REGIONAL- In a significant move towards expanding access to child care services in Minnesota, Gov. Tim Walz has announced a comprehensive increase in payment rates for child care assistance, which will take effect this week. The announcement comes as part of the state’s ongoing efforts to make child care more affordable and accessible to a broader range of families.
Walz emphasized the critical importance of affordable and accessible child care in fostering opportunity and driving economic growth throughout Minnesota.
“We’re raising child care assistance rates to support providers and improve access for more families,” Walz said. “This is an investment in our workforce, economy, and the well-being of families.”
The adjustment in reimbursement rates will bring state payments more in line with market rates for child care providers who serve over 11,000 families and approximately 23,000 children through the Child Care Assistance Program (CCAP). This increase is expected to play a critical part in stabilizing the financial viability of child care providers. At the same time, it will also enhance access to affordable child care options for families across the state.
The Legislature approved the new child care assistance rates earlier this year, committing $146 million in funding over the next two years. This was a component of a larger $1.3 billion child care package designed to boost the wages and benefits of child care providers and reduce wait lists for another form of child care assistance known as the basic sliding fee.
The CCAP serves families with low incomes by providing financial support for child care. Reimbursement rates lower than what providers typically charge for care decreases their potential income, and therefore gives providers less incentive to accept families enrolled in the program. That narrows the possibilities for finding care in an already tight market. By bringing reimbursement rates more in line with standard rates for child care, it is expected that more care options for CCAP families will be available.
Wage supplementation
Walz’s announcement comes on the heels of the unveiling of the Great Start Compensation Support Payment Program (GSCSPP), an initiative that will funnel $316 million to child care providers over the next two years to improve wages and benefits for child care workers and early childhood educators.
Over 8,000 childcare providers were given the opportunity to apply for the funds, which were slated to begin flowing last week.
“Minnesota’s economy doesn’t work without child care providers,” Walz said. “We are boosting the pay and benefits those providers receive to grow the workforce and reflect the critical work they do each and every day. Without the dedicated care they provide, parents can’t work and children miss early learning opportunities critical to brain development.”
Quality child care programs operate on extremely thin profit margins and providers often grapple with insufficient revenue to cover expenses while offering competitive wages and benefits. In Minnesota, the median wage for child care workers stands at $14 per hour, $1.84 less than the average fast food worker wage, and among the lowest median wages for positions requiring at least a high school diploma. Improved compensation will not only attract more individuals to child care careers but also will keep them employed in the industry, stabilizing the pool of care available to families who need it.
After the first two years of the supplemental wage program, the budget will decrease slightly to $130 million annually.
With it’s investment of $1.3 billion in the child care industry, the Legislature hopes to halt and perhaps reverse a 15-year decline in the number of licensed child care providers. While the number of providers offering center-based child care has remained relatively stable, the number of family child care homes has dropped precipitously, from 12.3 thousand in 2008 to just 6.2 thousand in 2023.
While licensed and certified child care centers must use the funding from GSCSPP to supplement compensation and benefits, family child care providers will have greater flexibility in how they utilize the funds, due to their unique business models.
To qualify for compensation support payments, providers must meet specific criteria, including being licensed, certified, or registered, maintaining good standing with the Minnesota Department of Human Services or their Tribe, and satisfying additional requirements. Recipients will be subject to random audits in order to ensure funds are being utilized appropriately.