Column: Michigan has had a sea change in childcare

September 25, 2021 7:55 am

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In less than a week, I will be retiring after more than three decades of working to improve public policy for Michigan children and families. And as I take one last look at the policy landscape before my personal role in it changes, I can unequivocally say that the appreciation of the importance of childcare and commitment to improving it is in the best place it’s ever been.

With strong bipartisan support, the Michigan Legislature this week passed a Fiscal Year (FY) 2022 state budget that could be the beginning of an unprecedented transformation in how the state supports childcare for Michigan parents, their children and their employers. 

For too long, many parents have been unable to find childcare they can afford, while childcare businesses have been struggling to stay open and childcare workers have been earning just slightly over the minimum wage. The result has been that many Michiganders — disproportionately women — have been forced out of the workforce, and employers are experiencing widespread labor shortages.

In a historic move forward, lawmakers and the governor agreed to invest $1.4 billion in childcare beginning in 2022, including: 

  • Grants for childcare providers. The budget agreement includes $700 million for grants to childcare providers to help them keep their doors open. Even prior to the COVID-19 public health crisis, small childcare businesses were struggling to stay open, and many are now on the brink of closure. 
  • Help for parents trying to find childcare they can afford. The agreement includes an increase in the income eligibility threshold for the state’s childcare subsidy from 150% of poverty ($39,750 for a family of 4) to 185% of poverty ($49,025), as well as the waiver of parent copays. These changes will provide much-needed childcare assistance to thousands more Michigan families. childcare for one infant in Michigan can consume 19% of the income of a family at the state’s median income of $57,054, but is devastating for minimum wage workers—accounting for 55% of annual income.
  • Rate increases for childcare providers caring for children receiving state subsidies. Lawmakers and the governor agreed to provide $158 million for a permanent 30% rate increase for providers caring for children who receive childcare subsidies—ensuring that they can afford to open slots for children from lower-income families—and an additional $222 million for a temporary rate increase. Subsidy rates are substantially below market rates, making it difficult for many providers to accept children with subsidies.
  • Strategies to shore up the supply of childcare: The agreement includes $100 million for startup grants for providers, including funds for technical assistance and facility improvements, as well as $36.5 million over 3 years to address the dire shortage of childcare for the state’s infants and toddlers. The care of infants and toddlers is more hands-on and requires more staff, making it more costly. As a result, only about 2 of every 3 providers offer care for infants and toddlers, and 10 Michigan counties have no licensed childcare center slots for these younger children. 
  • Bonuses to help ensure that childcare businesses can attract and retain childcare workers: The agreement includes $30 million to provide bonuses to one of the state’s most underpaid workforces, with median wages of just $11.13 per hour. Low wages are the primary reason for staffing turnover rates as high as 25-30%, with many childcare workers finding better wages and benefits in fast food and other traditionally low-wage jobs.

In the same week that lawmakers agreed to the largest childcare investment in the state’s history, a bipartisan group of legislators introduced bills to support childcare providers and build the supply of childcare. Included in the bills is authorization for new supports for small, home-based childcare providers as well as strategies to build the supply of infant and toddler care. 

I just found out that as my last official order of business aside from cleaning out my office, I will have the privilege of attending Gov. Gretchen Whitmer’s bill signing for the budget, and I can’t think of a better exclamation point on my career. 

Together, these budget and legislative decisions are good news for Michigan workers, businesses, and especially its earliest learners. It is also potentially the beginning of a sea change in how the state supports working parents and the state’s economy. 

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Pat Sorenson
Pat Sorenson

Pat Sorenson rejoined the Michigan League for Public Policy in September 2012 as a senior policy analyst working on state budget and tax policies. Pat was the senior director for policy and advocacy at the Early Childhood Investment Corporation; vice president for policy at Michigan’s Children; and a senior planning and research associate at the League, serving as the organization’s first Kids Count director.