Child care providers lend weight to Shumlin plan
By Peter Hirschfeld
Vermont Press Bureau | April 09,2013
MONTPELIER — Child care providers have added their hands to the heavy political lift underway in the Vermont Senate, where the Shumlin administration is waging a long-shot bid to further underwrite child care through heavy cuts to a state program that provides cash to low-wage workers.
At a news conference Monday, a coalition of child care providers endorsed a plan from Gov. Peter Shumlin to boost child care subsidies by nearly $17 million. While none of the providers was eager to argue that reductions to the earned income tax credit are a good thing, they said the cuts are a worthwhile trade-off for needed investments in the child care industry.
“The time is now where there are tough decisions being made, and it’s the time to prioritize,” said Julie Coffey, executive director of the Building Bright Futures Council. “We ask the Senate to increase those (child care subsidies) to the tune of $16.7 million. And we as an early childhood community accept if some of that comes out of the earned income tax credit.”
In rejecting any increase in broad-based taxes, Shumlin has said that child care subsidies for low-income parents must come from elsewhere within the human-services budget.
“This is what was put in front of us,” said Jody Marquis, owner of a child care center in Newport. “We are all being asked as a society to look at budgets, not spend more and not raise taxes. ... This is the best way to take those funds and redistribute the money in a way that they get a better return on their investment.”
Child care providers are putting more than words behind their advocacy. Vermont Birth to Three, one of the groups represented at the news conference Monday, has hired the Statehouse lobbying firm KSE Partners to push for the cuts to the tax credit.
Lawmakers in the House were less amenable to the trade-off. The body last month approved tax and budget bills that included no cuts to the earned income tax credit. The House used a patchwork of other revenue sources to come up with $3.3 million to increase child care subsidies.
The earned income tax credit in most instances provides direct cash benefits far in excess of recipients’ actual tax liabilities. But lawmakers nonetheless derided the governor’s plan as a “tax increase on poor people.” The program benefits about 40,000 of the lowest-wage earners in the state.
Barbara Saunders, co-director of the Mary Johnson Children’s Center in Middlebury, said she appreciates that the House found room for modest increases to the child care subsidy program. But she said the $3.3 million won’t provide “a measurable difference” to a system under strain.
“The $16.7 million changes the game,” she said.
Shumlin’s proposal represents a 40 percent increase in state funding for the Child Care Financial Assistance program. It would boost reimbursement rates to providers by an average of 25 percent and raise the income threshold at which parents would be eligible for subsidies. An estimated 900 families would become newly eligible.
Melissa Riegel-Garrett, with the Vermont Association for the Education of Young Children, said existing subsidies have fallen well below the cost to deliver care and that providers serving lower-income families “must make a choice between eating that difference, or asking families to make up that difference.”
To underscore the severity of the situation, Riegel-Garrett used the financial scenario now facing a family of four with a household income of less than $24,000 per year. If the family has one infant and one preschool-age child in a licensed child care center, according to Riegel-Garrett, they’d face out-of-pocket costs of $443 per month — 23 percent of their total earnings.
“(Parents) leave care not because they choose to, but because they build up a large balance owed and they’re unable to pay for the service,” Riegel-Garrett said.
But lawmakers have by and large said the benefits of the increased child care subsidies are outweighed by the harm that would be caused by cuts to the tax credit. The proposed reductions would cut the state portion of the benefit by two-thirds (it would leave untouched the federal tax credit on which the state has chosen to piggyback). Recipients would lose close to $400 per year on average, and only a small fraction of households receiving the benefits would be able to make use of the higher child care subsidies.
The proposal could be as hard a sell in the Senate as it was in the House. Sen. Tim Ashe, the Democratic-Progressive chairman of the Senate Committee on Finance, has been especially outspoken about the proposed reductions in the earned income tax credit. In an interview with Vermont Public Radio last week, he called the governor’s plan “beyond the pale.”
Senate President John Campbell has so far declined to commit even to the lower figure for child care subsidies in the House budget.
Providers say that without additional investments, the state risks bankrupting a child care system on which its future economy relies.
“Vermont’s prosperity today and in the future depends on our ability to provide children the solid foundation they need … to lead our communities and grow our economy as adults,” Riegel-Garrett said.