Should we be concerned about the decline in family child care providers?

During the debates over Wisconsin's new child care quality improvement initiative, the YoungStar quality rating system, it became clear that an anticipated trade-off for quality improvement was likely to be a reduction in the number of child care providers.  The providers predicted to most likely be negatively impacted were family child care providers (who care for small numbers of children in their own home), as the new quality standards would differ dramatically from the current certification and licensing requirements for these providers. In addition, the Forum's own survey work found family child care providers to be less likely to have the financial and organizational resources needed to make significant investments in quality.  Finally, many observers felt there could be an over-abundance of family child care providers, particularly in Milwaukee County, and that increased parental demand for higher quality care might expose that reality.

In fact, according to a recent analysis by the Wisconsin Council on Children and Families (WCCF), there has been a significant decline in the number of family child care providers, as compared to years prior to YoungStar.  Statewide, there has been an 28% decrease in the number of family providers over the past seven years, including a 63% decrease in the number of certified providers, who had the least rigorous regulatory requirements prior to YoungStar.  WCCF finds the drop in family child care providers in Milwaukee County to be even more dramatic, with a 33% decline in just the past four years.

Should these results be troubling?  It's hard to say.  While there is a need to monitor whether this reduced supply in the family child care market negatively impacts child care access, to date there is no indication that parents have less access to quality care despite the reduced number of slots.  The changes may simply mean the supply has adjusted to match demand.

Conversely, at least a few child care providers feel the new regulations, coupled with the state Department of Children and Families' focus on fraud reduction, are having an unconstitutional disparate impact on African-American child care providers in Milwaukee and several have filed a federal law suit.  Although the claim does not provide statistics, it does seem possible that most of the suspended licenses and certifications were held by African-American providers.  As of March 2012, of the 281 providers listed on the website of the Department of Children and Families as suspended, the vast majority (90%) are located in Milwaukee. The state does not report the race of these providers, but the Forum's 2010 survey of child care providers found that while 10% of Wisconsin's providers are African-American, the rate increases to 48% in Milwaukee County. Thus, to the extent Milwaukee providers make up most of the suspended providers, it is likely that African-American providers are over-represented among them.  Whether this is a disparate impact and, if so, whether it is intentional will likely be difficult to prove.  However, even if no intent is found, if the perception that the state is targeting Milwaukee's African-American providers is widespread in the city, it may prove to be a significant hindrance to the state's efforts to reach out to Milwaukee parents about the importance of choosing a high-quality provider.

Another concern may arise if the family child care providers who have left the market stay unemployed or leave the labor force altogether.  The Forum found in our 2010 report, "Moving the Goal Posts: The shift from child care supply to child care quality," that the state's restructuring of the subsidy program was likely to have unintended consequences for child care providers.  We cautioned that "if this system reform is to be effective, then it is important to understand that the child care system we have today is the result of policy goals originally designed to impact the supply of care..."  Reforming welfare and creating a new child care subsidy program enabled low-income parents to join the workforce, including thousands who found new jobs as family child care providers.  The subsidy program was designed to emphasize child care supply over child care quality in order to effectuate the goals of welfare reform. It is important to recognize that these supply-oriented actions created jobs in the child care market; dramatic quality-oriented changes in the market will now affect those same jobs.  


Finally, given the fact that family child care is less expensive than center-based care, any decrease in the supply may negatively affect families who cannot afford to utilize a child care center.  YoungStar is designed to make higher quality care more affordable to low-income families by increasing the subsidy rate for higher quality care.  Whether the increase is enough to neutralize the impacts of the decreased supply in the low end of the market over the long term is yet to be seen.  For now, families appear to be able to remain the in the regulated market.  However, there remains a potential for growth in cheap, unregulated care, which should be monitored.  

Moving the goal posts on early childhood care and education

The Forum's latest report on early childhood education finds the original goals of welfare reform produced state child care policies that had detrimental impacts on child care quality and that may be difficult to reverse under YoungStar, the state’s new quality ratings system initiative.

The report finds that as the existing Wisconsin Shares child care subsidy system became operational, certain policy decisions produced results – many of which were unintended – that ended up boosting child care costs for the state while reducing child care quality. Those include:

1. Creating a new, less regulated category of care provider, which was intended to allow parents broader choices in providers, quickly create jobs, and keep child care costs low for parents and the state.


2. Sharing costs with parents by basing co-payments on the cost of care, as opposed to the parents’ income, which would have allowed parents to opt for more costly care only if they wished to pay more out of pocket but which, ultimately, could not be implemented.


3. Creating a more restrictive definition of “low-income,” in order to serve the working poor in general, and not just those obtaining or seeking jobs as part of the W-2 program.


4. Tying subsidy rates to prices in the private market, which was intended to provide low-income parents with access to the entire market while also relying on competition to keep the state’s costs in check.

Each of these four policies helped the state achieve its primary goal of providing a sufficient child care supply that would allow low-income parents to move from welfare to work, but at a high cost to the state and at the expense of quality within the child care market.

As policymakers look to reform the system under the new YoungStar initiative, can they successfully change the emphasis to quality within a system originally built to emphasize low cost and quantity? The policy challenges with which YoungStar’s designers and implementers must grapple include:

• Stepping up collections of co-payments from parents. Under YoungStar, child care providers will be contractually obligated to collect parent co-payments, which they have not been required to do previously. An enforced co-payment requirement might cause providers who serve mostly low-income families to leave the program if they are not able to collect the co-payments, even if they are providing quality care.


• Keeping income eligibility limits for working families at current levels. The pool of families eligible for Wisconsin Shares subsidies is growing because Wisconsin family incomes are not, which swells overall program costs. As more money is tied up in providing access to care, less will be available to improve the quality of care. Options for cutting costs would be to reset eligibility limits to exclude more families, or to appropriate a sum-certain amount and create a wait list for the subsidy. Both of those options, however, would retreat from the goal of serving all the state’s low-income families.


• Tying subsidy rates to quality so as to incentivize quality improvements. Higher subsidy rates for higher quality might price some private pay families out of the market. If that were to happen, such families may have to seek lower quality options than they are using today. In addition, because YoungStar has been designed to be revenue neutral (at least initially), most providers will continue to earn the same subsidy rate after the initial round of quality rankings as they do today. If providers are not certain their investments in quality will result in higher subsidies, they may not see YoungStar as an incentive to improve.

Several policy options are highlighted for consideration as YoungStar’s implementation moves forward, including having the state collect parent co-payments directly, reducing the subsidy for lower-quality providers, and eliminating one category of provider—the minimally regulated provisionally certified provider.

In the end, the success of YoungStar may well rest on the ability and willingness of administrators and legislators to monitor real-world impacts on families and the child care market in Milwaukee County and to be flexible enough to tweak policies throughout implementation, in order to avoid a new set of unintended consequences.

Back to the 80's?

The Pew Charitable Trusts released results from a new poll this week and have characterized the findings as an indicator that "support for government assistance to the disadvantaged [is] up to where it stood in the late 1980s..."

The new survey asked some questions that had previously been asked in 1987 and 1994:

Three core questions regularly asked in Pew surveys since 1987 were analyzed to track attitudes toward government assistance to the disadvantaged. In addition to asking about their views on government help to the needy even if it means going deeper into debt, respondents were read these statements: "The government should guarantee every citizen enough to eat and a place to sleep"; and "It is the responsibility of the government to take care of people who can't take care of themselves." Respondents were asked if they completely agreed, mostly agreed, mostly disagreed or completely disagreed with each of the three statements after it was read.

Over half of this year's respondents (54%) agreed that the government should do more to help the needy, up from 41% in 1994 and about the same as in 1984 (53%). In addition, 69% agreed that the government should guarantee food and shelter to all Americans, up from 59% in 1994 and higher than in 1987 when 62% agreed. Over two-thirds (69%) agreed that it is the responsibility of the federal government to take care of people who can't take care of themselves, a 12 percentage point increase since 1994, though still less than in 1987. Overall, the percent of respondents who agreed with all three statements increased from 29% in 1994 to 41% in 2007. While the percent who disagreed with all three statements fell by nearly half, from 24% to 13%.

The gains appeared across all demographic groups except African-Americans, who had much higher support for government assistance in the '94 survey than did other demographic groups. According to Pew:

One of the largest increases occurred among the oldest Americans. Since 1994, the proportion of those 65 and older who agreed with the three propositions increased from 16% to 38%. These shifts narrowed the gap between old and young from 21 percentage points to 12 points. Support also grew disproportionately among whites (+13 points) compared with blacks, (+6 points), though a far greater share of blacks (61%) than whites (38%) consistently agreed. Among whites, the biggest increases occurred in the South, where support for the social safety net grew by 24 percentage points, from 24% to 48%.

What do these findings say about the success of welfare reform nationally, which came out of the Republican-led Congress of the 90's and was signed into law by President Bill Clinton, a Democrat? Among respondents in the bottom quartile of household income, overall support for the three statements had a 21-point increase, from 38% in 1994 to 59% today. If welfare reform is not meeting the needs of families in this lowest income group, greater support for increased government assistance is to be expected. However, support for a federal safety net also increased among the highest earning households. Favorable responses from those in the top quartile of household income for all three statements increased from 16% in 1994 to 29% in 2007. The breadth and depth of the change in attitudes across all demographic groups does seem to indicate a gap between opinion and policy.

Unfortunately, the Pew survey does not report findings by state. It would be interesting to see whether attitudes in Wisconsin, the birthplace of welfare reform, have changed in the past 13 years on this issue. What has changed in our state is the volume of people receiving assistance. In 1994 the average monthly total recipients of welfare (Aid to Families with Dependent Children, or AFDC) numbered 226,197. In December 2006 the total recipients of welfare (Temporary Assistance for Needy Families or TANF) in Wisconsin equaled 36,420. It seems unlikely that a change of that magnitude wouldn't impact public opinion in some way. Is Wisconsin more or less like the rest of the nation? Perhaps an argument could be made either way.