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In a state of the state speech that focused heavily on education and workforce development, Governor Mike Parson made good on his promise to invest in child care and early childhood education. The child advocacy community cheered his plan to allocate an additional $56 million to ensure every economically disadvantaged 4-year-old has access to a free public Pre-Kindergarten education AND boost child care subsidies by $78.5 million.
Free & voluntary Pre-K for all children from low-income families
As outlined in a memo drafted by Governor Parson's office, there are about 185,000 Missouri children who are economically disadvantaged (living at or below the poverty level). Approximately 12% of those children currently have access to an early childhood education (ECE) program through a public or charter school. The governor expects his proposal to provide ECE access to at least 17,000 more children across the state for annual cost of approximately $124,093,702 based on a participation rate of 70%. This assumes a six-year natural phase-in. For FY24, the Pre-K appropriation would total $82 million.
Childcare subsidies explained
Unless you are in the childcare business, the economics around subsidies are complicated. Childcare subsidies aim to serve families with low incomes and children in foster and adoptive care. To set reimbursement rates, a state will survey providers in the region to see what they charge private pay parents. The federal government recommends that states reimburse at the 75th percentile of market rates, which means they pay equal to or more than the rates charged by 3 out of 4 providers in the area.
Currently, Missouri reimburses providers between the 21st and 25th percentile of market rates (depending on the child's age). With low reimbursement rates, providers have a disincentive to serve families participating in the subsidy program because the costs of serving the family often exceed the rate the state pays.
Governor Parson's proposal will increase the subsidy rate to the 58th percentile of market rates. This bump aims to incentivize providers to serve more families using subsidies, support attracting and retaining the childcare workforce, improve the quality of services, and increase childcare supply, especially for economically disadvantaged families.
The theory behind child care subsidies is simple: Provide working parents financial assistance to help pay for child care and they’ll be more likely to keep working."
AND
For every additional $1,000 per child per year invested in the subsidy program, women are 3.5% more likely to participate in the workforce.
The governor's early childhood package also includes several tax credit proposals to strengthen the childcare network.
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Child Care Contribution Tax Credit - Encourages contributions to child care providers to improve and expand facilities and services;
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Employer-Provided Child Care Assistance Tax Credit - Benefits employers who offer child care assistance to their employees; and
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Child Care Providers Tax Credit - Assists childcare providers with payroll costs and incentivizes capital improvements to childcare facilities.
"Missouri businesses consistently rank the lack of child care options as a barrier to recruiting and retaining employees, and we have an opportunity to assist," Governor Parson said. "Together these supports will help serve more Missouri families by enabling more child care providers to remain in business, start their business, or expand their business."
Don't pop the champagne cork just yet....
The Missouri General Assembly must approve these expenditures and pass the required legislation to make these supports and incentives available to families and businesses.
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