Bill Berk, the owner of the Outer Limits preschool, believes that early childhood centers can serve a vital service in preparing toddlers for success.
“We use preschool as a way to ensure that children are ready for kindergarten,” Berk said. “So if kids are going to a preschool that doesn’t offer high-quality experiences, or if they’re simply not going because DES can’t pay for as many children as needed, then children are starting kindergarten off with a huge disadvantage.”
Outer Limits is one of a slimming number of child care providers in Tucson that have contracts with the Department of Economic Security to subsidize childcare costs for qualifying families. As the disparity between the high cost of child care and the low reimbursement rates provided by DES grows, these families are running out of affordable options.
DES subsidy rates are so low that it is locking low-income families out of the system. Providers can’t afford to pay their teachers and keep their lights on while losing money from DES-subsidized children.
Those who receive DES assistance fall into a few different groups: Low-income working families who make under a certain amount of money and teenage parents who can qualify, and are often put on a waitlist that can take over a month to open up. Also, the Department of Child Safety will often provide at-risk children living at home and foster children with free child care through their partnership with DES.
When a provider agrees to work with children receiving DES assistance, they don’t charge the parents/guardians and instead get a reimbursement from DES. But here’s the catch: It’s been so long since the state updated the funding formula, the reimbursement rate is only 75 percent of the average cost of child care from the year 2000.
Providers have coped with the disparity in a variety of ways. Some centers cancel their contracts with DES and only work with families who can afford to pay the full cost. Some home-based providers scale down to just four children and operate unlicensed, which is legal in Arizona.
Frequently, providers charge parents the difference between what DES pays and what their rates actually are in a co-pay agreement. Others charge the families either none of that difference or a partial amount, and absorb the loss in revenue.
Berk said that for many years he tried to keep co-pays low and foster family care cost-free, but recent minimum-wage increases have such an impact that he has had to start charging more from all of his clients in order to stay in business.
The perfect storm
The rates have been static for almost 19 years now due to a long history of federal and state governments decreasing their investments in child care. In 2014 the Obama administration reauthorized the Child Care Development Block Grant and expanded its requirements for providers who want those funds.
“For example, home providers had to go from having only six hours of training a year to 12,” said Michelle Saint Hilarie, the director of Child Care Resource and Referral. “They went from having to meet a whole bunch of health and safety requirements that they didn’t have to meet before, such as having an emergency plan, an evacuation plan.”
Saint Hilarie, who works under the DES-supported nonprofit Child and Family Resources, Inc., said these added requirements are necessary because it increases the quality and safety of care. However, considering the inadequate funding for providers, these requirements still increase their financial burden even more.
In July 2017, Berk said DES enacted new requirements in regards to group sizes. Research shows that smaller teacher-to-student ratios increase the quality of care, but many providers don’t have the space or resources to comply.
“It’s harder for us, and harder generally in my world means more expensive,” he said. “So they did put many new requirements on us, but no funding to help pay for those things.”
In the past few years, the burdens of both low funding and stricter requirements have become so great that Arizona has seen a “big time exodus” of providers, according to Saint Hilarie.
“We went from having like 400 providers in Pima County to fewer than 100,” she said. “It’s kind of like the perfect storm, everything happening all at once and people left.”
Accessibility and high demand
In an emailed response to questions, DES Deputy Press Secretary Brett Bezio wrote that the department is focused on increasing the quality of care from its contracted providers. Saint Hilarie said it’s great to have a certain amount of quality providers, but that doesn’t address the main problem: Low-income families can’t afford the care anyway.
There is a growing demand for infant and toddler, according to industry professionals. The younger the child, the higher the cost of care. Add that onto the low reimbursement rates and lengthy quality requirements, and providers begin to feel deterred from working with infants and toddlers altogether. Saint Hilarie said CCR&R is currently conducting a study to see which areas in Tucson are lacking early childhood care programs.
“We have a waitlist right now, especially the highest need and the most expensive form of care is infants,” said Reem Kievit, the director of preschool programs in the Tucson Unified School District. “We’re open 6 [a.m.] to 6 p.m. and we definitely sometimes have kids that stay the entire time.”
Berk, with Outer Limits said that right now, it’s “almost impossible” to find a spot for an infant or toddler.
“If you’re the parent of an infant or a one-year-old and you need child care next week, forget it,” he said. “We have families going on waitlists as soon as they’re pregnant, and some of them don’t find space.”
He said the infant rate that his center charges is almost double what DES pays per month in subsidies.
$56 million in limbo
If child care research and requirements have been updated from the standards set 18 years ago, shouldn’t the same be done for the reimbursement rates? Saint Hilarie said the providers she works with feel that meeting these extra requirements would be tolerable if they were receiving fair rates.
In May, Arizona lawmakers declined to use about $56 million of guaranteed funds intended for childcare assistance from the federal Child Care Development Block Grant. The U.S. government provides this money to all 50 states and no matching funds are required.
Despite harsh criticisms from industry professionals and childhood education advocates, legislators maintain that they didn’t want to use the money because it was unclear exactly how DES would spend it.
“We are currently working with the governor’s office to develop a plan for CCDF dollars,” Bezio, with DES, wrote. “We will be working through that process, as well as through the legislative process next session.”
Berk, who is also the vice president of the Arizona Early Childhood Education Association, hopes that when the next legislative session begins, a state representative will step up and sponsor a bill that could give DES the authority to use that money now.
“To me, the biggest issue is that we didn’t take free money, which is horrible,” he said. “The biggest issue is that children who are most at-risk are no longer going to have access to the programs that will actually make a difference in their lives.”