By Rebecca Holcombe
Vermont now spends tens of millions more dollars on child care and prekindergarten markets than it did only three or four years ago. Yet, a Joint Fiscal Office study recently found Vermont now has about 1,693 fewer regulated child care spots than we did in 2015 — a 25 percent decline.
Before spending more public money on the early care and learning market, Vermont needs to ask: Are we managing this market the right way?
Many Vermonters responded to JFO’s recent report on child care capacity by concluding we have a crisis. While child care centers and school programs held their own in the market, Vermont had almost 27 percent fewer regulated home-based child cares in 2018 than in 2015. Overall, home-based programs now have about 25 percent fewer infant and toddler spots.
Why? It’s possible that a portion of the decline relates to new, robust quality and safety standards put in place by the Child Development Division at the Vermont Agency of Human Services. These regulations were designed to reduce risk and ensure the safety and quality of early childhood settings.
It’s also possible some of the loss is an unintended consequence of state legislation, including the state-funded prekindergarten market. Act 166, Vermont’s Universal Prekindergarten voucher program, requires school districts to pay vouchers for 10 hours of prekindergarten for 3- and 4-year-olds who enroll in any prequalified program. This voucher represents a partial subsidy (10 hours) to a partial market (3- to 5-year-old children only), spread out over nearly 390 public and private providers. For comparison, we only have about 150 public elementary schools. For early care and learning, we stretch our public dollars over more programs, each with overhead costs, rather than over more hours of service.
In a publicly funded market like Vermont’s, programs compete for children (and in particular, for 3- to 5-year-olds) because children represent dollars. However, the business model of many home-based providers relies on using 3- to 5-year-olds to cross-subsidize care for children ages 0 to 2, so if home-based programs are unsuccessful in competition for prekindergarten-aged children, their business model no longer works.
In addition, because small programs are less likely to be able to pay competitive wages, caregivers with stronger credentials tend to gravitate to school- and center-based programs. This further disadvantages small, home-based programs in the marketplace. State efforts to increase training opportunities have done little to stem the exodus of skill to larger programs.
These challenges are not unique to Vermont. Jessica Brown of Princeton University found that in New York City, “the expansion of UPK (universal prekindergarten) decreased availability of center-based care for infants and toddlers.” Second, she found “the entire decline in day care center capacity occurs in poorer areas of the city,” possibly because less wealthy families have less ability to increase what they can pay to access child care or travel to accessible care. Finally, she found evidence suggesting that child care facilities that were near enough to compete with prekindergarten programs (whether public or private) cut costs in ways that led to substantial increases in the number of inspection violations and public complaints about quality.
All of this should give Vermont pause. We’ve invested substantial new resources in early care and learning, yet have fewer spots and pronounced child care “deserts.” That’s rough if you are a parent who needs to work to live. And, it’s not clear how more of the same will yield different results.
What we know about markets, whether they involve health care or child care, is that if we don’t get the incentives right, substantial new public investments can lead to higher taxpayer costs, but not expanded access to quality, affordable care, especially where it is most needed.
There is no one way to move forward, but we are overdue for a discussion on whether we have the right model. Just adding money to markets doesn’t always achieve the desired result.
Rebecca Holcombe is the former secretary of the Vermont Agency of Education.
