Michigan needs to take advantage of this historic opportunity to fix child care

A version of this column appeared in the Alpena News

The COVID-19 public health and economic crises raised awareness of both the importance of child care to the state’s economy and the fragility of child care businesses. As child care businesses and schools closed, parents struggled to find care for their children, and many—disproportionately women—were forced to quit their jobs. Others struggled to juggle Johnny and a job while working from home.  

Employers were also feeling the pinch as many could not attract or keep workers because of the lack of affordable child care. Business owners understand well the importance of child care and how it affects their bottom line. As a result, business leaders have been joining with community leaders, advocates, and policymakers from both sides of the aisle to promote solutions to Michigan’s child care crisis. Congress has also been stepping up to the plate with new funds to stabilize child care businesses. 

The problems are clear:

• Child care is not affordable for many Michigan families. Child care consumes 19% of the income of a family at the state’s median income, and 55% of income for a parent working at minimum wage. Child care can exceed the cost of mortgage or rental payments, and rivals college costs.
• Child care businesses are struggling. Child care is unaffordable for many parents, but not because child care workers are earning a living wage. In fact, they are some of the lowest paid professionals in Michigan, earning less than fast food cooks, laundry workers and animal caretakers. Nearly half of child care providers are themselves eligible for some type of public assistance, and few have access to benefits like healthcare and paid sick leave. Low care subsidy payments to providers have exacerbated the problem, making it very difficult for providers to accept children with state subsidies, and especially limiting the child care choices of parents with infants and toddlers who require a higher level of care.
• Too few families have been eligible for a subsidy to help with child care costs. Until the income eligibility level for child care subsidies was increased in January of this year, Michigan had the second lowest threshold in the country, so many families with very low wages could not get any assistance with child care costs. Even now, at 150% of poverty, Michigan’s income eligibility threshold falls well below the national median of 188% of poverty. 
• Michigan’s investment in child care declined over the last decade. The combination of strict eligibility, low provider payments, and the failure to commit all available funds to child care resulted in a nearly 70% drop in the number of families provided a subsidy—from 62,413 in 2003 to only 19,213 in 2020.

What will it take to fix child care in Michigan? The first step is to rethink the financing of child care. Currently, child care is “funded” predominantly by parents and underpaid child care professionals. It is a financing system that doesn’t make sense, and doesn’t work for child care providers, parents or children.

State funding for child care fell from $499 million in 2003 to $217 million in 2020. During that time, Michigan fell to 5th from the bottom of all states in its use of federal Temporary Assistance for Needy Families (TANF) dollars for child care, and led the nation in the amount of federal Child Care Development Block Grant dollars (CCDBG) it returned to the federal government for redistribution to other states—because of a failure to provide required state matching dollars. 

Federal COVID-19 relief funds have provided a cushion for child care businesses and families by helping child care businesses stay open during the pandemic or reopen later, but those federal dollars are time-limited. With the recent passage of the American Rescue Plan, the state is projected to receive an additional $1.1 billion for child care. 

Michigan has a historic opportunity to create the child care system parents and business owners need. The League is a member of the Think Babies Michigan Collaborative that has endorsed a range of recommendations for improving child care in Michigan, including:

• Targeting new child care funding to communities with the greatest need and the least access, including the 40% of Michigan parents living in child care “deserts” that have more than 3 children eligible for every licensed slot, and rural and urban communities with higher concentrations of poverty.
• Simultaneously raising rates for providers so they can accept children with subsidies, and making more families eligible for state assistance.
• Investing in enhanced contracts for child care so more providers can afford to open slots for infants and toddlers who need more care and are therefore more costly. 
• Reducing burdens on home-based child care providers by establishing staffed family child care networks with shared services.

The Michigan Legislature and the governor need to work together to amend the current year budget and adopt a 2022 state budget that ensures that Michigan uses these new funds wisely, with an eye on developing a long-term financing plan that makes sense—including better use of federal TANF dollars and new sources of state revenue. Please check out the League’s new report on child care financing, and our county fact sheets on child care in Michigan. We also urge you to join with us and the Think Babies Michigan movement to advocate for a long-term plan to fix Michigan’s child care system.  We need to get this right because our families and our economy are in the balance.