Day care operators: Low reimbursement rates causing financial turmoil for Abilene centers

Low day care subsidy rates posing big problems for our child care providers

ABILENE, TX - Day care subsidy programs are put in place to help low income families pay for childcare. Parents can apply for the assistance if they work or go to school and need financial help to enroll their children in daycare.

The subsidy rates are approved by local workforce boards. There are 28 of those boards throughout the state of Texas.

Mary Ross is the Executive Director of the Workforce Center of West Central Texas, and she explained the complicated system. She said each workforce board has a list of providers in the area who accept these children. "We have an agreement with that entity or individual and the parent pays a portion of the cost based on their income and then we reimburse the provider the remaining amount of that cost."

One local daycare is saying that's only partially true.

Cynthia Pearson, President of Day Nursery of Abilene, said they are not receiving the funding they need to keep up with other rising costs. They especially took a hit when minimum wage was increased in the late 1990's. "The increase in the cost of food that everyone experiences, fuel costs, electricity. Everything has gone up," said Pearson.

The subsidy rate for the West Texas region covers 19 counties, including Brown, Callahan, Coleman, Comanche, Eastland, Fisher, Haskell, Jones, Kent, Knox, Mitchell, Nolan, Runnels, Scurry, Shackelford, Stephens, Stonewall, Throckmorton and Taylor.
However, Day care centers in this region have not seen an increase in reimbursement rates in seven years. Three of those years were due to a freeze imposed by the state.

The reimbursement rates are so low that some day care centers in Abilene have severely limited the number of subsidized children they will accept, and some have stopped taking them altogether.

Ross, with the workforce board, says they would like to give a rate increase, but their hands are tied. "I think it would be a good thing. I understand times have changed and costs have gone up so certainly we want to increase rates. But sadly we'll probably never be able to pay day care centers as much as what they'd probably like to get, because we just don't have that amount of money," said Ross.

Ross says that money comes from the Federal level, from the United States Department of Health and Human services.

They appropriate a certain amount of money to the state level which is then dispersed to workforce boards.

Johnny Griffin, the Executive Director of the Concho Valley Workforce Board, said that money is divided using a mathematical formula which can be found in the Texas Administrative Code.

It's based on the relative population of total children under the age of five, as well as the total number of people whose income does not exceed $100,000 per year. They determine the monetary amount and the target number of children that should be served for each area. They also survey providers every two years to find out how much they require to operate.

Pearson said that the formula has problems, and the need for a rate increase is imperative.

She said with the number of state-subsidized children in Texas, centers across the state have chosen to stop taking these children, or have been forced to close their doors.

"Every child deserves a good day care experience so they can prepare for school and life," she said.

Ross said it's the individual provider's responsibility to manage the limited money they do receive. "It's a business decision as to how many children you're going to accept from us. If you know that you're going to not get as much money from us, then you may not want to accept as many of our children," said Ross.

Pearson said good childcare is vital to growth in a local economy, without child care, many parents aren't able to go to  work. Pearson said the reimbursement rate is so low, they've been forced to dip into reserve funds just to keep the Day Nursery of Abilene operating.

Pearson stressed the importance of child care to the community. "Childcare is not babysitting. It is not an easy job. I would challenge anybody who thinks it is to go and take care of 4 infants all by themselves all day long and I would bet that they couldn't do it," she said.

1,860 children were eligible for and used the subsidy rates this past September.
Day nursery served about 300 of those children. Pearson said Day Nursery loses about $3 to $5  per day per child, or up to $10,000 dollars every month.

We reached out to State Representative Susan King for more information about how the state sets the rates for each area, but she was unavailable for comment.

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