• Establishment of a child care quality rating system: $2.8 million is proposed over two years for additional licensing staff and computer programming to implement a quality rating system for child care centers.
  
  
• Expand child care scholarships: The child care scholarship and bonus program is expanded to help more teachers and providers complete courses to improve their qualifications ($2.4 million over 2 years).
  
  
• 4K start-up funding: $3 million in the second year of the biennium is proposed to help districts with the initial costs of starting 4-year-old kindergarten (4K) programs, with preference going to districts that use community-based models of delivery.

• Quality rating systems lead to higher quality
  Quality Ratings Systems (QRS) show great promise as a mechanism to improve quality in early care and education settings. Quality rating systems, combined with resources for program improvement, have been established in 13 other states. North Carolina, for instance, has seen a dramatic shift in the quality of its child care providers, thanks to a combination of a QRS and investments to help programs improve. When the system began in 1983, only 20 percent met high quality standards; today 80 percent meet those standards. A well-designed QRS helps consumers make good choices to drive higher quality, sets clear benchmarks for programs seeking to improve, and provides a quality measurement that public and private funding can use. WCCF and the Wisconsin Early Learning Coalition recommend enhancing the Governor's proposal by including a technical assistance system to help programs improve, with an emphasis on assuring good transitions for children with disabilities moving to settings with non-disabled peers.
  
  
• Educated staff: key to quality
  The education of early care and education providers is an important key to quality. Nearly every scientific study on the quality of early care and education programs links staff qualifications to the quality of the programs. The proposal to expand scholarships and bonuses to increase staff qualifications is an important companion to the quality rating system. WCCF and the Wisconsin Early Learning Coalition recommend adding $2.3 million per year to the Governor's proposal, bringing the child care scholarship program back to its funding level in 2001-03.
  
  
• Expanded 4K increases access to early learning
  Four-year-old kindergarten (4K) provides all children, particularly those without affordable access to private preschool services, access to early learning experiences that help prepare them for school. 4K delivered through a collaborative approach with community-based agencies can be a win-win situation for school districts and the child care and preschool programs they partner with. WCCF and the Wisconsin Early Learning Coalition support the Governor's start-up proposal, and recommend also adjusting the school funding formula to provide incentives for delivering 4K via "community approaches."

And now the bad news: Wisconsin Shares Child Care Subsidy Program

What's being proposed?

• Significant reduction from current spending level: The budget bill, as initially introduced, would fund Wisconsin Shares at $314.9 million in year one and $315.3 million in year two, while the actual spending level for the current year (2006-07) is estimated at $329 million. Nevertheless, the proposed funding levels are slightly higher than the base appropriation for the current year, which reflects that the appropriation levels have been considerably too low over the last several years. The total proposed funding level for 2007-09 is $69.6 million less than it would take to continue the current subsidy program through the biennium without major changes, according to the Legislative Fiscal Bureau's summary.
  
  In mid-March the Governor sent a letter to the Joint Finance Committee requesting a number of changes in his budget. He identified savings in general fund dollars in other parts of the budget and recommended using those savings to provide an additional $7 million per year for Wisconsin Shares above the amounts in his original proposal. The added funding would be used to avoid a new round of co-pay increases.
  
  
• Major changes in subsidy policies affecting families and providers: The Governor's budget proposes to reduce expenditures by reducing eligibility for the program, freezing payment rates, adjusting payment policies related to child absences, and establishing waiting lists. The bill would also increase parent co-payment requirements again, but the Governor subsequently reversed his position on that change. These policy adjustments - including a new round of co-pay increases - would cut costs by an estimated $69.6 million over the biennium.

What are the Implications?

• Families would pay higher co-pays.
  Families could be required to pay co-pays that are 10 percent higher, even after co-pay requirements were increased by 8 percent in March 2007. Low-income families are likely to be hard pressed to manage payments that high. As noted above, the Governor subsequently proposed adding $14 million to the proposed budget for Wisconsin Shares and eliminating the second co-pay increase. Nevertheless, this is still likely to be one of the options the legislature considers. (Estimated cost savings in the original bill: $9.2 million)

• Eligible families would go unserved. The budget proposes waiting lists, so eligible working families would be denied assistance. Waiting lists would be implemented if, as anticipated, funding is insufficient to meet demand. Wisconsin has not had a waiting list since 1996, prior to the implementation of welfare reform. (Estimated cost savings: $13.1 million).
  
  Eligibility ceilings would be lowered so that new applicants would not be eligible if they had income higher than 175 percent of the federal poverty level (FPL), instead of the current ceiling of 185 percent FPL. These families would lose ongoing eligibility at 190 percent FPL, instead of the current 200 percent FPL. Wisconsin would have lower eligibility thresholds for child care than those for Badger Care. (Estimated cost savings: $6.6 million)
  
  
• Child care providers would receive significantly lower payments.
  Frozen payment rates: The Governor's proposal would freeze payment rates at the 2006 level, adding two more years to the payment freeze that was instituted in 2007. For over 20 years, child care payment rates have been based on annual market surveys to assure that families had access to 75 percent of the market programs. The new proposal would end that policy. (No cost estimate available, but child care prices have typically increased by 3 percent or more annually)
  
  Absence policy: The proposal would institute a policy that the subsidy program would not pay for absences in licensed child care when attendance is less than half the number of authorized hours per week for enrollment, with some exceptions. This proposal would reduce payments to providers and result in unreliable cash flow, based on attendance patterns that they cannot control. (Cost savings estimate: $40.8 million)
  
  Child care quality is likely to be negatively affected: Child care programs are likely to have trouble sustaining current wage levels, leading to difficulty attracting and retaining qualified staff - the most important ingredient to quality early learning.

The promising efforts to help improve early learning for Wisconsin's children may be overwhelmed by the funding crisis facing child care. The child care subsidy program has been hailed as the cornerstone of welfare reform in Wisconsin. The fact that federal funding has been stagnant should not prevent our state from ensuring that low-income families can work, vulnerable children receive needed services, and child care providers receive fair compensation for their services. WCCF and the Wisconsin Early Learning Coalition support full funding for Wisconsin Shares.