Investment in child care is a critical investment in Minnesota’s workforce

Our state’s economy has been vibrant for the past several years, and a significant factor in this success is our strong workforce. But as the labor market has gotten tighter, employers in some industries and parts of the state struggle to find the workers they need. A significant barrier keeping Minnesotans out of the workforce is the lack of affordable child care.

Child care can be one of the largest expenses families with children face. For example, in 2017 the average annual cost of infant care at a child care center in Minnesota was $15,340. These costs are burdensome for many families. But it doesn’t have to be this way. Minnesota already has a mechanism to bring down the cost of child care for working families.

The Child Care Assistance Program, or CCAP, helps parents afford child care while they are at work or looking for a job, and gives children a safe and nurturing environment. Affordable child care helps build the workforce we need today and is a down payment on Minnesota’s future workforce.

Targeted improvements in Child Care Assistance would make the system work better for families and providers. These changes would create stability for children, working parents, and providers and bring Minnesota in line with recent federal changes.

Eliminating barriers and creating stability for families. Minnesota’s Child Care Assistance Program can better serve families with a few simple changes that would have a big impact. Changes that would streamline the system include: eliminating the six-month limit on assistance when a family moves to a county with a child care waiting list, making it easier for families moving off of Minnesota Family Investment Program to retain child care, and adjusting the application and activity requirements for families experiencing homelessness.

Updating out-of-date provider rates. Updating the state’s reimbursement rates to providers would both expand families’ choices of providers and help address the financial challenges facing child care providers. The state’s current payments to providers through CCAP have not kept up with costs of providing care. In 2016, provider rates only covered 29 percent of the prices charged by child care centers and about 22 percent of the prices  in-home providers charged. This is a dramatic decline from 2003, when about 80 percent of providers’ costs were covered by these reimbursements.

The low CCAP reimbursement rates may result in providers refusing to accept CCAP families or accepting CCAP families at a financial loss. Updating the provider rate to cover a greater share of the cost of caring for children will help providers keep their doors open.

Investing in Minnesota’s workforce, particularly during this tight labor market, could help ensure our state’s economy continues to thrive. While Minnesota only has a small surplus to invest this legislative session, prioritizing child care investments would benefit both working families and businesses across our state. We can’t afford to have Minnesotans unable to go to work because they can’t afford child care. The time is right to take steps so that families can build a better future and strengthen Minnesota’s economy.

-Sarah Orange

About Sarah Orange

Sarah Orange is policy advocate for the Minnesota Budget Project.
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