Minnesota’s Child Care Crisis: Bad Legislation or Purposeful Market Shift?

A Collaborative Work by Elizabeth Bangert and Molly Rieke-Hofschulte

If you know anyone with young children, you’ve probably heard them talk about child care; the supply and the cost. But when did Minnesota’s Child Care Crisis begin? And how will we right the ship?

I myself am a child care provider and as such I am intimately familiar with the “industry woes”. It’s not just a business to me, children deserve an advocate and someone who will go to bat for them, no matter how great the cost. And for me, the cost of going up against a power-hungry state agency, DHS, has afforded me the pleasure of being one of their top targets.

In my opinion, the Child Care Crisis, ramped up less than 10 years ago. Did Minnesota experience a baby boom? And if not, where did all of the child care providers go?

The Center for Rural Policy and Development released a report in 2016 entitled “A Quiet Crisis: Minnesota’s child care shortage”. [1] The report has been used across Minnesota to drive legislation and the conversation. The following is an excerpt:

  • The U.S. Census Bureau estimates that in 2014, 74% of Minnesota households with children under age 6 had all parents in the workforce, third highest in the nation behind Iowa and South Dakota at 75%.
  • The change in the number of children age 0-4 between 2000 and 2015 varies from county to county, but the percentage of the total population they represent in each county has stayed remarkably steady, around 5% to 7%. In each county, that percentage barely changed over time, varying between a 2-percentage-point drop and a 1-percentage point increase. Only in Mahnomen County did the under-5 group increase by more than 1 percentage point, going from 7% of the population in 2000 to 10% in 2015.[2]
  • Between 2006 and 2015, the number of licensed in-home family child care providers decreased by more than one quarter (27%) across the state. In terms of capacity—the total number of children providers are licensed to care for—that translates to a loss of approximately 36,500 spaces.[3]
  • Over those same ten years, the number of child care centers increased by 8% statewide and their capacity grew by 27%, enough to fill about two thirds of the gap left by in-home providers exiting the business.

So, if the total number of children in need of child care remained relatively stable over time, then how did the child care crisis originate?

It’s simple, yet complicated, and for child care providers it’s a sensitive topic, because it’s personal.

As this legislative session ramps up, with solutions coming from both sides of the aisle, I will be unpacking the complicated system that is Minnesota’s Child Care/Early Childhood climate.

A little about me. As I referenced, I am the owner of a small, private, Christian, nature based early childhood center in rural Minnesota. Children spend their days in the garden, snowshoeing, or playing – because play is truly how children learn. I have a BS in Elementary Education, an MS in Educational Leadership and I have over 12 years’ experience in the Public School System, Non-Profit Sector, and Private Sector. This has provided me with a foundation of understanding the complex systems within our state.

I believe childhood is sacred and that it should be preserved – don’t even get me started on the number of children utilizing psychotropic drugs, as they are increasingly crammed into environments that are not developmentally appropriate at earlier and earlier ages, but I digress.  Having said that, I firmly believe in Parental Choice, which is something that most parents no longer have regarding who cares for their children ages 0-5, because of the government – err crisis.

As I mentioned, I will unpack this issue piece by piece, and I will do my best to explain it as thoroughly, yet simply, as possible; a feat that will be challenging to say the least, due to the complexity of our state’s programs.

The Child Care Crisis can best be explained in a series of seven steps taken by our government, both Federally and at the State Level.

  • Fund It

In 2014, the Federal Child Care Development Block Grant was authorized. This restored funding for the Child Care Assistance Program commonly referred to as CCAP; the same program that has recently gained media attention in Minnesota due to fraud. In 2016, it was reauthorized once again through the Child Care Development Fund. [2] States also match these funds.

  • Introduce the Quality Rating System

Under the Federal Race to the Top Grant, Minnesota adopted a Quality Rating Tool, known as Parent Aware. [3] This rating system is voluntary and assigns providers a rating of 1-4 stars based on a series of indicators.

  • Dismantle the Existing Market

This is where the controversy begins. Legislators will claim that this was not the intent, however for many years’ child care providers, both family and center based, have taken time to go up to the Capitol to express their concerns. The reality is that small family and center-based providers are declining; family providers are fairing far worse since the attempt to unionize them failed a few years ago. [4] While the union attempt failed, the state tightened the screws on small, independent family and center providers; an allegation that is grounded in a 3,000 page report that my colleague and I compiled derived directly from Public DHS Documents. Please feel free to throw a paper airplane at the target DHS placed on my back if you ever run into me at the Capitol.

At the same time, the Legislature created a loophole for Public Programs such as Public Schools and Head Starts to be exempted from the regulations that private businesses are held to.

  • Champion the Centers

It’s true. As the owner of a center some may find it odd that I am agreeing with this, but the goal was and still is to push out family providers. If it weren’t, they would be addressing the regulatory issues, but the DHS is ignoring them. But Child Care Centers are expensive, and they require Capitol, so the Legislature authorized grants to Initiative Foundations which were carried out through DEED and EDA efforts. Which of course, were funded by your tax dollars. Is it hot in here or are you just doing a slow burn?

*I’m going to “press pause” here for a moment. We did not have a child care crisis nor would we have one had the Legislature reigned in the Department of Human Services. But they did not and so the problem persists. Back to the story.*

  • Introduce CCAP Differential Payments to Drive Out Small, Private Providers

Here is where the Early Learning Scholarships come into play; the champion of both sides of the aisle. In theory they sound lovely. They sound like a Voucher. Unfortunately, that is far from the truth. Early Learning Scholarships can only be used at Parent Aware Rated Programs. And as of 2020, they will only be able to be used at 3 and 4 Star Parent Aware Rated Programs. In addition to the scholarship funds, parents whose children attend a 3- or 4-Star Parent Aware Rated Program also receive a higher CCAP Rate of 15% or 20%. [5]

In theory, this was to help cover the complete cost of child care; in reality, it was the mechanism to steer parents to the Parent Aware Rated Programs; a voluntary rating system. The Market Rates for CCAP have not been adjusted since 2014. The problem is that while they may not have been adjusted, providers with a higher Parent Aware Rating received a higher payment per child, and this drove small, private providers who were unrated, out.

Now you may be thinking: “Well wait a minute. Anyone could have joined the rating program”. Yes and no. First, the program began as a pilot around the cities area and then expanded statewide. Second, Public Schools, Head Starts, and Accredited Programs receive an accelerated rating – one might even call it almost automatic. For small programs, it is incredibly hard to complete the trainings, as well as purchasing the curriculum and assessment tool. And for Family Providers, it would be nearly impossible to complete all of the steps as one person, rather than a center where multiple staff can assist.

  • Referendums

Is that a car burning out in the gravel or is that sounds of your tax dollars in a blender? You many have noticed a sudden surge of School Referendums. While the funding was available for Early Learning Scholarships, the space was not, and so schools began a race to push through referendums for school improvements. Another cost on tax payers. You might want to crack a window, because it’s not going to cool down anytime soon.

So here we are; we’ve arrived at the final phase. By now I hope you have a better understanding of how the child care crisis was born. It was purposeful, it was intentional, and we are now seeing the end goal come to fruition – which I’m about to explain.

“But wait a second, what about quality?” You may ask. Certainly, that was the goal. The problem lies in a 2018 report by the OLA[6], which discloses a number of issues within programs that are funded by tax dollars; but above all, it reveals that these programs do not adequately assess their effectiveness. Rut row.

So now here we are; almost a month into the 2019 Legislative Session and big-ticket tax funded child care is hot on the agenda. HF1 and HF 30 are carbon copy bills that seek to increase the income cap for CCAP and well as Early Learning Scholarships; effectively allowing a family of 4 who makes less than $120,000 per year to access “discounted or free” childcare – you know what that means, get out your wallets folks. In addition, a number of other House Files seek to allocate funding for Capitol Improvement Projects, such as buildings – over $15 million dollars to be exact. That’s right, your tax dollars are going to fund facilities for private businesses all to solve a child care crisis that our own government created. Don’t you just have ALL of the feels?

So now you know the truth. You’ve been let in on Minnesota’s dirty little secret.

There never was a child care crisis. It was the product of “bad legislation” at best, and a push for all children to join the Public School at worse. Spoiler Alert: I believe it was the latter.

I’ll grab some popcorn to make from the steam coming out of your head.   

Parental Choice is under attack in St. Paul and they are using your tax dollars to fund it.

The bigger question at hand is the one that everyone wants to seem to shut down each time I bring it up. Here it is:

Is the Parent Aware Program a violation of the Sherman Antitrust Act of 1890[7]? Passed under President Benjamin Harris, it sought to prevent the artificial raising of prices through restricting trade or supply for a product that is not superior.

The OLA Report of 2018 provides evidence that there indeed is no evidence of accountability in these programs both fiscally and with regards to outcome. What remains to be debated is the legality of whether or not fixing the prices of the market through CCAP Rates by providing a percentage differential for a product that is not proven to be superior, which in turn pushed out the majority of the competition.

Roosevelt utilized the Sherman Antitrust Act with the railroads and while I’m not an attorney, I did promise to Erin Brockovich this to the end because that is what families and children deserve.

I don’t know about you, but I hear a train coming.


[1] https://www.ruralmn.org/a-quiet-crisis-minnesotas-child-care-shortage/

[2] http://www.ncsl.org/research/human-services/2014-ccdbg-reauthorization-act-implications-and-opportunities-for-state-legislatures.aspx#Reauthorization

[3] https://qrisguide.acf.hhs.gov/states/minnesota

[4] http://www.startribune.com/minnesota-childcare-providers-say-no-to-union/370677131/

[5] https://www.dhs.state.mn.us/main/idcplg?IdcService=GET_DYNAMIC_CONVERSION&RevisionSelectionMethod=LatestReleased&dDocName=CCAP_092403

[6] https://www.auditor.leg.state.mn.us/ped/2018/earlychildhood.htm

[7] https://en.wikipedia.org/wiki/Sherman_Antitrust_Act_of_1890

2 thoughts on “Minnesota’s Child Care Crisis: Bad Legislation or Purposeful Market Shift?

  1. I have been a provider for twenty some years and I realized this was coming in the last twenty years. Government just didn’t know what to do with us to get us out! Rules were getting a bit crazy for a family in the home. They were taking all the normal living away from the family that was providing childcare. In other words, they were trying to turn us into a center. We can no longer call this our home because we cannot live and function as a family if we choose to do childcare. Everything Dakota County says is for the good of the child seems like an impossible situation for a family to live under. I am alone so I can adjust my home to the county’s rules. Which every year I am never sure of, and if I will be given a ticket or an infraction, as their rules change from one year to the next and the licensor can interpret them the way they feel at the time. YES government has won and now all tax payers will be paying taxes for FREE daycare. And the government will give out the money, control the centers and get back a heavy return in the tax structure. A see this as a form of socialism. Which I am very much against.

  2. Thank You for putting this out there in simple language. The other Problem I believe is that Parents are not TRULY AWARE of what is going on and what it Actually means or how it will affect them.
    I am a small town southern Mn provider. I Do Not make all the big money that they talk about when Saying High cost of daycare. I make enough to pay my bills and a little left over after all the costs. I am phasing out because of all the new regulations and the Very Real Threat of being found guilty of something. My kids are safe, get good meals, play outside and have learning time.
    The Parent Aware is a joke as far as I am concerned. I did it 1st time got a 2 star rating, the next time I tried for a 3 star. I sent all my paperwork In, expecting to at least get a 2. Nope got it back as a 1. Why? Because the did not like one of the forms i used for observation, so told me to redo on different form. So i actually did a new observation on new form. I was denied because the observation was made after deadline of application. REALLY!!! They new I had did 1 before the deadline just didnt like the form. So I am done WILL NEVER do it again or recommend. It does not provide quality care, all it does is make providers fill out a bunch of paper work in a certain format that they want. You better make sure you cross every T and dot every I or they will will reject it. You have are using curriculums, observation kitsch. Making sure you do them on the right intervals, having conferences with parents. We have to look up and give parents all the area Medical help, Mental, Dental, Food, school, among other things for them. That includes Contact person, address and phone number and what they do at each. Ridiculous!!! My 1st time I made mine into a nice little handout 3 fold for parents. Nope. Each thing had to be listed under the right number and letter according to their application. I could go on and on.
    The DAYCARE shortage is because of GOVERMENT sticking their nose in where it dont belong. I understand regulations and saftey, food program but getting beyond crazy. Counting the days till I can be Done!

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