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Facing deep fiscal challenges, child care providers urge lawmakers to adjust reimbursement rules

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Facing deep fiscal challenges, child care providers urge lawmakers to adjust reimbursement rules

Feb 20, 2024 | 7:02 pm ET
By Evan Popp
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Facing deep fiscal challenges, child care providers urge lawmakers to adjust reimbursement rules
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Child care facilities in Maine are in crisis mode. 

That’s what center directors and advocates told lawmakers Tuesday during a hearing on a bill before the Health and Human Services Committee that seeks to help child care facilities by adjusting subsidy reimbursement rules and creating an emergency fund to assist financially struggling operators. 

LD 2199, sponsored by Senate President Troy Jackson (D-Aroostook), would require the Department of Health and Human Services to reimburse child care providers based on the number of kids enrolled at a facility instead of the number of attendees each day.

Jackson said under the current system, providers lose income when kids within the subsidy program — which helps low-income families afford care — are sick or otherwise don’t show up. For an industry already operating on extremely tight financial margins, Jackson said that cost adds up and can be the difference between a facility staying open or closing. 

In all, current reimbursement rules cost child care providers that accept subsidies about $5 million a year, said Arthur Phillips of the Maine Center for Economic Policy. 

In pushing for the bill, advocates also pointed out that the federal government put forward a proposed rule last year that would make changes similar to the ones within LD 2199.

Jackson’s bill would build on action taken by lawmakers and Gov. Janet Mills last year that doubled stipends for child care workers in an effort to raise wages in a chronically underpaid industry. However, Mills in her recent supplemental budget budget plan proposed delaying the rollout of that stipend until July 1 and turning an ongoing stipend to child care workers with young children in the child care subsidy program into a limited two-year initiative. 

Jackson said he is extremely upset by the proposal to delay the stipends.

“There will be no budget that gets passed with any [child care stipends] stripped out of there because it’s just too important for far too many people across the state,” he said.

‘It breaks my heart’ 

A myriad of child care providers spoke in favor of LD 2199 during Tuesday’s hearing, discussing how the current system makes it nearly impossible to survive financially. 

“Most programs operate on such slim margins that if one unexpected life event, or one extended illness, kept them from going to work, they would most likely have to close,” said Jennifer Michaud, owner and director of Kids Kove Childcare and Learning Center in Sanford.

Michaud also noted that private payers (those not eligible for subsidies to help them afford child care) have to pay even when their kids miss daycare, creating inequity within the system.

Center directors said this structure creates a situation where it often makes more financial sense for facilities to not accept kids whose families are eligible for child care subsidies because they lose money under the current reimbursement rules. 

Heidi MacAllister McDonald, owner of Heidi’s House Child Care Center in Scarborough, said the reimbursement system essentially function as a penalty for operators.

“It doesn’t impact my expenses,” McDonald said of sometimes not getting the full reimbursement amount each day. “My rent didn’t change, my lights didn’t change, my heat didn’t change, my insurances didn’t change. None of that.”

“I no longer take any subsidies,” she told the committee. “And it breaks my heart because I want to. But I can’t.” 

The dire financial situation within the child care field has led to hundreds of facilities in Maine closing in the last few years and many families struggling to find open slots or pay for the cost of care. In all, the lack of child care across Maine could be costing the state about $400 million a year, with multiple proponents of LD 2199 noting that such providers are the workforce behind the workforce because parents can’t go to their jobs if they don’t have stable child care. 

Laurie Davis of Greenville, volunteer treasurer for the only licensed child care center in that region, said that is abundantly clear in her area. 

“In Greenville, as the only child care center, if we’re not open, occupational therapists don’t go to work at the hospital and the school, nurses don’t work, and people don’t work in a number of our businesses. … The community would grind to a halt.”