Arizona suspends child-care waiting list, increases provider reimbursements

Arizona families needing child-care help got a boost this month when $112 million in federal funds became available, leading the state to suspend its child-care waiting list for the first time since the Great Recession.

This means providers will be reimbursed at much higher rates, and that those who qualify for assistance should no longer have to wait for help.

That second objective is where a problem may lie.

The challenge, at least initially, will be finding enough spots for kids who need them, since Arizona lost hundreds of providers of subsidized child care over the last several years.

“This is an opportunity for providers to come back into the system,” said Michelle Saint Hilarie, senior statewide program director for child care resource and referral with Child & Family Resources Inc.

“We are hoping to increase the supply to meet the demand,” she said.

The additional federal funding will be used in three primary ways, said Brett Bezio, deputy press secretary with the state’s Department of Economic Security. These include:

• Increasing provider reimbursement rates by an average of 30 percent.
• Suspending the waiting list for the foreseeable future, allowing approximately 440 families and 800 children to immediately access services each month. The average monthly increase of children served will be approximately 5,000 over the course of fiscal year 2020, he said.
• High-quality programs will be supported through a 5 percent quality incentive payment for those who have a three-star rating in the state’s First Things First Quality Rating Program.

Arizona lost 788 providers of subsidized child care between January 2016 and July 31, 2018, including 369 centers and group homes ending their state contracts.

Of those 369 providers, 174 facilities closed entirely, while the other 419 were home-based contractors who stopped offering child care.

Pima County had more than 400 home-based providers certified by the state Department of Economic Security just a few years back, but as of last summer, there were 119.

Changes in the database make it impossible to update those numbers right now, Saint Hilarie said. Even so, she said it remains clear there aren’t enough providers to meet the needs of families.

Arizona offers child-care assistance to low-income parents who are working, teen parents taking high school or GED classes, homeless or domestic violence shelter residents, and people who are unable to work due to physical or emotional challenges.

Parents who work non-traditional hours have the greatest trouble finding help, Saint Hilarie said, as there is almost no subsidized child care available for people who work evenings, weekends, swing shifts or rotating schedules.

Additionally, a study Saint Hilarie recently carried out in collaboration with Child Care Aware of America focused on infant and toddler child care “deserts” in Pima County. The findings, just released, include the following:

• Pima County families with infants struggle to find child care in their communities; 62 percent have access to licensed, subsidized care.
• In southeastern Pima County, one in three infants has access to licensed care.
• In the Flowing Wells area, half of the infants have access to licensed child care.

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Hundreds of child-care providers were turning away families who qualified for financial assistance because they could not afford to keep them as clients.

The reason is that until now, Arizona’s reimbursement rates hadn’t changed for 18 years and providers could not offer care at prices families could afford.

The challenges started with the recession over a decade ago, and escalated a few years ago under tougher requirements on how states qualify for federal money for child-care subsidies.

A year ago, Arizona received $56 million in federal funds earmarked to address these problems, but for reasons that are still not clear, the state didn’t activate the funds until this year. Arizona has now received its second $56 million, which adds up to $112 million for the state to spend over the next fiscal year.

The annual sum is Arizona’s share of $5.2 billion Congress approved in March to distribute nationwide to boost the federal Child Care Development Block Grants program. There are only two ways Arizona can use the annual funding: to provide subsidies for child care or to increase the quality of existing programs.

Arizona also receives $125 million per year in federal Child Care and Development Funds, which provide most of what it uses for its child-care programs.

Stricter provisions were added in 2014 to the federal funding Arizona and other states receive under the Child Care Development Block Grant Act.

As more health and safety requirements were added to the list of mandates for providers already burdened with low reimbursement rates, more started backing away.

These new reimbursement rates are a “huge step” toward helping all children access high-quality early childhood education, said Bill Berk, director of a local preschool called Outer Limits and board chairman for Child & Family Resources.

With the new revenue, he said, the base rates providers receive will cover about 60 to 75 percent of what it costs to offer care.

“We will be reimbursed at significantly higher rates than what we have been reimbursed at, but still significantly lower than what it costs for quality child care,” he said.

Over the next six months, Berk said, he will begin to catch up on repairs around his center, and then the increase will get eaten up with Arizona’s new minimum wage, which goes from $11 per hour to $12 in January, a jump that Berk says only begins to cover what his employees deserve.

“My thoughts are that the portion of the new dollars going to provider rate adjustments are so overdue that it will help some child-care centers keep their doors open,” said Eric Schindler, president of Child & Family Resources.

“That said, it is not enough of an increase to meaningfully increase staff compensation, which is so low.”

Since Arizona probably won’t be able to spend the $112 million within the next year, some of the funds will carry forward after June 30, 2020, said Dana Naimark, president of the Children’s Action Alliance, a statewide family advocacy group.

“As advocates, we want to keep an eye on that balance and use it to help families instead of having a sitting balance.”