Child Care Deserts in Rural Minnesota

Jordan Treder, University of Minnesota medical student

February 6, 2021

The COVID-19 pandemic revealed many pre-existing disparities in Greater Minnesota, including child care deserts. Without affordable child care available nearby, parents must take time off work or stay home entirely. Without incoming revenue, child care providers lack the means to pay staff, offer healthy meal options, or ultimately stay in business under their licensure. As the density of providers decreases in rural Minnesota, providers are harder to find and leave a bigger gap in care when forced to close.

Child care should be viewed through the lens of healthcare, making it a public health concern that must be made equitable throughout the state.

Of course, the growing absence of affordable child care providers in rural Minnesota versus urban regions highlight a problem that existed well before COVID-19. Minnesota has a child care shortage of providers (both family and center-based child care) and licensed child capacity—and rural communities find it more difficult to maintain adequate levels of either. As trends of lower median household income and reduced population persist in rural Minnesota, the uphill challenges of building back these necessary services are both clear and pressing. The dilemma of providers to stay both fully staffed and profitable is at odds with parents’ desire for quality care within their financial means and travel limits. At least 30% of low-income, minority, and non-English speaking households, as well as, children with special needs, feel they must take whatever form of childcare they can get. It is important to illuminate the obstacles that rural child care specifically experiences, otherwise the gap in care will widen further. While state-wide programs function to benefit everyone, more targeted aid for rural access must be addressed.

Background

In Minnesota, under state law and as outlined by the Minnesota Department of Human Services (DHS), every child care provider must obtain a license in order to operate a child care service, with the exceptions being providers who meet state exemptions. Providers are generally broken down into two categories: child care centers (CCC) and family child care (FCC). CCC’s provide care at a location other than the provider’s residence, often with larger numbers of children being cared for and greater requirements for staff qualifications and training. FCC’s provide care at the same location as the providers residence to children of multiple households and/or community neighbors. In contrast to CCC’s, FCC licensing, including inspections and issuing citations, is predominantly performed by Minnesota counties individually, with the state primarily responsible for legislation and oversight. A third category titled certified child care centers exist as a legal, non-licensed exemption for certain providers. Essentially, these include individual person’s providing childcare for related children (by marriage, blood, or adoption) AND up to only one additional unrelated family. State law prohibits these providers from advertising their child care program. Overall, the goal of state licensing is to ensure children are cared for in a safe and healthy environment by qualified personnel that meet their developmental needs. Currently, Greater Minnesota relies much more heavily on FCC’s to fill roughly 65% of their child care services, while the Minnesota “Metro” utilizes CCC’s to a much higher extent at around 70%.

In regard to the individual consumers of child care (the families of children), DHS provides the Child Care Assistance Program (CCAP) to financially assist low-income families in paying for these growing expenses. This includes the Minnesota Family Investment Program and the Diversionary Work Program, which assist in gaining household economic stability by helping with child care assistance (if having been on the program in the last year). Additionally, the CCAP also includes the Basic Sliding Fee Program, which is a capped financial amount, given to families earning 47% or less of the state median income ($42,920 for a family of three in October 2020). This primarily helps families while they search for work, attend work, or participate in schooling or training to prepare for future work. Families are, in return, responsible for one monthly copayment (covers all children) based on income.

Minnesota Metro

The Minnesota “Metro,” generally considered as the Twin-Cities counties in and around Minneapolis and St. Paul, can be used to illustrate the state-wide deficit in child care services, despite the greatest deficits being seen in Greater Minnesota. From 2006 through 2016, the Metro lost a substantial amount of licensed child care providers within FCC’s, decreasing by approximately 34% (see the figure above). This decrease in FCC providers considerably impacted child care capacity within FCC’s as well, decreasing by 32%. The loss of providers and capacity within the Metro drove the opportunity for CCC’s to grow in the region, increasing CCC availability to families.

In general, FCC’s are cheaper than CCC’s statewide, holding true for all age groups of infant, toddler, preschool, and school-age. More importantly, Metro child care costs are more expensive than Greater Minnesota costs per week, per child, and higher than the state average. For example, for one infant in the Metro, child care costs about $344/week at a CCC and $190/week at a FCC. This contrasts from the average $216/week (CCC) and $142/week (FCC) costs for a Greater Minnesota infant. Therefore, with the loss of FCC’s between 2006-2016, families are contributing more expense to enroll their child(ren) in CCC’s. The median household income in 2019 for the 7-county Twin Cities Metro was $74,593, while Greater Minnesota collectively averages a median household income of $63,525. While household income may be greater in the Metro to support the extra expenses of CCC’s, increased cost of living and a much greater population density still create challenges in paying for child care and finding free provider capacity. Further, middle-income families may still struggle to afford these increased Metro CCC costs and are often not eligible for any financial assistance, falling above the cut off for relief programs like the CCAP. In these cases, along with the provider shortage, many parents have been forced to terminate their employment in order to stay home and care for their children.

Greater Minnesota

While Greater Minnesota experiences some of the same child care issues as the Metro, both providers and paying families face additional challenges unique to their rural communities. As providers attempt to serve these areas across the state, profit margins are difficult to balance with growing expenses and operation costs. With an average annual FCC revenue of $50,938 in 2016, 90% came from family payment sources (i.e. tuition). 30% of providers received some amount of tuition from CCAP, but these payments still only accounted for 23% of tuition revenue. After subtracting average expenses from the average annual FCC revenue, FCC providers were only collecting an annual salary of $24,566 on average. Further, these providers are often working an average of 53 hours /week (well above the traditional 40 hours/week), making the calculated hourly wage below $8/hour before taxes for about half of FCC providers. This is, of course, not taking into account the extra hours outside of operation dedicated to cleaning and preparation. Despite program expenses between Greater Minnesota and the Metro being similar, rural providers are profiting around $9000 less than urban providers in MN. This difference is largely a product of the higher tuition rates Metro providers can charge due to the higher median household incomes of family payers.

A shortage of staff for FCC’s and CCC’s has remained a persistent roadblock for Greater Minnesota and can often be tied to finances and supply. The high costs of quality staffing and care puts a strain on the already slim profit margins of providers. It is estimated that staffing for most CCC’s dominates at about 60-80% of total expenses. Wages for staff were found by Minnesota Initiatives Foundation to be below $15/hour in 2017 for teacher aides and full-time teachers at CCC’s, making it challenging to compete with Metro providers who can offer increased wages plus benefits. The number of children a CCC is able to care for at any one time is determined by staffing, which makes these staff essential for revenue. Even when quality staff is available though, a CCC’s capacity under their license is also based on square footage - another logistical hurdle capping a business’ growth.

Across the state, between 2005-2014, over 3,000 FCC’s were lost to closure, a figure that led to roughly 36,500 child care spaces lost, as well. As these FCC’s went under, CCC’s helped fill the void statewide in those years, generating about 100 new CCC’s  - a 7% increase. However, further investigation found that these CCC gains were quite regional, occurring mainly in the Metro and covering the Metro’s losses from FCC’s. The same rebound did not happen in Greater Minnesota and a 15,000 net loss of child care spaces helped create the child care deserts we see today in rural communities. What makes matters even more frustrating for Greater Minnesota providers, specifically FCC’s, is the lack of consistency by licensors between counties across the state. Since FCC’s are regulated much more at the county level than CCC’s, interpretation and enforcement of varying county rules and statutes play a large role in an FCC’s ability to stay in business. Often, providers must act as their own legal advocates during monitoring visits to protect themselves against inconsistently applied laws. The unpredictable nature of these audits causes fear, anxiety, and unneeded stress and can even drive providers out of business altogether. The relationship with counties (and even the DHS) has soured for many providers over recent years, moving from an environment of support and retraining to a system of punishment. These providers have felt a decreased emphasis on quality improvement and teaching and instead have experienced hostility from licensors searching until any infraction can be found. Providers must then post correction orders in their homes or facility for two years according to Minnesota statute, regardless if under appeal or overturned, which has left some to exit the industry entirely.

While providers are struggling to stay licensed, staffed, and profitable, family payers of child care face their own circumstances for their child(ren). Families in Greater Minnesota are tasked with not only being able to find quality child care in their region, but must be able to afford it and travel to those sites within reason. As previously mentioned, the median household income in Greater Minnesota of $63,525 is roughly $11,000 below its Metro equivalent. As costs rise for providers to stay in business and pay their staff, the geographical options for low-income families dwindle quickly. In the search for quality child care, Minnesota DHS encourages families to use the Parent Aware tool to rate and locate providers based on issues of affordability, food and nutrition, special needs access, etc., as well as a more recent addition, COVID-19 preparedness. For many rural community providers though, word-of-mouth is still relied on heavily to connect with families in their region. With regard to family travel in delivering their child(ren) to child care, 22% of survey respondents expressed daily travel of more than 11 miles in one direction to reach providers out of their way. These compounding factors make it equally difficult for families to access providers, a clear consequence of growing child care deserts in Greater Minnesota.

Solving the complexities of child care deserts across Minnesota is not a one-step process of simply increasing funding.

While finances play a heavy role in the state’s deficits, a multi-target, longitudinal initiative is most likely needed to be effective for future generations of children, families, and providers. As outlined previously, gaps in care are not at all isolated to Greater MN, but the unique circumstances that rural communities face make targeted assistance a necessity. Too often, blanket legislation is relied on to answer these complex issues. Recognizing the unique needs of Greater Minnesota and its regional differences will be essential in assisting child care shortages across the state.

In 2016, a Legislative Task Force on Access to Affordable Child Care was created to assess the shortages and accessibility hurdles in child care in order to make recommendations to the 2017 Minnesota State Legislature. Comprising State Representatives and Senators working alongside rural community voices and providers in town hall settings, this top-down review generated several primary aims. In addressing regulatory oversight of providers, the goal of developing consistency and uniformity across the state stood at the forefront. This is not only to improve relationships and fairness between DHS/counties and providers, but to ensure that training programs are in place and accessible to build a more stable pool of providers. In changing the course of action on issues of capacity and staffing, this initiative will be crucial to the state’s future success.

Additionally, affordability was targeted as an area drastically needed in reform, including assessing the effectiveness of the CCAP. Relieving costs for middle to low income families most likely needs to come through targeted funding, tax exemptions, and community/business investments. By assisting family payer costs, providers can charge profitable child care rates that ensure they can keep quality staff and remain in business in the long term. Finally, sustainability of child care programs is key to prevent similar future loss as has been witnessed since 2006. Creating a board of providers independent of DHS that can advise and answer questions without fear of discipline was one idea brought forth, ultimately with the goal of encouraging and incentivizing providers to remain in the child care workforce for the state. A collaborative environment between providers across the state would encourage increased networking and hopefully build successful businesses as a result.

As the dynamics of rural needs continue to differ from urban, an emphasis must be placed on rural-specific programs. One example of this is the Rural Child Care Innovation Program (RCCIP), a project sponsored by the Minnesota DHS through First Child’s Finance. The focus is to help rural communities identify the depth of their child care deficits and guide them in finding solutions that fit them specifically. One branch of this mission is also in strengthening awareness of the connection between early care/education and the economic development of a region. This interconnected approach places responsibility in the community to care for their children’s success - perhaps a more sustainable model. Regional specificity in rural-oriented programs like this can use secondary determinants, like local transportation issues or economic burdens of single-parent households, for example, to improve the primary goal of generating more child care slots across the state.

Emerging COVID-19 Challenges

With the onset of COVID-19 challenging most aspects of life, it has exposed Minnesota’s child care access disparities just the same. Child care issues have been brought to the forefront for the average Minnesotan due to the major role its sector plays in health care, education, and employment for most families. Keeping child care businesses open is imperative for most essential workers, who depend on someone to watch their children so they can earn a continuous paycheck. State relief legislation, in the form of grants and forgivable loans, has been used throughout the pandemic to aid child care challenges. Federal programs, such as Economic Injury Disaster Loans and Emergency Grants or the Paycheck Protection Program (PPP), offer options to small businesses, which includes child care operators. The PPP provides fully forgiven loans to child care providers if the funds are used for payroll costs, interest on mortgages, rent, and utilities, with 75% required to be used on payroll. Additionally, the responsibility to keep both children and staff safe and healthy from COVID-19 has made shortages in cleaning supplies and testing costly for both FCC’s and CCC’s.

Many providers have been frustrated since the beginning of the pandemic, when the state pleaded with them to stay open for children of essential workers. Despite facing crippling financial decisions, providers who stayed open were incentivized with grant funding. Unfortunately, the volume and selectivity of the grants left many child care providers waiting for financial assistance well beyond the first round of funding, if ever. The lost revenue over that time placed providers in an even bigger hole and their decision to stay open made them ineligible for any unemployment benefits. The reality of COVID-19 could not have come at a worse time for providers across Minnesota, placing more pressure now on creative solutions to address the structural inequities of child care.

For further reading:

Center for American Progress. “Do You Live in a Child Care Desert?,” 2020. https://childcaredeserts.org/.

Davis, Elizabeth E, and Aaron Sojourner. “Mapping Access to Child Care for Minnesota Families.” Child Care Access. University of Minnesota, 2018. http://childcareaccess.org/.

Minnesota Legislature. “Legislative Task Force on Access to Affordable Child Care: Report and Recommendations to the Minnesota Legislature.” Minnesota Legislature, January 15, 2017, 1–39. https://www.lcc.leg.mn/tfcc/meetings/Child%20Care%20Report%202017.pdf.

Jordan Treder (trede005@umn.edu) is a medical student at the University of Minnesota, Duluth campus. He earned a Bachelor of Science degree in Biochemistry from the University of Minnesota, where he conducted research in the Department of Pediatric Neonatology studying iron deficiency on developing brain function. Following graduation, he worked as a medication assistant for a long-term care facility and concurrently interned with the Muscular Dystrophy Association. He will receive his medical degree in 2023.

Jordan also enjoys woodworking, exercise, and any games and outdoor sports with friends and family. He especially is interested in end-of-life care, social justice reform, and youth engagement, with hopes to integrate these into his medical practice one day.