Federal stimulus includes $550M for child care in Minnesota

Minnesota’s child care industry is about to get a boost from the $1.9 trillion federal stimulus package signed into law last week. Included in the bill was more than $40 billion dedicated to child care providers. Of that, Minnesota’s share is approximately $550 million, which breaks down to roughly:

• $200 million for the Child Care Development Block Grant
• $325 million for child care stabilization
• $12 million for Head Start
• $9 million for the Temporary Assistance for Needy Families (TANF) program.

As you can imagine, there are lots of ideas on how to invest these dollars, and a few different ways to make it happen. The Department of Human Services says the Walz administration already has legislative authority to distribute the federal stimulus money, so as we have seen with past federal dollars, the ultimate allocation of the funds may rest solely in the Governors’ office. We anticipate seeing at least a Senate GOP proposal, and likely a House DFL proposal, on how “best” to allocate these resources.

There are countless ways the state could divvy up these funds, from investing in existing programs to creating new ones. The Child Care Development Block Grant is a federal program that provides funds to each state to help address child care needs for children living below the federal poverty level. Base level annual funding only allows it to benefit one out of six children in Minnesota who live in poverty, so one possibility is to invest more in those children and their needs. Another option would be to provide compensation bonuses for existing child care providers, a sector known for low wages and high staffing turnover. This investment could help retain providers and stabilize an industry that is still reeling from the economic impact of the pandemic and shutdowns.

The GMNP has joined a broad group of advocates, from traditional child care advocates to the Minnesota Chamber of Commerce, to call on the Governor and Legislature to use these funds to make a significant investment in the state’s two subsidy programs: Child Care Assistance Program (CCAP) and early learning scholarships. Minnesota for years has been out of compliance with federal recommendations for reimbursement in the CCAP program, which calls for reimbursements to cover the full cost of 75% of providers in the market. Just last year the state finally achieved the minimum standard of reimbursement at 25% of market providers. More information on this effort is available at thinksmall.org/wp-content/uploads/2021/03/MNleg-session-flyer-2.pdf.

These funds could also be used for the child care proposals that GMNP is advancing, which include $20 million for Greater Minnesota Child care Facilities Grants, $10 million for the DEED Provider Grants, and $4 million for the Initiative Foundations.