Lawmakers Question Changes to State Child Care Subsidy Program

Mar 27, 2013

One of the last issues the Legislature’s Joint Finance Committee considered Tuesday as it wrapped up budget briefings was childcare. Lawmakers must decide what they think of Gov. Walker’s plans to alter the state’s payment system for providers and to combat fraud.

Lawmakers wrapped up budget hearings Tuesday with a discussion about child care subsidies.

The program Wisconsin Shares provides subsidies to low-income families to cover childcare expenses.

The state has not increased those payments for seven years, but in his new two-year budget, Gov. Walker proposes lifting the freeze and creating a new payment system. It would reward higher-quality providers.

The state rates them using a system called YoungStar. It assigns between one and five stars to providers based on standards such as curriculum and the education level of caregivers.

Eloise Anderson is secretary of the Department of Children and Families.

“The good news, a majority of the children in Wisconsin Shares program – 55 percent – are in child care providers rated three, four or five stars. Things are moving in the right direction,” Anderson says.

The proposed budget provides bonuses for childcare providers with five-star ratings. That’s only about 6 percent of providers around the state. The bonuses would be smaller or non-existent for four- and three-star ratings. For providers with two stars or less, the state would cut their payments.

During Tuesday’s hearing, Democratic Sen. Jennifer Shilling questioned the wisdom of penalties.

“How does it make sense to have further reduced payments to these providers with a two-star rating if the goal is to provide the necessary financial and technical support to have them increase their ratings?” Shilling says.

Secretary Anderson responded that the state provides grants and other programs to help providers determined to improve.

“So we’ve, I think, gone the full mile in order to help providers move up. In the future, we’ve got $22.5 million in Race to the Top grants we’re putting in to supporting providers’ development,” Anderson says.

Anderson says the state has also begun working with technical colleges to improve their childcare courses.

Even those incentives did not satisfy Democratic Rep. Cory Mason. He insisted many providers can’t afford to reach four- or five-star status because the state’s base subsidy is too low.

“That’s unfair to those providers. It’s unfair to those kids who are relying on them and it’s unfair to the parents who we told that we were gonna give them a five-star program that was actually gonna move kids into higher-quality child care,” Mason says.

Children and Families Secretary Anderson advised day care operators concerned about their long-term viability to take on a mix of subsidized and non-subsidized children.

The other big issue that surfaced during Tuesday’s hearing is fraud – particularly, providers billing the state for children not in their care. To help fight abuses, the administration wants to issue debit cards to parents, so they pay the provider for childcare. Right now, the state pays.

Anderson told the panel that putting parents in charge would lessen the potential for scams.

“That doesn’t mean that we’re not going to still go out and look at it and see, but it really puts the onus of responsibly someplace other than us. And also for me, removes the ability for the provider to look at us as if we are their employer,” Anderson says.

Republican Sen. Sheila Harsdorf agreed it makes sense to give parents more responsibility, yet she still foresees problems.

“I’ve heard from a child care provider who has a lot of concern with this. She’s from a rural community and she has had a huge problem with collecting the parents’ portion of the child care payment. In fact over two years, she has about $30,000 in accounts receivable,” Harsdorf says.

State officials said they’ll tell parents about their responsibilities with the new debit cards, and remind providers they don’t have to accept children whose parents fail to pay.