What happens when a state gives deep cuts to child care?

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What happens when a state gives deep cuts to child care?

Teigue Linch remembers the email she received from Pine Forest, her daughters’ daycare in Burlington, Vt., encouraging families to take advantage of the new state law that allows more people to benefit from childcare assistance.

But Linch, who works full time as an office manager for an engineering company, has 17-month-old twins, a long to-do list and the heavy mental load shared by all parents of young children.

“So I kind of ignored that for a while and didn’t really look at the information to see if it was worth applying,” she said.

Linch and his partner, who works in the auto insurance business, earn a combined household income of $120,000, which at $10,000 a month is 400 percent of the federal poverty level for a family of four – an amount that would generally be considered far too high to receive any significant government subsidy. This is particularly true for child care subsidies, which only represent approximately one eligible family in seven in the United States actually receive.

But then one of Linch’s colleagues began to take an interest in Vermont-specific child care changes brought about by Act 76which passed over a bipartisan veto to become law in June 2023. He suggested that, even with Linch’s six-figure household income, she should apply.

Linch went online and downloaded the application, which she described as “easy to fill out,” and sent it off.

What happened next was a huge surprise.

“Within 48 hours, I heard back and learned I was qualified,” Linch said. Instead of paying $3,068 each month for care of her twins, she would now be responsible for $1,000, with no changes or additional paperwork on her part. “I couldn’t believe it,” Linch said. “It just didn’t seem real to me.”

The way the state breaks it down in this handy tableIf Linch’s household income is $10,000 per month for a family of four, their weekly family share for child care is capped at $250. Previously, almost all of Linch’s take-home pay was spent on childcare for his daughters. She was paid hourly, so if she had to miss work because a girl was sick or Pine Forest was closed for a day, her income would decrease.

But now she would have $2,000 more every month. What will she do with it? “We finally have the ability to save – period. We had gotten to a point where we were seeing our checking account shrink more and more every month,” Linch said. “It’s still too early to know what impact this will have on us, but it will be much better.”

Vermont Act 76 reached its first anniversary of implementation this summer. The law, paid for with a new payroll taxis designed to help families with more than one dependent child, like Linch and her twins, save more. Importantly, cost savings increase significantly with two children; The high cost of caring for a second child is the tipping point for many families, where it may make more financial sense for one parent to leave the workforce, said Erin Roche, director of First Children’s Finance in Vermont, a group that helps implement Act 76.

Under the state’s old system, Vermont provided child care subsidies to families earning up to 350 percent of the federal poverty level, although many families receiving assistance had to pay a copayment. -higher share. Starting October 7, Vermont child care subsidies will be available to families living at 575 percent of the federal poverty level. For a family of four, this rate is close to an adjusted gross household income of $180,000.

For those who study child care policy, such a generous leap is unheard of. Advocates and policy experts will be closely monitoring developments. Roche estimates the eligibility jump will make the subsidies available to 80 to 90 percent of all Vermont families with young children.

But it’s not just parents like Linch who benefit from the program. Under Act 76, Pine Forest, Linch’s child care center, will also see the amount collected increase because it will be reimbursed for the actual cost of care, rather than what families can afford. Instead of receiving $3,068 a month to care for Linch’s two toddlers, the center now receives $3,768, an increase of $700.

Vermont has also narrowed the gap between reimbursement levels for in-home child care and day care centers, since centers are traditionally reimbursed for care at higher rates. This made in-home child care more cost-effective and sustainable, and as a result, more than 1,000 new child care spaces were created in Vermont in just one year.

Roche credits Vermont’s small size and the prowess of state agencies for getting these systems up and running quickly to support Act 76. One hurdle, she notes, was ensuring that the state’s computer system the State can prepare the online application system.

“Each of the changes made by Act 76 required a state agency to create a system or modify a system. They literally had less than two weeks to make the first changes,” Roche said.

Not every family will see an immediate benefit increase like Linch’s, but Roche believes many will, especially those with both parents working full time. Families with a parent or guardian who is home and not working are not eligible, but the state recently changed its policy so that parents who are in higher education or training programs are now eligible.

Having access to reliable child care is one way to support parents participating in the workforce. And it could have the effect of changing people’s minds about the costs and burdens associated with having more children, whereas studies show that many families who choose not to have children cite cost as a major factor.

Linch said she and her partner had originally planned to have just one child, “but then we got lucky with twins,” she said with a smile.

Does receiving additional financial support for childcare change one’s view of having more children in the future?

“I don’t know how to answer,” she said. “But it would make things more achievable, that’s for sure.”

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