them to support funding for child care assistance.

Staff contact: Ben Horowitz, Policy Advocate, 651-757-3065