Discover more from Civic Way
America’s Ramshackle Childcare System – Part 3
Building a Universal Childcare System for the Next Generation
This is the third and final essay in Civic Way’s series on childcare. In this essay, we suggest some strategies for building a new childcare system. The author, Bob Melville, is the founder of Civic Way, a nonprofit dedicated to good government, and a management consultant with over 45 years of experience improving public agencies.
The US should replace its tangled, under-performing childcare programs with an efficient, affordable universal system that is fully integrated with public education and parental leave systems
We should migrate to government-funded, locally administered and privately-operated childcare centers at or near public schools for every child from infancy to kindergarten
Public childcare agencies and funding sources should be restructured and strengthened at all levels
Childcare facilities should be planned, funded and managed like schools (critical civic infrastructure)
We should dedicate ourselves to high-quality, accessible childcare, especially upgrading and fairly compensating childcare workers and streamlining childcare monitoring systems
A New National Childcare System
As we outlined in our last essay, quality childcare is unaffordable and increasingly elusive to many Americans.
Thanks for reading Civic Way! Subscribe for free to receive new posts and support my work.
We need an entirely new childcare system now more than ever. One that treats childcare as a public good. One that fully integrates childcare with K-12 education and parental leave policies. One that distinguishes childcare from babysitting. One that promotes managed competition. One that values our children as our future.
The new childcare system should fully integrate childcare and public education. Every community should offer quality childcare at or near public schools for every child up to kindergarten age. Each program should be largely government-funded but privately—and locally—administered. As needed, childcare should be available for extended hours.
Government should contract with the most cost-effective private entities—nonprofits and businesses—to provide childcare in public childcare centers. These facilities should be publicly regulated but privately-run. For-profit corporations should continue to deliver childcare services to those who can afford it.
The system should include a new funding model that makes licensed childcare affordable for every family. Initially, it should be free for families with income below 400 percent of the federal poverty level (about $92,000 for a family of three)[i]. Childcare tax credits should be made available to more affluent families. Ultimately, childcare—like public schools—should be free but not mandatory for all families[ii].
Childcare should be fully aligned with new parental leave policies. Synchronized national and state leave policies that cover leave for every pre-childcare stage—prenatal leave (pre-birth) and post-natal leave (first year). Minimum payment and duration standards for maternity, paternity and parental leave. Clear coverage parameters for every worker class (e.g., employed, self-employed and seasonal)[iii].
Aligning Childcare and Public Education
The new universal childcare system should be fully aligned with the nation’s K-12 education system. Since our public-school systems are local, childcare should be administered locally through local school districts. Aligning childcare with education also will require reorganizing childcare agencies and funding sources.
Federal and state governments must reorganize public childcare programs. The federal government should place its childcare programs under the Department of Education. State governments should consolidate their childcare programs under an education agency and take full advantage of federal aid to transform their state childcare programs.
Next, federal and state governments should develop a unified funding model under unified leadership. The model should expedite the coordination of all childcare funding sources through the lead childcare agencies. Regardless of the specific funding structure, all revenue sources—tax credits, grants and subsidies—must be harmonized to promote universal childcare.
States should consider executing state compacts to coordinate childcare funding and improve efficiencies. For example, they could establish regional childcare trust funds to pool childcare funds and attract external funding in appropriate multi-state regions (e.g., New England or Southeast).
If space is available, local school districts should co-locate childcare at or near public schools. This will require an ambitious childcare infrastructure initiative with several components, including the following:
Fund childcare centers as critical infrastructure like roads and public schools
Design facilities to meet the needs of children with disabilities
Revamp land use laws as needed to allow childcare facilities in all targeted areas
Incentivize states and localities to use their available tools[iv] to expedite new facility development
Streamline licensing and permit requirements for building or expanding public childcare facilities
Require residential developers to support any added childcare needs associated with new housing
Increase impact fees for other developers to augment local childcare funds
In some cases, circumstances may dictate the placement of childcare facilities near major employers or other public facilities like libraries. In addition, parents, grandparents and guardians choosing other childcare options should be respected and supported during the transition to the universal childcare model.
Aligning childcare with public schools will encounter hurdles. Co-locating childcare facilities at public schools, especially those run by private providers, could face stiff public teacher union opposition. In some cases, public-school districts, especially those with rising enrollment. may lack sufficient space for childcare. To encourage employers to become full partners in building the new childcare system, such challenges must be overcome.
Financing Universal Childcare
How should we pay for universal childcare? Since it will cost considerably more than our current regime, we must be creative. And, given childcare’s importance to our nation’s future, it must be funded by a reliable blend of dedicated, multi-year revenue sources.
Unlike public education, which relies primarily on local sources, childcare funding should be predominately federal, especially during the implementation phase. Once the new universal childcare system takes root, state and local governments could gradually assume more of the fiscal load, similar to the Medicaid program. Federal incentives and disincentives should be explored to maximize state participation.
How should we increase federal childcare funding? There are many options. One way would be to tap new revenue sources, such as higher taxes on estates, inherited capital gains, mega-assets and top income brackets).
Another way would be to reallocate savings from repealed tax cuts. For example, we could allocate a portion of the $2 trillion tax cuts enacted under the 2017 Tax Cuts and Jobs Act (TCJA)[v] due to expire in 2025. On a smaller scale, we could repeal selected cuts (e.g., the TCJA pass-through deduction[vi]).
We also could allocate savings from eliminating or capping unproductive tax expenditures (e.g., credits and deductions). For example, cap all deductions at one or two percent of adjusted gross income. Eliminate or
cap specific tax expenditures like the carried interest and mortgage interest deductions. In addition, we could allow families to use the Life Savings Accounts (LSAs) recommended in our healthcare series.
More money is only part of the solution. We also must manage childcare funds more efficiently and holistically. We should ensure that all funding sources, including direct aid and tax expenditures, work in concert to attain system goals. This may require shifting allocations or replacing funding programs entirely, but it most certainly will require us to replace the current tangle of subsidies with a coherent funding model.
The federal government should use its funding programs to incentivize state investments and multi-state childcare partnerships. In turn, states should revamp their childcare funding strategies to improve coordination, encourage provider competition and promote childcare partnerships. In some states, childcare ballot initiatives could help reinforce funding sources.
Diversifying Childcare Options
Different families need different childcare choices. Choices that meet child safety, health and development goals and unique family needs. This means more diverse providers—family, home, center and employer—and more competition. And it means making childcare a more viable enterprise, one offering promising rewards—financial and otherwise—to people who see childcare as their calling.
How do we meet this goal?
We should start by helping small providers navigate the new system. Engaging small providers at public schools. Building small provider networks. Funding joint provider ventures. Streamlining regulations[vii]. Offering caregiver training and bonus programs. Fast-tracking reimbursements. Creating infrastructure banks. Improving financing access for start-ups, facilities and emergencies. Offering back-office support (e.g., technological).
We also should help small nonprofit childcare providers migrate to public facilities. Community-based shared service networks. Custom operational standards and guidelines. Provider performance bonuses. More generous matching grants for serving low-income families. Targeted training programs. Tax preparation and other accounting assistance.
Expanding employer-based parental leave and childcare also should be a priority. Federal and state agencies should design targeted incentives to encourage more employers to provide paid parental leave. They also should incentivize employers with tax credits to support nearby public childcare facilities[viii] especially to ensure childcare for employees with flexible or remote work schedules.
Making Quality Childcare Accessible
We need more childcare, but we also need better, more consistent childcare. There are several ways that federal, state and local governments could help providers attain this goal, including the following:
Develop free model guidelines for childcare providers by provider type[ix]
Develop free online operating tools for providers by provider type[x]
Upgrade public facilities at or near public schools or other public facilities (e.g., libraries and community centers) to accommodate childcare
Improve the coordination of data management efforts across states and providers
Strengthen monitoring and inspections processes
The most important quality improvement measure will be to upgrade and expand the childcare workforce. States should expand associate degree programs for childcare and refine minimum education requirements. They should raise the minimum wage for caregivers to at least $15 an hour and fund more educational stipends and scholarships for caregivers[xi]. The US government should create a special visa program for caregivers.
To make quality childcare accessible for all families, it must be affordable. It also must be easy for parents to find. There are many possible strategies for linking families to the best childcare options in their communities. One would be to design and deploy an online public childcare search tool profiling, rating and matching all providers to family needs by multiple factors[xii]. Another would be to expand outreach and referral efforts[xiii].
Investing in America’s Future
Childcare advocates believe that investing in quality childcare will pay for itself. Other experts claim that the quantifiable benefits may not exceed the estimated costs. The supporting evidence is mixed.
Investing in quality childcare is investing in America’s future. The Heritage Foundation has argued that childcare is the “essential infrastructure without which the other sectors of the economy could not function.” Few—if any—reputable organizations have challenged that claim.
A well-funded and organized childcare system is pro-child, pro-family and pro-worker. More parents working with parenting. More financially viable and resilient providers. More satisfied caregivers. More profitable businesses. And more children prepared for school and life.
And America? A quality childcare system will produce more vibrant communities, a stronger tax base and a more dynamic economy. Aren’t those the kind of outcomes in which we should invest?
[i] Families with income between 400 and 800 percent of the Federal Poverty Level should be eligible for childcare tax credits.
[ii] Until then, quality childcare should not cost families more than seven percent of their income.
[iii] Some categories like the self-employed and small businesses will no doubt be exempt from parental leave requirements.
[iv] Such tools include public property sale or lease, tax abatements and other development incentives, land use ordinances, development codes, permitting requirements, traffic studies, environmental impact statements and other required pre-development studies.
[v] It should be noted that the Tax Cuts and Jobs Act (TCJA) reduced federal tax expenditures by about 10 percent, mostly by limiting state and local tax deduction, raising standard deduction and lowering marginal income tax rates.
[vi] The TCJA pass-through deduction allows a 20 percent deduction of income from pass-through entities like sole proprietorships and partnerships.
[vii] Eliminate overly prescriptive and costly regulations especially for small providers (e.g., space, zoning, parking, fencing, equipment, furniture, toys, insurance, menus, utensils and discipline).
[viii] Where possible, such facilities should be built at or near public schools, but circumstances may dictate their development on other public property (e.g., libraries) in vacant commercial space.
[ix] Model guidelines should include performance metrics, best practices (e.g., National Association for the Education of Young Children), laws, regulations, licensing/credentialing processes and curricula.
[x] Such tools could include a small business start-up kit, an admission process template, a family communications app, a parental survey form and a community feedback mechanism.
[xi] The pay of childcare workers and preschool teachers should be competitive with the pay of elementary teachers with comparable education.
[xii] Assessment factors could include the child’s age and needs, the parental work schedule, facility proximity, dimensions, safety and cleanliness, care availability, quality and affordability.
[xiii] Child Care Resource and Referral (CCR&R) agencies make childcare referrals, facilitate access to that childcare, and inform families, providers, employers and communities. Building a strong network of such referral resources, with a fully-staffed national childcare referral hotline, should be explored.
Thanks for reading Civic Way! Subscribe for free to receive new posts and support my work.