Looking Ahead, State Must Go Much Further in Boosting Payments to Child Care Providers

The Senate Select Committee on Women and Inequality convened last week in Los Angeles to explore strategies for promoting economic opportunity for women in California. Throughout this hearing, the importance of child care was a recurring theme. As Senator Holly Mitchell discussed, the state’s 2014-15 spending plan includes some reinvestment in the state’s child care and development system, including an increase in child care provider payment rates.

Provider payment rates are a key issue in helping women and their families to advance. Adequately reimbursing child care providers increases families’ access to providers. When women have access to affordable child care, they are more likely to find and keep jobs and to have money to pay for other necessities such as rent and groceries. This is critical for their own economic success and for the well-being of their children, too. Policymakers had not raised provider payment rates since 2006, and the recently approved increase is long overdue.

However, policymakers have more work to do, especially for families who use vouchers to pay for child care (as opposed to going to child care providers that contract directly with the state). Even with the rate increase included in the budget agreement, scheduled to go into effect on January 1, 2015, voucher-based providers offering care in licensed family child care homes (LFCH) will not see an increase in their payment rates for infant care in more than half of California counties. Similarly, these providers will not see an increase in rates for preschool-age children in 19 counties. In fact, across the state so few counties will see an increase that the median percent increase for LFCHs for infant care is 0 percent. For preschool-age children the median percent increase is just 1.2 percent.

In addition, even while it might appear that licensed child care centers (LCCs) fared well in the budget agreement, the median increase in the provider payment rates for infant care at LCCs translates to just $131 a month — and this after nearly a decade without any rate increase. Likewise, the median rate increase for preschool-age children in LCCs is $103 per month. The table below displays how both kinds of licensed providers fared in the 2014-15 budget cycle. (You can also view a PDF of this table here. )

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As we discussed in a recent blog post, California has far to go in restoring funding to the child care and development system in the aftermath of the Great Recession. Access to subsidized child care and preschool programs is a key component in helping families achieve economic security, and it is critical that policymakers continue to take steps to reinvest in California’s child care and development system.

— Kristin Schumacher