Montana State University

MSU research may help Montana families better afford child care

June 7, 2017 -- By Emily Stifler Wolfe for MSU News Service

MSU economist George Haynes developed a survey to analyze child care costs around the state. The state will use the data to determine subsidy rates for scholarships provided to low-income families to help them afford child care. MSU photo by Kelly Gorham.

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Tel: (406) 994-4571
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BOZEMAN – Montana State University economist George Haynes has completed an in-depth study comparing the costs of child care in every county in the state. The study will potentially help lower income Montana families afford child care.

Haynes, professor in the Department of Agricultural Economics and Economics in MSU’s College of Agriculture and an economics specialist with MSU Extension, was commissioned by the Montana Department of Health and Human Services Early Childhood Services Bureau to develop a survey with the goal of helping the bureau determine subsidy rates for its Best Beginning scholarships. The scholarship program helps working families whose income is at or below 150 percent of federal poverty guidelines pay for child care.

A federal Child Care and Development Block Grant funded the new survey – the first of its kind in the state – and also provides funding for the scholarships. The bureau has collected market information since the grants were first developed in 1996, but a new federal reauthorization required states receiving the block grant funding to do this more comprehensive study.

Haynes and his research associate, Lisa Curry, developed the survey called the 2016 Montana Child Care Market Rate Survey with the MSU Human Ecology Learning and Problem Solving Lab, patterning it after a study done by the University of Texas. The lab, located in the MSU Department of Political Science, contacted every licensed child care provider in the state, receiving responses from 62 percent of the 968 providers. They asked providers about advertised rates, as well as actual out-of-pocket costs for specific families.

Haynes and Curry analyzed the data, comparing providers statewide and within counties and local areas. Haynes said some of their results were surprising.

Previously, subsidy rates were set by region, but because the survey found as much variation within regions as statewide, Haynes and Curry recommended setting statewide rates.

A statewide rate would result in a subsidy increase for most places other than the higher-income areas of southwest Montana, where reimbursement rates would decrease slightly. The survey also looked into other neighboring and rural states, finding that Wyoming, North Dakota, Utah and New Hampshire all use statewide subsidy rates.

“[This research] was very valuable, and we’ll be applying it in some way,” said Patty Butler, Early Childhood Services Bureau chief, who will use the survey statistics and recommendations in drafting policy this year.

Another important part of the survey explored how providers charge: The majority of families pay for a monthly slot, but the state has historically reimbursed child care facilities through a daily, hourly and weekly rate system. That, Haynes said, can be a barrier for low-income families. Because providers are only reimbursed once a parent turns in state paperwork, and then it’s not until the end of the month, payment can be inconsistent, causing some providers to shy away from participating in the program.

Haynes and Curry recommended re-configuring Best Beginnings so the program could buy a certain number of monthly slots with a particular provider, and pay up front, assuring access to care for families using the scholarships.

“Adequate and affordable child care continues to be an ongoing struggle for many Montana families, especially the working poor,” said Gregory Gilpin, interim head of the MSU Department of Agricultural Economics and Economics. “The Best Beginnings scholarship reimbursement program is one way to help needy families afford quality child care. One of the most important aspects of this program is having an accurate, unbiased estimate on market-rate costs so that the state is not underpaying or overpaying for child care.”  

Contact: George Haynes, haynes@montana.edu or (406) 994-5012