Lawmakers hear of ‘broken economic model’ that hinders early learning, child care

Early care providers and families with young children continue to find themselves between a rock and a hard place.

The early learning and child care industry operates within a broken economic model, according to Christa Anders, coordinator for Transforming Minnesota’s Early Childhood Workforce.

Anders and her colleagues presented an overview of child care industry economics to the House Early Childhood Finance and Policy Committee Tuesday.

The lack of affordable, available child care comes down to a gap between what it costs to provide services and what parents are able to afford, Anders said, without enough state and federal investments to make up the difference.

“We ask parents to pay the most when they have the least ability to pay,” she said. “We as a society have consistently underinvested in early care and education, and that’s led to inadequate funding and a lack of harmonization among the funding streams.”

For providers, much of their expenses are fixed, with 70% going toward staffing and to meet regulatory requirements. Facility costs account for 20%, and the remaining 10% goes toward curriculum, program expenses and administrative costs.

Jamie Bonczyk, executive director of Hopkins Early Learning Center, highlighted how razor thin its annual net assets were prior to the COVID-19 pandemic. The organization managed to operate in the black until its subsidized lease was terminated. To remain viable, staff wages would have needed to be reduced from an average of $17 per hour to $9 per hour.

“It is not possible to pay somebody, with that amount expertise, $9 an hour and retain them. They would all go out the door,” she said.

The organization was unable to find another turnkey facility within its budget and the board voted to close the learning center. The program had been downsized since the onset of the pandemic, but when it closed last December, 21 teachers and 60 families were impacted.

Boncyk’s story not only detailed the struggles that providers and families face, but also those of educators. While the demand for early childhood educators is high, there’s little incentive to enter the profession.

“It is the lowest return on investment of all four-year degree professions … even though you have the same costs coming out [of college] as a person with an engineering four-year degree,” she said.

Rep. Peggy Bennett (R-Albert Lea) noted that costs associated with early care and learning are higher in Minnesota than in neighboring states and asked what could be causing that.  

One factor may be that cost of living and educator salaries are higher in Minnesota, Anders said, adding that’s an issue being grappled with nationwide.

“The issues that we are experiencing in Minnesota are consistent across the country,” she said. “Yes, our costs might be slightly higher than other places, but the broken economic model of early care and education is not unique to Minnesota, it’s broken in every state across the country.”