State committee wrestles with Montana’s childcare capabilities, low wages and staff retention

Montana’s Economic Affairs Interim Committee wants to take a deeper look during the next year into ways to boost wages for childcare workers, and continue to find funding sources as federal pandemic programs that have helped keep childcare providers afloat during the past three years expire.

Committee members received a multi-hour update on childcare in Montana and its impacts on the workforce from both state officials and economists at a meeting Tuesday, as well as from people who run organizations trying to make childcare more affordable and accessible so more parents can work and not worry about putting too much of their paychecks toward care for their kids.

After the presentations, lawmakers acknowledged there was significant work to do on several facets of the workforce and childcare issues, as childcare is now costing Montanans, on average, about 28% of their median household income, and more than it costs to send a student to Montana State University each year. Cost-of-living and educational changes between urban and rural Montana have also compounded disparities and issues, the committee was told.

“Local chambers (of commerce), economic development agencies and schools are relaying the message to us that the lack of accessible quality care negatively affects employers’ ability to recruit and retain employees,” said Caitlin Jensen, the executive director of Zero to Five Montana. “And state leaders are looking for a solution, however, quickly learning that there’s no silver bullet. This is a complex challenge, and it’s one that we really need to look at holistically.”

Montana’s licensed childcare capacity met only 43% of the demand last year, and for most of the rural counties, less than one-third of the demand, Department of Labor and Industry Interim State Economist Amy Watson told the committee.

She said just about 31% of infants ages 2 and younger have a place where they can be cared for, Watson said, and much of the lack of capacity can be attributed to scarcity in the workforce, which has seen high turnover and retirements, and wages that often only pay between $20,000 and $40,000 in a state with increasing costs of living.

Carrie Krepps, the executive director of Florence Crittenton Family Services in Helena, said while grants have helped the organization improve a new building to increase capacity from 24 to 48 spots, there are currently 56 children on the waitlist, so even after expansion, there will still be kids waiting. She also said the organization has had to pay for about 30-35% of staff wages through fundraising that smaller, newer organizations would not be able to utilize.

A 2020 study the department conducted with the Minnesota Federal Reserve found 40% of businesses in Montana were having difficulty hiring people because of a lack of childcare, and a University of Montana study found an inability for employees to get childcare was costing the state $55 million a year in lost business revenue.

As of this month, Montana had 950 childcare providers among several different types of licenses. Licensed childcare centers, which can care for 16 or more children, provided care for nearly three-quarters of the 22,177 children at childcare centers.

But just around 5,000 infants received care from licensed facilities, according to Department of Public Health and Human Services Childhood and Family Support Division Administrator Tracy Moseman. There are 5,162 approved staffers at the various facilities.

During the past three years, the state has utilized around $150 million it received through three federal packages to try to stabilize the childcare sector, increase eligibility and reduce copayments for the Best Beginnings Scholarship program that helps offset costs for low-income families, and to offset losses by providers and keep them operating during the economic churn of the pandemic.

More than 700 providers applied for and were granted stabilization grants worth $62 million to try to keep them running, with extra money going to counties, mostly in eastern Montana, where there are few providers. The federal money helped organizations, like Zero to Five Montana and Raise Montana, work with providers to come up with projects to try to retain staff and improve their care. Other dollars went toward finding career pathways through apprenticeships to try to put more Montana youth on a road toward working in childcare.

Moseman said those efforts proved beneficial, and now, some of the more specialized community efforts will be studied to see how the state can improve laws and programs to boost the childcare workforce and get more parents with children back to work.

The department launched a child care worker program in October to pay for childcare workers to get childcare for themselves in subsidized slots, and this month, the state made a change to a tiered enforcement model for licensing.

She and other speakers said they have anecdotally learned that insurance companies are looking up public records for minor license infractions and pulling insurance coverage for the businesses – making it increasingly difficult for the businesses to be insured and creating another hit to their abilities to stay above water financially.

Moseman said the idea behind the tiered enforcement process was so low-risk infractions that don’t put a child in harm’s way or involve simple paperwork errors don’t go onto the public portal and affect the licensee’s insurance.

“It’s a complex issue,” Moseman said.

Another factor in the discussion aboiut childcare and Montana’s workforce is that more than 250 Montana schools in 46 counties now have four-day school weeks, particularly in more rural parts of the state already without a robust childcare network.

That is putting pressure on parents of the schoolchildren to figure out what to do with them on Fridays, and also on school-age childcare programs, which are struggling to hire workers to fill the odd hours – longer days on Fridays but short hours before and after school on the four days children are in class.

Rachel Wanderscheid, the director of the Montana Afterschool Alliance, said most school-age programs provide for kids older than age 5 but are not licensed and thus not eligible for state funding. She said she would like to see the state be able to provide licenses for those kind of programs, which she said would be “a huge benefit.”

She and Xana Burg, the KIDS Count director for the Montana Budget and Policy Center, said often, the four-day week leads to a cost-shift in terms of who is caring for those children on Fridays – as they still need transportation, meals, and physical opportunities that are more difficult to provide in rural areas of Montana. They would like to see the committee address some of those topics during the interim.

Officials with the Office of Public Instruction said the growth of the four-day school week in Montana has happened quickly – going to 260 schools on the schedule this year from 10 in 2007. They say the department is utilizing community learning centers competitive grants for some of these areas to provide for better childcare options but are still seeing challenges.

“Recruiting staff, as you heard earlier, is difficult because of the different hours that the programs are operating, so they might get an hour after school and then only two hours on Friday,” said Michelle Cusey, the Innovation and Improvement Senior Manager for OPI.

Several of the speakers who do not work for the government did praise the state’s work with the federal grant money in trying to find better approaches by working with locals. The group is awaiting the results of a market-rate study that will determine new market rates for the next three years, as well as information on how the expansion of the Best Beginnings Scholarship eligibility has worked so far to see where else they, as providers, should focus their efforts moving forward.

In talking about how to move forward, most of the committee’s lawmakers agreed that there needed to be a focus on improving wages for these specialized caregivers, whose median wage is less than $13 an hour and only around $20 an hour after 10 years in the industry.

Those wages affect the state’s ability to retain workers in the industry, which in turns affects businesses’ ability to provide care, which only deepens the problem with parents and their ability to both work and afford childcare when they are doing so, the committee was told.

Lawmakers agreed they did not like the cliff for families receiving the Best Beginnings Scholarship, where if their income goes above a certain level, they immediately see large increases in their copays.

They also pledged to analyze how to increase wages, saying current ones were not livable or sustainable, to study why insurers are dropping providers and find solutions, and look into grant and tax credit programs for after-school programs, especially in areas that have four-day school weeks.

“We all kind of have always known that there was an issue,” said Sen. Shane Morigeau, D-Missoula. “It’s complicated, but I think we have a good core group of people who care about this issue, and so it will be nice to start chipping away at it.”