Making Child Care More Affordable in Colorado

CHILD CARE

As findings from a recent Bell report shows, a middle class lifestyle is predicated on two wage earners, meaning more and more Colorado families rely on child care to enter and stay in today’s middle class. Despite the necessity, child care and early childhood education are largely unaffordable for many families. Our state’s average cost of child care for one 4-year-old is about $11,000 per year, while infant care is closer to $15,000 annually, which accounts for 19.5 percent of median family income in Colorado.

Despite the cost, the fact remains — high-quality child care is an important societal benefit that sets up children and parents for success. Study after study shows early childhood education leads to significantly better life outcomes for children as they grow up, such as lower drug use and incarceration rates, higher paying jobs, and enhanced educational attainment. The latter two effects also are seen in parents, as they can achieve more professionally and academically knowing their children are being cared for in a high-quality environment. This is underscored for women, who often suffer, career wise, if their children lack access to affordable, quality care.

Last year, the Colorado legislature compromised to raise the income level to $60,000 annually for collecting a child care tax credit. Even still, this doesn’t cover families in the middle class — according to our report, a two-child, two-parent family has to make more than $80,000 per year to attain a middle class lifestyle. We can — and should — do more.

Below are ways for states, including Colorado, to support early childhood education, child care, and other programs for infants and toddlers. These can take the form of direct state spending, indirect spending — mostly in the form of tax credits and other types of similar expenditures — and support for child care providers and educators.

The United States Department of Health and Human Services (HHS) defines affordable child care as 7 percent of a family’s income. In Colorado, the median income in 2016 was $59,000, meaning child care should cost $4,130 per year on average.

While a sliding scale based on income can be used in concert with subsidies, the current cost of center-based child care in Colorado is $11,229 — more than twice the affordability guidelines laid out by HHS. While Colorado isn’t unique in its high cost of child care, our state is consistently near the bottom in terms of child care affordability, with the Economic Policy Institute ranking Colorado the seventh most expensive state.

Many states are trying to make child care more affordable. Colorado’s Colorado Child Care Assistance Program (CCCAP) is a prime example of a successful program in that vein. CCCAP is a direct subsidization for lower-income families to afford quality child care and early childhood education. Recent work has been aimed at making CCCAP more accessible, as well as creating a more gradual drop off of subsidization for families who begin to earn above the current threshold. Still, more must be done as the middle class continues to shrink and child care costs increase. As more families find quality and affordable child care out of reach, an even larger influx of public funding is needed.

Sixteen states provide funding for more than one-third of 4-year-olds, and funding has risen 47 percent nationally over the past five years. That funding is important and crucial, but it doesn’t address early childhood education for children younger than 4 years old. A full-scale rethinking of how we fund child care programs is needed to adequately help children of all ages. This means putting money into programs to help families afford child care on a normal scale, which isn’t currently happening in Colorado.

As mentioned above, the Colorado legislature considered a bill to raise the child care tax credit last year. Initially, it aimed to include families making up to $120,000 per year to more closely reflect Colorado’s middle class, but due to Republican opposition, it was compromised down to $60,000.

Washington D.C. didn’t hold back, though. The city council made its child care tax credit available to all families earning up to 150 percent of the median income in the area, according to census statistics. The median income there is a little more than $99,000, meaning families making close to $150,000 per year and below can take advantage of the credit. The median income for Colorado’s Denver-Aurora-Lakewood metropolitan area is $76,643; 150 percent of that is $115,000 — right at the level originally recommended by the 2018 legislation.

Another tax credit that has been helpful for families in other states is the Child Tax Credit. This tax credit is less targeted — it goes directly to families without any stipulations — but for many families, it can be a critically important part of affording child care. Four states (California, Idaho, North Carolina, and New York) currently have a version of the Child Tax Credit. Colorado has passed a Child Tax Credit, but it has yet to be funded. Legislation in 2019 is in progress to do just that.

Washington D.C. has shown how to help families afford child care and early childhood education in a targeted way, and other states have lifted families up through other tax credits. With lower- to middle-income families struggling to afford the costs of child care in Colorado, we should move forward with smart tax credits to help them.

When discussing child care, it’s also important to focus beyond the cost to families and examine the low wages for educators and providers. Low wages hurt accessibility and quality of care, as it’s hard to recruit and retain good people in these professions.

Colorado’s lack of child care providers and early childhood educators can be attributed to poor pay despite the very critical role they play in both children’s and parents’ lives. The median salary for a child care worker in Colorado is just $22,730, whereas a preschool teacher earns $27,870. These salaries don’t provide a living wage in many parts of our state. However, Louisiana and Nebraska have both put forward policies to help these workers that Colorado can emulate.

In 2016, the Nebraska legislature passed a tax credit for early childhood educators that would allow them to qualify for a tax refund based on experience, training, and educational attainment in their field. The tax credit ranged from $510 to $1,530 annually based on these various criteria.

Even earlier, in 2007, Louisiana passed a suite of tax credits — dubbed School Readiness Tax Credits — including ones aimed specifically at early childhood educators. These tax credits are available to both directors and staff at accredited child care providers. Like in Nebraska, the tax credits increase depending on education and training levels for the professionals. In 2016, they ranged from $1,630 to $3,260.

Because the tax credits were put in place more than a decade ago, data is available to measure how effective they’ve been. According to the Louisiana Policy Institute for Children, “between 2008 and 2015, teachers achieving a Teacher Level 1 credential increased… 374 percent and the number of staff that attained higher credentials increased almost eightfold.” Credits that incentivize more educated and trained educators help children receive better care, while also helping teachers stay in their chosen jobs and still achieve economic mobility.

Colorado needs policies that improve our early childhood landscape, both for families with children and the providers helping to care and educate them. There are many good proposals to study the issue and find the best path forward.

In the meantime, we need to provide immediate relief to those who are just getting by. Other states and Washington D.C. have shown the way forward and Colorado should continue improving upon their example. In doing so, we can build on best practices and still think bigger to truly provide quality and affordable child care and early education to all who need it.

JOIN US

DONATE

 

BELL POLICY HOT SPOTS

FUTURE OF WORK

AGING ROADMAP