The state budget deliberations in the Capitol have been very disappointing so far for advocates urging improvement in early learning and development.  The Joint Finance Committee has now voted on most of the key issues, and there is slim hope that those decisions will be changed by the full legislature. However, there are some bright spots.

This analysis will look at four major goals set for the budget by WCCF and the Wisconsin Early Learning Coalition, and supported by many advocates around the state.  The goals were based on research indicating that quality early learning is effective in preparing children for school and life, with strong returns on investment. Below is a summary of how the four goals have fared so far.

1.    Restore $35 million in child care funding

WCCF and the Early Learning Coalition urged the Joint Finance Committee to maintain the current child care budget to improve rates and strengthen YoungStar. This did not happen. The Joint Finance Committee cut the Wisconsin Shares child care subsidy biennial budget by $35 million over the 2013-15 biennial budget, supporting the Governor’s budget proposal.  Federal funding earmarked for needy children and families that had been funding Wisconsin Shares was transferred as part of a fiscal maneuver that freed up state dollars for other purposes (for instance, lower taxes primarily benefiting higher income families).Advocates argued that the funds were needed to increase child care payment rates that had deteriorated dramatically and to strengthen YoungStar with support and fiscal incentives. The decision continues a disturbing trend of reductions in the Shares budget, with a drop in the annual budget of over $100 million. The Joint Finance Committee approved an annual Shares budget of $273 million, the lowest since 2003.

2.    Improve child care rates

WCCF and the Early Learning Coalition urged the Joint Finance Committee to increase child care rates by 7%, improving the base payment rate that has been frozen since 2006. This did not happen.  Not even close.

 
However, the seven-year freeze on child care payment rates was officially ended, with a slight $1 million increase in the 2nd year of the biennium (less than a 1% increase), beginning January 1, 2015. However, according to the Milwaukee Journal Sentinel and other sources, the Department of Children and Families (DCF) expects to have over $5 million to increase rates in the second year.  That would amount to more than a 2% increase, on average, if the boost in rates began in July 2014. Advocates will be monitoring DCF rate decisions closely.

While the freeze was ended, with the $1 million increase in the budget and the additional increase anticipated by DCF, child care payment rates are still way below market rates.  According to the Legislative Fiscal Bureau, the current payment rates, frozen since 2006, are 20% lower than the market rate (set by market rate surveys).  The slight increase from the budget only makes a small dent in the deteriorated payment rates.

Policies that dock payments to child care providers when children are absent were not addressed in Committee action. This policy, which particularly penalizes family child care, but also affects many center-based programs, further reduces reimbursement to child care providers.

The Joint Finance Committee also approved giving DCF broad flexibility in determining how the maximum payment rates will be established.  It is not yet clear how this will affect rates.

 3.    Increase support to help programs move to a higher star rating in YoungStar

WCCF and the Early Learning Coalition recommended increase investments in training, scholarships and rewards for credit-based education, on-site technical consultation, and micro-grants to help child care programs improve and move up the YoungStar 5-star quality rating scale.

Joint Finance approved YoungStar services to continue at about a $7 million level, except for a $360,000 annual reduction for the Consortium to rate providers, provide technical assistance and grants for provider improvement, and to administer YoungStar at the local level.

However, separate from the state budget bill, Wisconsin has taken opportunity to strengthen YoungStar with federal grant funds from the Race to the Top-Early Learning Challenge program. In 2012 Wisconsin received a grant of $22.7 million over four years, with $10 million allocated to strengthen YoungStar and improve child care quality. In 2013 Wisconsin has been invited to apply for an additional $11 million to supplement the earlier grant.  The Race to the Top funding provides a great opportunity to further strengthen YoungStar and help children with high needs learn and develop positively.

4.    Improve the YoungStar tiered reimbursement system

WCCF and the Early Learning Coalition urge to improve the YoungStar tiered reimbursement system by returning to the original schedule of fiscal incentives for higher quality, with particular emphasis on 2-star and 3-star programs.  The original schedule, approved by Joint Finance in 2011, included no change for 2-star programs, a 5% increase for 3-star programs, a 10% increase for 4-star programs, and a 25% increase for 5-star programs.  But there was only minor change, leaving a system that penalized more than reward programs working to improve their quality.

 Joint Finance approved the Governor’s proposal, which kept a policy that penalized 2-star program by 5% and provided no increase for 3-star programs.  As of April 2013, 64% of child care programs were rated 2-star, and 25% were rated 3-star.  The decision would largely continue a tiered reimbursement system that penalizes 2-star programs and provides no incentives for programs that earn 3 stars.

The Joint Finance Committee approved the Governor’s proposal to adjust the tiered reimbursement system so that 4-star programs will receive a payment up to 10% higher than the base reimbursement rate.  The increase is estimated to cost $347,700 in the first year of the biennium (beginning January 1, 2014), and $808,000 in the second year of the biennium.  This change is helpful, but it affects only about 3.5% of children and programs participating in YoungStar.

Other Joint Finance Decisions Related to Early Care and Education

•    Reading Readiness Assessment: School districts and independent charter schools must assess 4K, 5K and 1st grade pupils for reading readiness beginning in 2013-14. In 2014-15 pupils in 4K through 2nd grade must be assessed.

•    Electronic Benefit Transfer System: Provided $2.3 million to implement a system that issues Wisconsin Shares benefits directly to individuals participating in the program. DCF must submit a plan to the Joint Finance Committee for approval before spending the funding.

•    Boys and Girls Club of America: Funding was increased for serving children from low-income families.

•    Fingerprint-Based Background Searches of Child Care Providers: Requires fingerprint-based background searches of all child care providers, as well as their employees, non-client residents, and other caregivers.  Changed name-based background checks to be an annual requirement, rather than every three months.

By Dave Edie