Build Back Better plan could double Minnesota spending on child care

(The Center Square) – Minnesota state spending on federally subsidized child care would increase under the Build Back Better plan, according to research conducted by a national think tank.

American Enterprise Institute Senior Fellow and Rowe Scholar Angela Rachidi was author of the report. She said in a Nov. 23 article the Congressional Budget Office’s estimate the program will cost $273.5 billion through 2031 hides the full cost of the program by requiring states to contribute through increasing government assistance for families along with wage mandates and quality requirements.

“The bill specifies that states must pay 5 percent of the new childcare benefit costs (they must also cover a share of administrative and other expenses),” Rachidi said. “This may not seem like a large amount, but assuming the annual cost of the program will be about $60 billion, states will need to come up with an additional $3 billion per year to cover their share.”

Minnesota’s mandatory allocation in 2019 for the Child Care Development Fund (CCDF) was $23.4 million, with total federal-only funds (discretionary, mandatory and federal share of matching funds) of $121.4 million, according to the U.S. Department of Health & Human Services’ Office of Child Care. Under the fiscal year 2019 appropriations law, targeted funds for quality expansion, infant and toddler quality and school-age/resource and referral were not included. States had to meet an 8% quality spending requirement and 3% infant and toddler quality spending requirement.

From 2016 through 2019, states spent $1.2 billion annually to match funds for administering the Child Care Development Block Grant (CCDBG) or CCDF, Rachidi said.

“Since the BBB plan does not phase out CCDBG, it appears that the new program’s match requirements will stack on top of, rather than replace, current state obligated spending on childcare, resulting in a two- to three-fold increase in state spending on childcare,” she said.

Minnesota would be required to contribute $48.7 million in fiscal year 2025, $57.7 million for fiscal year 2026 and $65.7 million for fiscal year 2027, compared with an average annual (from 2016 through 2019) payment of $30.1 million for the CCDF program, a table accompanying the article said. Congress could extend the program beyond 2027, requiring states to match funding, continue funding the program or leave families with increased costs of childcare, Rachidi said.

Minnesota Child Care Association Vice President of Government and Community Relations Clare Sanford told The Center Square in a phone interview Monday the universal preschool and changes to early childhood care would be “transformational.”

Both are included under the bill, with separate budget costs. The commitment to early childhood care would mirror the commitment the United States makes to kindergarten through 12th grade education and benefit the economy, education and the criminal justice system, she said.

“[States] can find a way to do this, but it will take some serious buy-in on the part of your average taxpayer,” she said.

She said child care costs are “ridiculously expensive” but the costs are warranted to ensure safety, a high level of quality and low child-to-teacher ratios. Sanford said there are often waiting lists for the Early Learning Scholarship program and Child Care Assistance Program financial assistance programs Minnesota offers.

At early childhood care centers in the Twin Cities, the annual cost of child care for a baby and a child in preschool is nearly $35,000 annually, which is unaffordable for the vast majority of families, she said.

“We are pretty much the last developed nation to invest so little in early childhood, both in education it provides to children and in the support for parents to be in the workforce, particularly mothers in the workforce,” she said. “Yes, this is expensive, but that’s because our country has so under-invested in early childhood up until this point.”

A White House fact sheet on the plan’s benefits to Minnesota said Minnesota families with two young children spend, on average, 26% of their income on child care annually. Minnesota would be able to provide access to child care for about 360,000 children aged up to 5 years old annually for families that earn under 2.5 times the state median income (about $271,782 for a family of four). Costs would remain under 7% of income for the 90% of young children’s families who would be covered under the plan.

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