Child Care in Wisconsin – Part I

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With over 400,000 children in the state of Wisconsin under the age of 6, and 74% of those children having all parents in the workforce, the accessibility and affordability of child care is critical to employers being able to attract, attain, and retain workers. According to the Center for American Progress, the average annual child care tuition for two children in Wisconsin is $22,222, meaning the average median income family in Wisconsin is spending 30% of their income child care for two children. Additionally, 54% of the population lives in a child care desert. According to the WEDC Wisconsin Tomorrow – An Economy for All report, “Improving recruitment, retention, and support of high-quality and effective ECE workforce to rebuild this system in the wake of the public health emergency will be a critical undertaking.”

Types of Child Care Providers in Wisconsin

Child care in Wisconsin is regulated by the Department of Children and Families. The DCF regulation sheet says, “Anyone providing care and supervision for 4 or more children under age 7 years for less than 24 hours a day must be licensed by the Department of Children and Families.” There are 11 exceptions to this regulation criteria.

Licensed Family Child Care Centers are programs regulated under DCF 250 and are identified as a person providing care and supervision for less than 24 hours per day for between four and eight children under 7 years of age. While the maximum group size is eight children, there are different combinations of age groups which are acceptable under this designation. These centers are usually in the provider’s home.

Licensed Group Child Care Centers are regulated under DCF 251 and are identified as a person providing care for less than 24 hours per day for nine or more children. The maximum number of children allowed in this program varies depending on the ages of the children. Like the Licensed Family Child Care Centers, different adult to child rations provide for different maximums. In addition to the child ratios, there are staff-to-child ratios which must be maintained and may impact the maximum group size. These centers are usually located somewhere other than a residence and may be small or large in size.

Licensed Day Camps for Children are regulated under DCF 252 and are identified as care and supervision to 4 or more children, 3 years of age and older, in a seasonal program oriented to be out-of-doors for periods less than 24 hours per day.

Certified Family Child Care are regulated under DCF 202 and are identified as a person providing care and supervision for less than 24 hours per day for no more than 3 unrelated children under age 7 with a maximum group of 6, including the provider’s own children under age 7.

Public Schools child care is operated or contracted by a public school but still regulated entirely through the DCF system under DCF 251 licensing rules.

Per DCF Cumulative Data:

All Providers
Licensed Group1,939
Licensed Camo68
Licensed Family1,139
Certified Family375
Public School162
Total3,683
All Providers by Region
Kenosha/Racine200
Milwaukee1,197
Northeastern588
Northern293
Southern906
Western499

YoungStar

Youngstar is the quality rating and improvement system for Wisconsin’s child care centers and licensed family providers. It was started in 2010 and was designed to increase the availability of high-quality child care. The program established child care benchmarks for regulated child care and an evaluation system to incentivize centers to improve child care quality. When the program began in 2010 DCF began offering training and technical assistance to child care programs. Beginning in 2012, YoungStar began providing higher subsidies to child care centers with higher ratings. The tiered reimbursement rates together with the rating system was meant to encourage child care programs to improve their services to attract families and receive higher subsidy payments. The rating system is a 40-point evaluation based on four categories: program staff education and training, learning environment and curriculum, program’s business and professional practices, and children’s health and well-being.

Per DCF Cumulative Data:

All Providers1-Star2-Star3-Star4-Star5-StarTotal
Licensed Group56186981244381,939
Licensed Camo04787468
Licensed Family757034880621,139
Certified Family12713992375
Public School01113932162
Total131,6171,1322235083,683
      
All Providers by Region1-Star2-Star3-Star4-Star5-StarTotal
Kenosha/Racine18080721200
Milwaukee955337961871,197
Northeastern02442024084588
Northern1133941440293
Southern235322983212906
Western02541481864499
Total131,6171,1322235083683

Funding

Child care is funded in general in two ways: private pay and state subsidies through Wisconsin Shares. The Child Care and Development Fund (CCDF) is the primary federal funding source for child care subsidies but Wisconsin also uses some TANF funding for child care. While Wisconsin received $128 million in the 2018-19 budget in CCDF funding, during that same budget, Wisconsin budgeted $318 million for direct child care subsidies; the difference being made up with TANF funds. CCDF funding was designed to help low-income families pay for child care by providing subsidy payments from the government to child care facilities allowing low-income families the same opportunities for placement.  When Wisconsin moved to using EBT cards for Shares, payments stopped being made directly to programs and instead the funds were loaded on the parent’s card and the parents makes the payments. While states are not required to pay child care programs the same amount charged for a private-pay family, states are required to set rates high enough for families receiving subsidies to have access to comparable child care options. The federal government does not require a specific payment rate, however it does recommend states set their rates at the 75th percentile of market rates as determined by a study of market rates.  The 75th percentile market rate is the price at which 75% of the child care programs in the survey reported charging for child care services. The federal government therefore recommends setting rates at a level that would give families access to 3 out of 4 available child care slots or programs. The federal government requires a market study survey be completed every two years, but DCF does the market study annually because of market volatility. DCF Current Child Care Subsidy Maximum Rates. In February 2019, DCF Secretary Anderson received a letter from the US Department of Children and Families saying, “Wisconsin’s payment rates as reported in questions 4.3.1 and described in question 4.4.1b of your Plan were found to be inadequate based on the results of your most recent market rate survey (MRS)…In determining compliance with the Act for the equal access provisions, the Office of Child Care (OCC) reviewed all of the states with payment rates below the 75th percentile benchmark. Of those states, the half with the lowest payment rates were placed on a CAP [Corrective Action Plan]. The states placed on a CAP all had payment rates below the 25th percentile for either some or all categories of care, and will need to increase the base payment rates up to at least the 25th percentile to come into compliance with the equal access provision by September 30, 2019 (and avoid a penalty).” Wisconsin was one of the states which received a CAP.

Costs

Market rates show the tuition and fees which child care programs charge private-pay families, yet it may not accurately reflect the true cost of providing child care which meets regulatory health and safety standards. Several factors impact the cost of providing child care, including rent and utilities, materials, food, personnel, and administration. Personnel is the largest budget item for child care programs. Early childhood educators often make $10 an hour with no benefits, so turnover is generally high. The Center for American Progress estimates the true cost of providing base level quality child care for infants is $14,700 a year while the cost of high-quality care for infants is $27,100. However, reports show the average annual price being paid for infant child care is $11,444. When prices being charged for families are less than the expenses, the subsidies being paid at 75% of the market rate are artificially depressed. Child care programs are finding it increasingly difficult to break even or stay open driving the increased shortage of child care slots for working families. With Wisconsin at approximately 30-35% of the market rate it becomes even more difficult to attain and retain.