For a growing number of low-income families, Wisconsin’s child care subsidy program is falling short of providing affordable care. Both the governor and Republican legislators proposed remedies as part of the 2019-21 state budget, though neither side called for the resources needed to meet a challenging federal benchmark for access.
Over the past 13 years, a growing number of families participating in the Wisconsin Shares child care program have had to shoulder added financial responsibility for their children’s care. In 2006, families qualifying for Wisconsin Shares could access 75% of the child care slots without contributing more than their family’s expected copay. By 2017, that share had fallen to 15%, according to figures from the state Department of Children and Families (DCF).
The federal grant program that provides some Wisconsin Shares funding recommends setting reimbursement levels so that families receiving a subsidy can access 75% of child care slots, although as of 2016, a national study found that only one state did so.
DCF recently received a letter from the federal government warning the program is not complying with the conditions of the grant. The letter notes the state could face a penalty if it does not raise its maximum reimbursement rates so that at least 25% of slots are considered accessible to families receiving the swubsidy.
The governor’s proposal was intended to raise the share of slots considered affordable to 50%, a threshold known as the 50th percentile. Lawmakers put forward their own plan—which is included in the final version of the state budget—to raise the share of affordable slots by a smaller amount.
How the Subsidy Works
Qualifying families (generally those with income up to 185% of the federal poverty level) who participate in Wisconsin Shares receive an EBT card, or debit card, that comes pre-loaded with authorized funds to pay their child care provider. The process of determining the amount that is loaded onto each card depends on a variety of factors, including family size, household income, and place of residence.
First, the state sets a maximum reimbursement rate, which it determines for each geographic area through a market rate survey of child care providers conducted every year or two. Then, the family’s copay is determined based on household income and family size. If the family has a copay, that amount is deducted from the maximum reimbursement rate, and the resulting amount is what is loaded onto the card as the family’s subsidy.
In most cases, however, the combination of the subsidy and copay (the sum of which is equal to the maximum reimbursement rate) is still not enough to cover the full cost of child care. The family is responsible for paying the remaining amount in addition to their copay, if any.
To analyze affordability for Wisconsin Shares families, we looked at both the maximum reimbursement rates and average price per slot in each county for accessing care in two age groups: 0-1 year olds (for whom care tends to be most expensive) and 4-5 year olds. In seven counties, five of which are categorized as less than 50% urban, the maximum reimbursement rate was enough to cover the average cost of care in both age groups. An additional nine counties met the affordability threshold for one of the age groups (four in the infant age group and five in the older group).
In the remaining 56 counties, the difference between reimbursement rates and average monthly cost ranged from $0.50 to $84.05, with a median difference of $23. This difference would be in addition to any copayment the family already pays.
Finding affordable child care is a problem faced by families in many communities throughout the state, and is not limited to urban or rural settings. Counties with gaps greater than the median include largely rural counties such as Iowa, Kewaunee, Pepin, Polk, Pierce, and Sawyer, as well as mostly urban ones like Milwaukee, Dane, La Crosse, Rock, and Waukesha. Counties falling in between (25-74% urban, according to DCF’s categorization) also face difficulties, with Crawford, Ozaukee, Dunn, Walworth, and Columbia counties facing some of the largest gaps.
While the adopted 2019-21 budget provides some relief for Wisconsin Shares families, and in the short term allows the state to meet the 25th percentile federal standard, it falls well short of the 50th percentile objective proposed by the governor. Consequently, pressure may build on legislators heading into the next budget to come up with the funds for a more substantial increase.