Low Child Care Subsidies Shortchange Texas Kids

Anyone with a kid in child care can tell you how expensive it is. Unfortunately, like many things, when it comes to child care you usually get what you pay for. So children from families with modest means often end up in cheaper, low-quality care where they don't get the attention they need in these critical years of development. The State provides child care subsidies to allow some low-income families to return to work, but the centers that take these subsidies, or vouchers, don’t always have the resources to provide high quality care.

One of reasons that the subsidies fall short of helping centers provide high-quality care is that the Texas Workforce Commission (TWC) reimburses Texas child care providers that take subsidized children at rates that are well below market rates. These providers receive far less than what they could receive by accepting only non-subsidized children in their classrooms. In fact, many providers are reimbursed at rates that are well below 75% of market rates, and sometimes even as little as half of market rates.

This leaves many child care centers with insufficient funding to invest in measures to improve the quality of the care that is provided to these children from low-income families, arguably our state’s population most in need of quality care. While the word "quality” might mean different things to different people, in the early education setting quality usually refers to things like having safe caregiver-to-child ratios in classrooms, limiting overall class sizes, giving teachers sufficient training opportunities and providing adequate compensation to child care staff. Properly trained staff can teach kids the skills they will need to be kindergarten-ready, so they do not lag behind peers. Similarly, having lower caregiver-to-child ratios and class size limits enables caregivers to give children the attention they need to learn, instead of forcing caregivers to struggle to keep up in a classroom with too many children competing for their attention. Ensuring a manageable classroom reduces teacher stress, and turnover, leading to more consistent care.

Fortunately, there are steps that TWC can take to increase funding for the child care subsidy program and raise reimbursement rates, enabling centers to spend more money on improving the quality of care they provide and enabling more quality centers to accept more children in the subsidy program into their centers. For example, the federal government requires that four percent of the funding that Texas receives through the Child Care and Development Block Grant (CCDBG) be set aside to pay for quality improvement measures. This funding was allocated to TWC until the budget crisis of 2003 prompted the Legislature to shift the funds to the Department of Family and Protective Services to pay for basic child care licensing functions. Today, with different budget circumstances, TWC can tell the Legislature that they need these quality dollars back at the agency, and request that they redirect at least some of this money back to the agency. The Legislature counts on our state agencies to tell them what is needed to effectively run programs, and TWC has not asked for an increase in state general revenue in over ten years. An increase would allow TWC to raise reimbursement rates, and help providers improve the quality of care, the purpose for which these funds were originally intended.

Providers with high populations of subsidized children are perhaps the most in need of increased funding. New Mexico recognized this need and developed a program called AIM HIGH that is only open to providers that have 25 percent or higher subsidized children at their centers, and incentivizes higher quality care. The Texas Legislature could fund a similar program at TWC to help provide some relief to child care centers in our state serving high populations of subsidized children.

Easing the financial burden on providers participating in the child care subsidy program by ensuring reasonable reimbursement rates can have a positive impact on our state’s youngest learners.Higher quality programs will help prepare children for a brighter future by reducing the achievement gap and equipping more kids with the skills they need to succeed in kindergarten, and later in life.