With Delaware’s child care system ‘in crisis,’ Gov. Carney proposes new cash infusion to assist low-income families

This story was supported by a statehouse coverage grant from the Corporation for Public Broadcasting.

Imagine that a Delaware road-paving company wins a $1 million highway contract, but the state only pays them some of the cash.

That’s the analogy child care provider and advocate Jamie Schneider uses to describe how the state allocates money to help lower-income families afford child care. She contends the money the state pays covers much — but not enough — of the cost.

That means child care homes and centers that take children in the so-called Purchase of Care program often lose money on the deal, said Schneider, public policy chair for the Delaware Association for the Education of Young Children, a trade group for providers.

“Child care providers are paid at a percentage of the cost of care,’’ Schnedier said. “If the company repaving I-95 submits an estimate of $1 million, they get paid $1 million. If they were paid like child care providers, they’d only be paid $400,000 to $600,000 depending on the county where they operate. This means they are forced to keep staff wages low and unable to provide basic benefits.”

Schneider’s analysis only describes part of the challenge in getting more infants and toddlers into early learning centers so they’re ready for math, English and other classes when they start kindergarten.

Beyond small profit margins in a state where K-12 student proficiency has been subpar for years, there’s a dwindling child care workforce and declining enrollment since the pandemic. The falling numbers are fueled in large part by the reality that families who earn too much for subsidized care often cannot afford to pay their own way.

Those with a stake in children’s educational success — parents, politicians, providers and employers — agree that more must be done, especially with the minimum wage rising to $15 an hour in January. It’s currently $13.25 an hour.

The state currently has about 900 licensed child care homes and centers, with a capacity for 52,600 kids. Roughly 13,000 Delaware children are currently enrolled through Purchase of Care, state records show.

Gov. John Carney’s administration has steadily increased the state’s investment in the two primary sources of child care funding for lower-income families since he took office in 2017. If lawmakers approve his budget for fiscal year 2025, the state share of child care funding will have grown from $38 million to $99 million during the eight-year period.

“We know how critical the first five years of a child’s life are to future academic and career success,” Carney said in a statement. “Investing in our youngest learners has been a priority of ours from day one, and these investments further that commitment.”

In his latest budget, the final one of his eight-year tenure, Carney wants to incrementally increase the eligibility for Purchase of Care from 185% of the federal poverty level to 200%.

Here’s how that would work for a family of three — two parents and one child, or one parent with two children:

A family of three qualifies if their income is less than $51,640, or roughly $1,000 a week. Any family that earns more need not apply.

Those who qualify and earn up to 50% of the poverty level — $38,730, or $750 a week — would pay nothing out of pocket. But those whose income is between $38,730 and $51,640 have to pay 7% of their income — about $50 a week — toward the cost of care.

Families that don’t get state subsidies pay upwards of $400 a week for child care.

‘We have a long way to go’ before the industry is stabilized

State Sen. Sarah McBride, a Wilmington-area Democrat who has pushed for more funding for families in need, said the new cash infusion would help but still leaves too many families ineligible.

“We should celebrate this step forward but recognize we have a long way to go before we’ve stabilized the child care industry in Delaware and guaranteed every family in this state access to quality, affordable child care,’’ McBride said. “The system is in crisis right now in Delaware. There is no question.”

McBride would like eligibility increased way beyond the 200% of poverty threshold. At a minimum, she wants the state to waive co-payments for families who earn up to 200% of the poverty level.

She noted that Delaware households who earn up to 200% of the poverty level are eligible for the federal Supplemental Nutrition and Assistance Program, commonly known as food stamps.

“If our government is saying that a family is making so little that they need assistance to purchase something as life-saving as food, how can we expect them to fork out as much as 7% of their income for something as necessary as child care.”

Schneider said many larger centers and smaller child care homes have closed classrooms or shut down entirely in recent years, and that many providers won’t take Purchase of Care because it hurts the bottom line.

She said some providers that make ends meet with a high percentage of families using Purchase of Care are often part of a larger community center that receives foundation or other outside funding.

Schneider thinks more providers would participate in subsidized care if eligibility was expanded to perhaps 300% of the poverty level and if the state significantly increased its reimbursement. The state currently pays Purchase of Care providers $65 a day, or $1,430 a month, for an infant under age 1 in New Castle County. She said the cost of providing quality care will easily exceed $2,000 when the $15 minimum wage takes effect in less than nine months.

Even with a greater state contribution, Schneider said it will be hard for many providers to fill staff openings when they are competing with retailers and other employers that pay well above minimum wage and don’t have certification requirements like the ones for child care teachers.

“In order to make impactful change, we must support the workforce and providers by changing the budgeting calculation, increasing the subsidy rate to providers and incentivizing retention of a dwindling workforce,’’ Schneider said.

The state’s reimbursement rate is expected to increase in the coming months, but the amount has not yet been determined.

Delaware has ‘traditionally underfunded child care’

State Sen. Kyle Evans Gay of the Brandywine Hundred area north of Wilmington has been another vocal proponent for families and providers in the child care field, but acknowledges that there are no easy fixes. She said the child care “ecosystem” of small businesses who care for and educate children can only improve with a concerted, collaborative effort that’s sustained over several more years.

Gay said fellow Democrat Carney’s latest proposed injection of cash “demonstrates that we can do a lot better and we’re taking steps to do that. These are the things that people want from their governments, but there’s more work to do on child care.”

Daniel Walker, deputy secretary at the state Department of Health and Social Services, said the new state reimbursement proposal for Purchase of Care would be presented to state lawmakers for their approval before they vote on the fiscal year 2025 budget in late June.

Walker said the Carney administration’s investments have been historic and noted that centers using Purchase of Care also will get paid for 10 days a month instead of five, even if children are frequently absent.

Yet Walker agreed that the state has “traditionally underfunded child care” and that more must be done in future years, albeit within the confines of a state Delaware’s budget that has scores of other funding priorities.

“We know that there are challenges in the child care field. It’s about how do you respect the profession, how do you support and build the infrastructure. It’s certainly easier said than done,’’ Walker said. “We’ve made massive investments, but we know it’s not enough.”