CHILDCARE INVESTMENT SHORTAGE HURTS PARENTS—AND PROVIDERS

Raising a child is expensive, as any parent will tell you. According to Economic Policy Institute, a family on a full-time minimum-wage salary can expect to spend up to 64 percent of their income on just infant care. A family with just two children—an infant and a four-year-old—can pay more than $19,000 per year—more than 56 percent more than the cost of an average monthly rent in Delaware. Still, the U.S. States invests much less than other nations in early learning, during a critical period of childhood brain development.

It’s not just parents who suffer under the high cost of childcare. Childcare providers also struggle to stay afloat.

For low-income parents that are working, training for a job, or looking for work, the state of Delaware offers some reprieve. Purchase of Care is a subsidy to help pay for early learning tuition. Delaware covers about 15,000 children up to age 12 every year through POC. Families that qualify choose from centers that accept POC payments—not all do—and the state reimburses that provider based on the state’s available resources.

But Purchase of Care reimbursements do not cover the whole cost of care. According to the latest market rate study, the state’s POC payment covers only about half of what it costs a provider to deliver high-quality care to a child. Delaware has not increased the amount it pays providers since 2011, in spite of rising costs, inflation, and cost-of-living increases.

Governor Carney proposed increasing this rate to the 2015 “market rate” in his FY20 budget proposal. This is progress; however, it still won’t cover current costs—and doesn’t include a plan to ensure that reimbursement rates are updated annually.

Providers who accept children from low-income backgrounds often face daunting financial decisions.  Providers indicate that financial hardship due to low reimbursement rates has been leading to fewer POC slots in high-quality programs, meaning less access for low-income families. Delaware has not had a waiting list for children on Purchase of Care for decades, but this losing financial proposition may create a waiting list if the supply is not sufficient.

Early childhood education is a no-brainer investment for Delaware. Investing in high-quality early learning can help stimulate the economy, reduce crime, improve academics, and produce more positive overall life outcomes. A recent report shows that some states could see annual returns of up to 13 percent for every dollar invested in early childhood education. Ensuring that providers are better reimbursed will translate into benefits for both children and families.

Join us in urging the Delaware General Assembly to:

• Increase Purchase of Care and Stars reimbursements in the state budget by $10 million each.
• Ensure Purchase of Care reimbursement rates are based on the current market rate, which is studied every three years.

[Click here to get a sense for how tiered reimbursement works in Delaware]