A proposal to pour $850 million over four years into Minnesota’s struggling child care industry cleared a House committee Thursday.
The House early education committee approved a budget bill that seeks to make child care more accessible by boosting aid to families and providers, funded by the state’s projected $9.3 billion budget surplus. The proposal would increase early education spending by about 25% through fiscal year 2025.
The child care industry — already in shambles for years — is desperate for help, pushed to the brink by the COVID-19 pandemic. More than 25% of Minnesotans lived in “child care deserts” before 2020, and businesses operated on razor-thin margins. Workforce shortages have exacerbated providers’ struggles to recruit and retain staff in an industry with notoriously low wages.
The GOP-controlled Senate will likely balk at the House bill’s price tag. Republicans have argued the Legislature should pass tax cuts rather than spending increases this session.
“The investments we advanced today will get children off to the great start they deserve and ensure that parents can work, employers can hire and communities can thrive,” said Rep. Dave Pinto, DFL-St. Paul, who introduced the bill.
The budget proposal would expand on many of the measures in the 2021 state budget, which included a $500 million spending boost for public child care programs and grants to providers. It was an unprecedented sum — but almost entirely from federal COVID-19 relief aid, which isn’t permanent funding. The package included just $24,000 in new state spending on early childhood education programs.
The House budget bill would fund early learning scholarships for 20,000 children — roughly double the number currently receiving scholarships — who are least likely to have access to early education, at a cost of $240 million.
It would also increase the state’s reimbursement rates for subsidized child care to meet the federal standard, a change that lawmakers hope would encourage more providers to participate in the child care assistance program.
The federal standard sets reimbursement rates at the 75th percentile, meaning they’ll cover the full cost of daycare at 75 in 100 child care providers. Currently, Minnesota’s reimbursement rates are set at the 40th percentile for infants and toddlers, and the 30th percentile for older kids.
Quality child care aids children’s brain development in the short-term and is linked to lifelong positive effects on education, crime, employment and earnings, experts say. It’s critical for economic growth as well, by allowing more parents — especially women — to enter the workforce.
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