State Reimbursements Don’t Cover Even Half the Cost of Childcare

As any parent will tell you, childcare is important—and expensive.

And, for low-income parents who are working, training for a job, or looking for work, Delaware provides a subsidy called Purchase of Care 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 the state only has a finite amount of dollars to spend on POC. And, unfortunately, POC reimbursements don’t come close to covering the cost of care for providers.

Every three years the Department of Health and Social Services surveys providers to ask what they charge private-pay parents and use those figures to compare to the state payment.

According to the latest market rate study, the state’s POC payment makes up only 50 percent of that amount—a fraction of the cost of care. Delaware has not increased the amount it pays providers since 2011, in spite of rising costs, inflation, and cost-of-living increases.

Despite the fact that the early years are the most important ones in terms of a child’s brain development, Delaware invests between four and 10-times less in early learning (even when including child care, home visiting, and other investments) than it does in K-12 students. Also in need of more investments: the workforce. Early learning professionals, in spite of their longer work days, are so poorly paid that nearly a third of them qualify for public assistance like Food Stamps.

Delaware’s current Purchase of Care reimbursement rate is already having serious implications. Childcare providers, when given the choice between a parent who can pay full-price and a parent who qualifies for POC, are taking a hard look at how to keep the doors open and choose the former. We are hearing that programs have reduced their numbers of Purchase of Care children, and some have decided not to accept Purchase of Care at all.

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.

This is an issue we have to tackle as a state—and we can do that by:

• Increasing Purchase of Care by $15M in the state budget this year. While this will not bring rates up to what is needed for 2018, it would go a long way to starting to help providers continue to offer childcare to families who need help. Contact your legislator and ask them to invest.
• Tying POC rates to the tri-annual market rate study conducted by DHSS. Codify that the reimbursement rate not drop below 70 percent of the market rate—and establish the higher percentages to programs that receive high “Stars” quality ratings. Maryland is considering a bill that would enact this policy currently.

As a state, the early years are important for many reasons: we need to help parents work, help students be prepared to learn in Kindergarten, and invest to prevent other costs to society. Increasing the rate is required to ensure child care reimbursement achieves the goals it is intended to.

At a time when dollars are tight—and the state is working on its next fiscal year budget—it’s more critical than ever to invest more deeply in early childhood education. After all, it’s one of the wisest investments we can make so contact your legislator today!