Transcript It’s Not Just About Money

We Don’t Just Need More Money
Visioning a New Child Care
Financing Structure
in Maine
Louise Stoney
Alliance for Early Childhood Finance
September 27, 2002
What Are We Financing?
High-quality early care and education
services that:
 offer children opportunities for early
learning
 support families with a range of yearround, full and part-day services
 provide comprehensive services to
children and families who need them
What will it cost?
Our charge today is to explore various
financing systems…so we won’t be
spending time costing out the service…
But for purposes of discussion, let’s
assume we are talking about per child
costs in the $6,000 - $7,000 range for
full-day early learning and $10,000 $12,000 range for comprehensive
services.
Assume Layered
Layered
Layered
Layered
Funding
The ECE Layer Cake
What can policy makers do to
encourage and support layered
funding?
Establish common funding standards and monitoring
practices across all ECE funding streams;
Coordinate or consolidate Requests for Proposals
and reporting requirements;
Assume that a program will have a single budget to
which multiple funders will contribute, a
single/coordinated audit, etc.
Combine
and direct financing.
What is a direct subsidy?
Funding that directly supports
an institution or industry
Higher Education - government
appropriations to public & private
colleges; grants for research & special
projects; endowment/investment
income; revenues from auxiliary
services (food, housing, bookstore,
sports..)
What is a direct subsidy?
Funding that directly supports an
institution or industry
Housing: Equity from the Low
Income Housing Tax Credit,
Federal Community
Development Financial
Institution Grants and
Subsidized Loans, HUD Grants,
Foundation and other private
sector grants.
What is a portable subsidy?
Funding that is tied to a specific
child or family & follows them to the
program/services they select.
Higher Education - government
grants to students (Pell, BEOG)
scholarships, subsidized loans,
tax credits.
Housing - Section 8 vouchers,
home mortgage tax deduction,
housing subsidies from
government or an employer.
Direct and portable subsidies
work in tandem.
In other fields, direct and
portable subsidies are designed
to work in tandem….
….but this is not the
case in early childhood care
and education.
In early care and education:
Direct Subsidies - Head Start, state
pre-k/school readiness grants,
subsidy contracts, a few private
sector grants, CACFP.
Portable Subsidies - child care
certificates, the dependent care
tax credit, private scholarships.
Cost/price analysis in child
care and higher education.
100
90
70
60
50
42
Total Cost
80
Institutional
Subsidy
87
40
58
30
20
10
13
0
All Child Care Centers 199394
Tuition &
Fees
All private non-profit
colleges 1995-96
The moral of the story:
Early care and education
policy needs to recognize
that direct and portable
subsidies are not
substitutes for one
another but should be
combined.
Financing Approaches that
Combine Direct & Portable
Assistance





Quality Improvement Grants
“Base Funding” Contracts
Grants for Specific Costs (wages, benefits, facilities)
Industry Supports (economies of scale)
Tax Benefits for Families and Programs
Quality Improvement Grants




Texas Comprehensive Child Development
Centers
Wisconsin Quality Improvement Grants
Mississippi Child Care Enhancement Grants
Colorado Educare Differential
Reimbursement
Base Funding Contracts



Connecticut Child Care and School
Readiness Contracts
Georgia Prekindergarten
The Military child care system
Grants for Specific Costs



Wage Initiatives - stipends to providers
(NC, WS, OK, IL, NY), grants to
programs (WA), stipends & grants
combined (CA)
Subsidized Benefits - RI and NC
Facility Grants & Subsidized Loans
(CT, IL, RI, NC, MA, and others)
Industry Supports


Tompkins County (Vision)
Kansas City World-Class Early
Education System payroll support
Tompkins County Early Education Partnership
Child Care Financing Model – Vision for Tompkins County
Community Scholarship
Program
Cornell FSA/D
Employer FSA/D
Coordinated Scholarship
Program
single point of entry
common application form
automated system to
coordinate funds from
multiple sources
DSS Subsidies
Tax Benefits
DCTC
DCAP
In-Network
Providers
Head Start and UPK
Out-Of-Network
Providers
(Referral or coordinated intake)
Direct Funds
Support Services
 Operating assistance
 Professional development
 Facilities
 Toys, equipment
 Food subsidy
 Billing/fee collection, FSAD management
 USDA Food Program management
 Management assistance
 Training/ professional development
 Program support (e.g. Infant/toddler
specialist, classroom observations, child
assessment, etc.)
 Wage supplements
 Group purchasing discounts
 Development Director
(single payer
system)
(parents can still choose
these providers & pay for it
with scholarships but the
reimbursement will be
lower and parents would
pay the difference)
Tax Benefits




Colorado School Readiness Tax Credit
(proposed)
Oregon Child Care Investment Tax Credit
(modeled on LIHTC)
Child and Dependent Care Credit (Maine et al)
Additional industry-related tax benefits (new
ideas)
Child Care is a vital part of the
local economy.
from Tompkins County, NY)
(
Direct Effects from child
care establishments taking in
revenue.
$15.2 Million, 700 jobs
280 early
care and
education
businesses
serve
3,557
children
Indirect Effects from
businesses and suppliers
making purchases.
$4.8 Million, 86 jobs
Induced Effects from
child care workers
spending wages.
$4.2 Million, 107 jobs
3,557
working
parents
Parent
wages
$112.3
Million
Parent
child care
payments
$11.3million
Economic
Impact of
Child Care
Business
Spending
$24.2 Million
in Product
and
893 jobs
Parent Impact
3,557 jobs and
$101 Million in
wages
Economic impact of child care
subsidies.
Tompkins County gains $4 for every $1 invested in child care subsidies
Average
Children
Enrolled
Per
Month
413
Average
Annual
Subsidy
By Child
$3,150
Total Direct Impact
of Subsidies
$1.3 Million
Indirect Effect from
Centers&Suppliers
Making Purchases
$416,017
Induced Effect from Child
Care Staff Spending Wages
$364,015
Parents
Receiving
Subsidies
206
Average
Wage of
Parents
$15,548
Productivity Impact from
Parent’s Wages
$3.2 Million
Total
Economic
Impact of
Child Care
Subsidies
$5.3
Million
Child care subsidies support the
services and retail trade industries.
Employment among families who receive child care
subsidies.
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Alabama California
Services
DC
Retail
Florida
Oregon
Other Industries
A Case for Action
The services sector leads
employment growth.
Percent Change
Georgia Industry Employment Growth, 1996-2006
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
44%
22%
12%
1
14%
2
16%
17%
3
4
5
25%
6
27%
7
8
1. Construction
5. Agriculture, Forestry, Fishing
2. Finance, Insurance, Real Estate
6. Wholesale Trade
3. Transportation
7. Communications, Public Utilities
4. Services
8. Retail Trade
Source: Occupational Outlook, 1996-2006
Think outside the box.
some of the best ideas
haven’t been tried yet.
Think Outside the Box.
Fees, Surcharges & “Sin” Taxes
Arkansas: a new surcharge on beer, earmarked for child care
California: imposed a surcharge on cigarettes
The Military: uses revenues from the PX
“Earmarks” on Revenue
Maine, Kansas and Kentucky: earmarked tobacco settlement
funds
Georgia: earmarked part of the lottery for pre-k
Missouri: earmarked a portion of the Gaming Commission Fund
Think Outside the Box.
Tax Credits
Maine: doubled state DCTC for families who select
“quality” child care; and Employment Increment Tax
Credit could be adapted to early care & education
Colorado: School Readiness Tax Credit (proposal)
New York: greatly expanded its Dependent Care Tax
Credit
Oregon: child care investment tax credit modeled on
low-income housing tax credit
Think Outside the Box.
Other Public Funds
Rhode Island: taps into health care funds to help
pay the cost of health insurance for child care
providers.
Connecticut: makes tax exempt bonds available to
help finance facilities, then uses TANF funds to
underwrite a portion of the debt.
New York, D.C., Boston: use criminal justice funds
to help create child care centers in court buildings.