It is no secret that the payment rates for the Wisconsin Shares (WI Shares) child care subsidy program have been on a steep decline for many years. Where are we now, and how did we get there? A recent child care market survey shows how low the payment rates have plummeted.

Historical Background

Reasonable range of affordable child care: In the early 1980s child care payment rates were established in law to assure that low-income families had a wide range of affordable child care options. The idea was that parents should have a reasonable range of affordable choice in selecting child care, and while their children might not have access to “Cadillac” services, they could afford programs of reasonable quality. Families shared in the cost by paying co-pays, on a sliding scale based primarily on their income.

Fair reimbursement for child care programs: The payment policy also assured that child care providers would receive a fair reimbursement and be willing to provide services under the subsidy program. The statutes required counties to do a market survey and set payment rates so that at least 75% of the number of places for children could be purchased at or below that maximum rate. The federal government recommended, but did not require, that states use the 75^th percentile as their benchmark for payment rates. This policy was in place for over 20 years, continuing under Wisconsin Works (W-2) —until 2006. Then the policy came to an abrupt stop, when a rate freeze was implemented.

The decline in payment rates: It is fair to say that fair reimbursement is no longer a core value ever since payment rates were frozen in 2006 to keep expenditures level.  A further impetus for freezing rates came from the child care fraud scandal, combined with desire to reduce child care spending overall. Most child care leaders supported strong efforts to address the fraud and to make some adjustments. But the freeze lasted for seven years.

No changes in payment rates took a toll. There was a modest upward adjustment at the end of 2014, but overall the payment rates have been in decline. Ten years after the 2006 freeze, child care payment rates are way below the 75^th percentile that tried to assure fair payments—in fact, the rates are below average rates.

2015 Child Care Market Survey

The Department of Children and Families has continued to implement an annual child care market survey in every county and some tribal territory.

The table below shows child care payments rates in 2016 are clearly below the average weekly price for child care in a sample of counties (the 14 most populous counties). The rate setting policies have declined from rates at the 75^th percentile to below average. The table shows that the 14 counties, which serve 86% of children in WI Shares, all face below average maximum payment prices in their community.

Impacts

While it is difficult to fully document the impact of the payment rate decline, the policies seem to have negative impacts for the Wisconsin Shares program.

In recent years, Wisconsin has built YoungStar, a strong Quality Rating and Improvement System, to improve child care and to provide better services to low-income children and families. The decline of WI Shares payment rates is undermining the success of YoungStar, and has likely been responsible for the exodus of thousands of children, families, and child care programs from Wisconsin’s child care system.

Certainly our country and our state can do better than this to support our poorest children and families.

Dave Edie
Early Education Policy Analyst