YoungStar's impacts on the Milwaukee child care market

In June 2010, in the wake of detailed media accounts of widespread fraud in the Wisconsin Shares child care subsidy system and growing evidence that high-quality child care promotes positive academic outcomes, the Wisconsin Legislature approved a new quality rating and improvement system (QRIS) for the state’s nearly 8,500 regulated child care providers. In a new Forum report, we analyze initial data collected for Milwaukee County child care providers during YoungStar’s first year. Through this analysis, we gain important insight into the initial impacts of the new program on the county’s unique child care market, including where key policy objectives are being realized, and where potentially unintended consequences are emerging.

Key findings from the Forum's analysis of YoungStar's first year include the following:

• In Milwaukee County, 46% of participating providers were rated by YoungStar as of December 2011. Of those 534 providers, a total of 428 (80.1%) received 2-star ratings, while 50 (9.4%) received the highest rating of five stars. An additional 33 providers (6.2%) received 1-star ratings, meaning they no longer will qualify for subsidy payments from the state's Wisconsin Shares program.


• In light of the state’s plan to reduce payments for 2-star providers while providing a bonus for those who receive four or five stars, more than 80% of the providers rated thus far will receive less money under Wisconsin Shares when the tiered reimbursement system is implemented in July. Wisconsin’s QRIS is the only such system in the country that uses this type of “carrot and stick” approach. Its impacts on the child care market in Milwaukee County will bear watching.


• The data reveal several significant differences between Milwaukee County’s family providers (those who provide care in their home) versus group center providers. For example, 35% of group center providers received 5-star ratings compared to less than 1% of family providers. Conversely, 90% of family providers are at the 2-star level compared to 52% of group center providers. Thus, a much higher percentage of Milwaukee County’s group center providers will receive additional state support, while far more of the county’s family providers will feel the pinch of reduced state assistance.


• The rating data show there is considerable variation among providers at the same star level. Two-star providers, for example, which make up over 80% of the Milwaukee County providers rated thus far, vary dramatically in YoungStar’s staff education category. It is evident that some 2-star providers have highly trained staff but fall short in YoungStar’s other categories of assessment, while other providers with the same star rating have little to no relevant training in early childhood education.


• Some areas of the city and county enjoy significantly better access to high-quality child care than others. Among Milwaukee County’s 35 ZIP codes, 13 have at least one high-quality child care provider (defined as receiving either four or five stars) for every 1,000 young children, and 19 have at least one high-quality provider for every 10,000 workers. For a handful of other ZIP codes concentrated in the City of Milwaukee’s northwest and far south sides, no high-quality options exist despite large populations of both children and workers.


• Many providers are close to achieving the minimum point totals required for a higher star rating, but may be unable to afford the investments necessary to move up the rating scale. In addition, the challenges of meeting YoungStar’s minimum staff education requirements for 3-star ratings and above appear to be a major hurdle for many low-rated providers.

As additional Milwaukee County providers are evaluated by YoungStar in the coming years, it will be important to track these trends and determine whether the new system’s support structure and financial incentives are supporting quality improvement effectively.