Budget cuts for Idaho Child Care Program compounds financial troubles for parents, providers

REXBURG (Idaho Capital Sun) — As Brigham Young University-Idaho’s new school year starts up in September, Kearis Ochs was preparing for a round of new parents to enroll kids in her local child care centers. 

But after the health department announced budget cuts to a child care subsidy program, she’s expecting “a lot of lost business for us, and a lot of parents scrambling to find childcare that they can afford.”

About four in 10 of the children who come to her centers, called Whole Child Early Education, are on the Idaho Child Care Program, which gives parents subsidies to pay for some child care costs.

RELATED | Idaho halts accepting new families after $15M budget shortfall in child care grant program

She and others worry that new cuts to the program by the Idaho Department of Health and Welfare — which officials say they made to avoid a projected budget shortfall — could compound financial struggles for Idaho child care centers and make it harder for low-income families to access affordable child care.

“… This could force many child care centers in Idaho to finally close our doors, after everything we have fought through in the last four years to keep helping these kids,” she wrote in a letter.

The cuts — announced last week — have prompted “a lot of anxiety and uncertainty” among Idaho child care providers, Idaho Association for the Education of Young Children Executive Director Robert Sanchez told the Idaho Capital Sun in an interview. 

“Knowing that there was already significant challenges and barriers before the pause, the anxiety level kind of skyrocketed,” he said.

Idaho Department of Health and Welfare suspends new enrollment in child care program

Attempting to balance the program’s budget ahead of a projected shortfall, the Idaho Department of Health and Welfare suspended new enrollments to the program and announced the agency would delay expected benefit hikes, among other changes. 

Health department Director Alex Adams told reporters last week that officials prioritized providing more families reduced benefits. And officials say they exempted vulnerable children from the enrollment pause.

About 7,800 children are now on the program, which relies mostly on federal funds. But officials project around 300 children would enroll in the program each month, and that the program could grow to 8,100 enrollees by July 2025. 

The Idaho health department “is committed to supporting families most in need, child care providers, and local economies by operating the … program within the boundaries of the law and (the agency’s budget) appropriation,” agency spokesperson AJ McWhorter told the Sun in a statement this week. “Keeping the program within budget helps ensure its future.”

Families and child care providers in Idaho rely heavily on the program, said Emily Allen, policy associate at Idaho Voices for Children.

The program, she said, “is the backbone” for Idaho’s child care industry. 

“They made the wrong changes,” she said of the state health department’s cuts. “And they didn’t consult providers or families or community partners in this at all. This is a complete shock and surprise.”

After the health department’s cuts to the program, Allen said she expects some Idaho child care providers will close — leaving parents with fewer options.

Idaho child care providers already financially struggling

Child care providers in Idaho are often small businesses with slim-margins and small profits, Allen said. 

“They are not in it to make big bucks here. They are in it to provide care for families because they care deeply about young children,” she said.

In 2023, over 2,400 people quit child care jobs in Idaho — contributing to a 37% turnover rate for the industry, as many workers cited low pay as among the reasons they left, according to a report by IdahoSTARS. That left the Idaho industry with 3% fewer workers.

The average wage Idaho child care workers earned was $13.50, the report found. The Idaho workforce is more than 94% women, with a median age of 32.

“Working in child care is rooted in a passion for early childhood, but the job is overly taxing and drives individuals out of the field,” the report found. “Low pay, long days, constant changes in leadership, children, co-workers, and requirements as well as the physical and emotional toll of the job all contribute to leaving the field.”’

Idaho is one of few states that doesn’t invest public dollars into child care, according to a 2022 report by Idaho First Steps Alliance. 

Almost half of Idahoans live in “child care deserts,” the report found, which are defined as “areas that lack sufficient child care options to meet the needs of young children.”

“There is already not enough child care available in Idaho to meet the need,” McWhorter told the Sun. “Earlier this summer, (the Department of Health and Welfare) waived rules that may have made it possible for providers to increase the number of child care spaces available for children aged 2 and above, hoping to make more seats available for Idaho children.”

Earlier this month, Boise-based Micron Technology — planning a new $15 billion fabrication plant — announced that its employees could soon access a child care center in Boise, Idaho Education News reported. 

“Idaho cannot afford to lose more child care spots, “ Allen said. “We were in the path of expanding availability.”

How will the cuts by the Idaho Department of Health and Welfare work?

State health officials have exempted some vulnerable groups – such as kids who are in foster care, who are experiencing homelessness, who have disabilities, and who are receiving preventive services through the child welfare program, along with families receiving aid through the Temporary Assistance for Families in Idaho program — from the freeze in new program enrollments. 

People already enrolled in the program aren’t subject to the pause, McWhorter told the Sun, so they could “for example, add a new baby to the program during the pause.”

Once the enrollment pause is lifted, the health department plans to reduce the program’s income cutoff for eligibility to 130% of the federal poverty limit, down from the 175% that the department raised it to in recent years. 

About 1,000 families currently enrolled would be affected if the eligibility drops to 130%, McWhorter said. But if they are no longer eligible under the lower income cutoff, they won’t immediately be disenrolled, McWhorter said.

“Rather, a yet-to-be-determined phase-out plan will occur for those families who currently qualify for (the Idaho Child Care Program), but no longer qualify after recertification,” McWhorter said. “This is important to help families plan for the future and continue taking steps toward self-sufficiency.”

Parents on program could pay for more child care

The program gives parents an allowance for child care. But if child care centers charge more than that, they can ask parents to pay the difference. 

Additional child care costs on top of co-pays only apply if families go to providers that charge more than the program’s monthly voucher, Adams told reporters.

The health department usually changes the program’s benefit rates in October, he said, after it completes its local market rate analysis — as required every three years by the federal grant. But that won’t happen until July 2025, after Adams said the state health department’s new analysis this month showed local market costs rose by about 25%. 

So much has changed since the health department’s last rate study three years ago, Ochs said — like higher costs of living, supplies and employee pay. She says she charges what “we feel like is kind of bare a minimum of staying in business.”

Ochs, who owns Rexburg child care centers, said her prices and prices at many nearby centers are already much higher than the Idaho Child Care Program pays. She says that leaves parents to pay the difference — sometimes $200-300 more. 

When the health department implements the new rates next July, the program’s reimbursement rate will rise “for all provider types,” McWhorter said.

“Providers will get a raise. Like probably all working Americans, it won’t be as much as hoped,” he said. 

Average Idaho child care costs were over $8,000 a year, according to an August 2022 report by Idaho First Steps Alliance. It’s even higher for Idaho infant care, which was estimated that year to cost more on average than in-state college tuition.

“Pulling the rug out from under those families is not only just really unfair. It’s a shock,” Allen said.

$15 million budget deficit is worst case scenario, health department says

The program — funded mostly by a $65 million federal Child Care and Development Block Grant — has a $52 million budget for subsidies this fiscal year. But the health department projects costs could be as high as $68 million. 

But that $15 million projected shortfall is a worst-case scenario, Adams told reporters last week. He says the deficit could be as low as $5 million.

“But we know that we’re in the red, which is why we’re taking action here in August, so that by the time the Legislature rolls around, there’s a robust conversation about where do we go from here?” Adams told reporters last week.

Allen said she was also skeptical about the budget shortfall projections. In legislative budget hearings, she said there was no suggestion that there weren’t enough funds to sustain the program with existing enrollment levels. 

Adams says the health department projects the higher program costs were driven in part by reduced families co-pays for care, higher reimbursements and raised income cutoffs for families to be eligible — along with the higher local market rates.

“This burst on our radar screen a couple weeks back, when the local market rate study came back and people saw the magnitude of that,” Adams told reporters last week.

Allen told the Sun the agency could go back to the Legislature, and ask for a supplemental budget. 

Last week, Adams, the governor’s former budget chief, acknowledged that option. 

But he said, “this is not in state law as an entitlement program. And because it’s not an entitlement program, agencies have to live within their budget.”