Screenshot 2023-01-31 at 2.04.53 AM
Screenshot: Massachusetts Taxpayers Foundation

The good news: since the start of the pandemic, Massachusetts has seen increased investments in child care, up to $1.3 billion in fiscal year 2023.

The bad news: these investments aren’t paying off the way they could.

A new report from the Massachusetts Taxpayers Foundation (MTF) — Preparing for Child Care Reform: How to Improve the Subsidy System to Maximize Future Investment — points to a key problem, noting:

“The subsidized child care system in Massachusetts is complicated and inefficient. The result of a state-federal partnership, it serves three different eligible populations with two different forms of subsidies and uses multiple funding streams.”

“Massachusetts is to be commended for its substantial investment in child care in recent years; unfortunately, the subsidy system is complex and inefficient,” Doug Howgate, MTF’s president says in a press release.

Among the results of this systemic failure, the report says, is “lagging enrollment numbers, financially unstable providers, and disruptions and delays in care for families.”

According to MTF’s previous research, this complicated inefficiency comes at a high cost: “due to inadequate child care, Massachusetts loses roughly $2.7 billion a year in lost earnings for employees, additional costs and lower productivity for employers, and in reduced tax revenues.”

The report was shared earlier this month in a Boston Foundation webinar (that’s available in Spanish and English).

To help families and make up some of that $2.7 billion loss, Massachusetts could improve its system of providing child care subsidies to families.

“We acknowledge the subsidy system is just one piece of the puzzle,” Ashley White, Senior Policy Researcher at MTF, says in the press release. “But reforming financial assistance programs to make affordable child care more accessible is a critical step.”

Parents and providers agree, Massachusetts must improve. Among the affected parents is Yaoska Rayo, a mother featured in a Boston Foundation blog who works multiple jobs to support her family, but found that the additional income made her ineligible for a child care subsidy. Without this subsidy she could not afford child care and had to ask family members to help her out.

Among the providers who are wary of Massachusetts’ subsidy system is early educator Josmanie Vincent, who tells the Boston Foundation that she doesn’t accept state vouchers in her child care business because “The application process was long and discouraging and she felt that she would not be able to fill a spot in a timely manner to take advantage of the subsidy. She plans to apply eventually, yet it is not a current business priority despite all the benefits that accompany becoming a voucher recipient.” The outcome: fewer affordable child care spots for families.

For Massachusetts the path is clear, reform the subsidy system, and, as MTF’s report recommends, continue awarding the Commonwealth Cares for Children (C3) stabilization grants that are helping child care programs deal with pandemic-related costs.

Specifically the MTF report recommends:

• updating how child care providers are reimbursed by ensuring that these reimbursements are based on the true costs of caring for young children

• modernizing how subsidized child care slots are distributed around the state to better and more evenly meet demand

• streamlining the process of determining whether families are eligible for subsidies

• improving data systems across the Child Care Resource and Referral agencies, and

• maximizing resources by setting annual benchmarks for the number of children to be served by the child care subsidy system

Once the subsidy system is stabilized, Massachusetts can “shift to reforming the greater child care system,” the report says, working toward the larger policy goals of greater access to more affordable child care. 

In addition to children and families, businesses also stand to benefit from this kind of substantial child care reform.

As Tom Weber, the executive director of Massachusetts Business Coalition for Early Childhood Education and an Eastern Bank Foundation fellow says, “The Massachusetts business community increasingly recognizes the essential role that child care plays in our economy and supports policies that will increase child care quality and availability for working families.”

Stay tuned, there’s more to come. The Massachusetts Taxpayers Foundation is continuing its research on child care and will look at the larger system next.

As Howgate, MTF’s president, says, “We have an opportunity to implement and invest in real change that will better serve Massachusetts families, make state investment more efficient, and expand economic opportunity.”