Child care provider subsidies may grow

State cites inequity in plan to raise rates

State officials are proposing to revamp how they divvy up money to reimburse child care centers that provide child care to poor children in Massachusetts, resulting in more money across the board for the state’s struggling and long-overlooked child care industry.

The changes will begin to address “some long-standing inequity” for the roughly 56 percent of child-care providers in the state who accept children that receive state subsidies, state Early Education and Care Commissioner Amy Kershaw told the Globe.

The state’s board, which meets Wednesday, will “marinate” on the multipronged proposal, Kershaw said, and then vote on the proposed changes in early January.

If they approve it, the new rates would go into effect as soon as January or February, but would be retroactive to July 1, the start of the fiscal year. That means that each provider already accepting poor children would get retroactive payment to account for the increase in a lump sum.

“Our goal is to expand access and affordability for every family in the Commonwealth. So the more programs that are willing to participate in child-care financial assistance, the more access our families will have,” she said.

In the spring, the Globe reported on how child-care costs statewide are about the same, but centers in some regions receive much smaller subsidies for poor children than those in Greater Boston.

The Globe cited research conducted by an Illinois-based group, Center for Early Learning Funding Equity, which found that the costs for providing care do not vary substantially across different parts of the state.

The proposal would use the CELFE data to account for the actual cost of caring for the children, instead of relying on the current rate

structure, which doesn’t capture a number of factors, including housing costs, staffing numbers, or child care salaries in a particular region.

“The state had an opportunity to do something truly transformative,” Kershaw said. “Now we’re following through on that.”

For years, subsidy rates have been set using a federal market rate survey of what programs charge private-pay families. But because the data do not account for nuances unique to different parts of the state, the rate system produces large discrepancies from region to region.

State officials are aware that families who live in rural or lowincome communities with a limited child care supply may rely on friends and family — informal arrangements that are not captured by the market rate survey and therefore don’t reflect the financial need in the community. Other factors, such as a lack of public transportation, are also not taken into account when the rates are set.

For example, child care centers in Boston are about 18 percent more expensive to operate than those in Western Massachusetts, but receive 52 percent higher subsidy rates.

Subsidies are reserved for certain families who make 50 percent or less of the state median income, but because of the low rates in some parts of the state, many providers can’t afford to accept these children.

Providers in the western part of the state have long held the belief that large need and low reimbursement rates have dissuaded providers from accepting poor children or from opening in the first place, further stretching an already overburdened industry, creating wait lists, and negatively impacting child development in their region.

The new formula being recommended by state officials would consolidate rates across regions with similar costs and economic indicators, take into account the actual cost of care, and raise the subside rates across the board.

For example, a provider receiving subsidies for caring for an infant in Western Massachusetts would get an additional $25 per day, meaning an extra $6,000 per year. The additional money could help cover the cost of care, but also help recruit and pay staff — a top concern for providers in the state.

Dawn DiStefano, CEO of Square One in Springfield, a child-care center, said that the lack of recognition for specific challenges her region faces has left a yawning gap that has significantly affected day-to-day operations for DiStefano and other providers in her area.

For each toddler in her care, she receives a subsidy of $61.16 per day. In Boston, that rate is $85.90, according to the state.

“I am just thrilled that the commissioner, the board, our local legislators . . . people seem to truly be listening,” she said. “That is a breath of fresh air for me.”