Bill Berk, the owner of the Outer Limits school, believes that early childhood centers can provide a vital service in preparing toddlers for success.
"We use preschool as a way to ensure that children are ready for kindergarten," said Berk. "So if kids are going to a preschool that doesn't offer high-quality experiences, or if they're simply not going because the Department of Economic Security can't pay for as many children as needed, then children are starting kindergarten off with a huge disadvantage."
Outer Limits is one of a slimming number of child care providers in Tucson that have contracts with the Department of Economic Security to subsidize childcare costs for qualifying families. As the disparity between the high cost of child care and the low reimbursement rates provided by DES grows, these families are running out of affordable options.
DES subsidy rates are so low that it is locking low-income families out of the system. Providers can't afford to pay their teachers and keep their lights on while losing money from DES-subsidized children.
Those who receive DES assistance fall into a few different groups. Low-income working families who make under a certain amount of money and teenage parents can qualify, and are often put on a waitlist that can take over a month to open up. Also, the Department of Child Safety will often provide at-risk children living at home and foster children with free child care through their partnership with DES.
When a provider agrees to work with children receiving DES assistance, they don't charge the parents/guardians and instead get a reimbursement from DES. But here's the catch: It's been so long since the state updated the funding formula, the reimbursement rate is only 75 percent of the average cost of child care from the year 2000.
Providers have coped with the disparity in a variety of ways. Some centers cancel their contracts with DES and only work with families who can afford to pay the full cost. Some home-based providers scale down to just four children and operate unlicensed, which is legal in Arizona.
Frequently, providers charge the parents the difference between what DES pays and what their rates actually are in a co-pay agreement. Others charge the families either none of that difference or a partial amount, and absorb the loss in revenue.
Berk said that for many years he tried to keep co-pays low and foster family care cost-free, but recent minimum-wage increases have created such an impact that he has had to start charging more from all of his clients in order to stay in business.
The perfect storm
The rates have been static for almost 19 years now due to a long history of federal and state governments decreasing their investments in child care. In 2014 the Obama administration reauthorized the Child Care Development Block Grant (CCDBG) and expanded its requirements for providers who want those funds.
"For example home providers had to go from having only six hours of training a year to 12," said Michelle Saint Hilarie, the director of Child Care Resource and Referral (CCR&R). "They went from having to meet a whole bunch of health and safety requirements that they didn't have to meet before, such as having an emergency plan, an evacuation plan."
Saint Hilarie, who works under the DES-supported nonprofit Child and Family Resources, Inc., said these added requirements are necessary because it increases the quality and safety of care. However, considering the inadequate funding for providers, these requirements still increase their financial burden even more.
In July 2017, Berk said DES enacted new requirements in regards to group sizes. Research shows that smaller teacher-to-student ratios increase the quality of care, but many providers don't have the space or resources to comply.
"It's harder for us, and harder generally in my world means more expensive," he said. "So they did put many new requirements on us, but no funding to help pay for those things."
In the past few years, the burdens of both low funding and stricter requirements have become so great that Arizona has seen a "big time exodus" of providers, according to Saint Hilarie.
"We went from having like 400 providers in Pima County to fewer than 100," she said. "It's kind of like the perfect storm, everything happening all at once and people left."
Sara VanSlyke has worked at the Desert Spring Children's Center on Speedway and Euclid for 32 years. She said the school had a contract with DES for 28 years, but as director, she decided to end the contract two years ago because it was too intensive.
"They were requiring all these new trainings for teachers which is actually good if you didn't have experienced teachers, but to require all these extra trainings on top of what my teachers already do—it just didn't seem worth it for the low reimbursement rates," she said.
Over the years, VanSlyke never charged her DES families their full co-pay because she knew they couldn't afford it. She said this took a toll on her school's finances, and parents also had to apply for DES subsidies every couple of months. So if a parent perhaps got a new job that paid them a little bit more than the requirement, they would lose their subsidy and suddenly be responsible for the full cost of care.
Now, instead of working with DES, VanSlyke said her school's accreditation through Arizona's Quality First program supplies them with nine scholarships to give to families in need. She said this strategy works much better for her business and is easier than using DES because she just applies for the accreditation once a year. However, that won't work for many of the providers in Arizona.
"We're lucky in that we have a demographic that can pay tuition, there's some schools that are 75 percent DES-funded," she said. "If I was going to take a lot of DES kids, then my teachers would be paid a lot less and not have healthcare or benefits. So it's a balance."
Berk acknowledged that the low reimbursement rates have changed the demographic of his school over the years.
"What's happening because we've increased our rates so much, as you might expect, our room is going from where we had a good mix of DES and private-pay families, now it will be almost exclusively private-pay families," he said. "If the state says you can afford five dollars a week in child care expenses and I'm charging $50 a week, where do you get that money? So that's not a policy I'm proud of, but we need to stay open, we can't go out of business."
Accessibility and high demand
In an emailed response to questions, DES Deputy Press Secretary Brett Bezio wrote that the department is focused on increasing the quality of care from its contracted providers. Saint Hilarie said it's great to have a certain amount of quality providers, but that doesn't address the main problem: low-income families can't afford the care anyway.
She said the biggest challenge right now is the lack of providers with non-traditional hours. That option is crucial to parents/guardians who work jobs that don't operate within the regular 9 a.m. to 5 p.m. schedule.
"I had a mom call me and say 'I'm getting fired from Walmart if my child is sick one more time. I need a provider that's available 5 p.m. to midnight,'" Saint Hilarie said.
Across the U.S. there are almost 3.5 million parents working in the restaurant industry, and over one million of them are single moms, according to a 2016 study funded by Restaurant Opportunities Centers United and the National Women's Law Center. The study found that over 40 of restaurant workers live in poverty, and 74 percent live at or below two times the poverty level.
A 2018 fact sheet provided by Child Care Aware of America, a national organization that collects data on trends in childcare in every state, reported that there were a total of 2,381 requests for care during non-traditional hours in Arizona this past year.
Usually, providers that operate in residential settings such as family home providers and group homes help satisfy that demand for non-traditional hours. But Saint Hilarie said these providers have substantially declined in the last five to 10 years, and even more so in the last three to five years.
According to DES 2018 market rate survey, in Pima County only 1.6 percent of licensed child care centers offer late night care (6:30 p.m. to midnight) and 25 percent of them charge a premium rate for that care.
"More and more it's getting harder and harder for us to offer options to them that simply are not there," she said.
The demand for infant and toddler care is even worse, according to industry professionals. The younger the child, the higher the cost of care. Add that onto the low reimbursement rates and lengthy quality requirements and providers begin to feel deterred from working with infants and toddlers altogether. Saint Hilarie said CCR&R is currently conducting a study to see which areas in Tucson are lacking early childhood care programs.
"We have a waitlist right now, especially the highest need and the most expensive form of care is infants," said Reem Kievit, the director of preschool programs in the Tucson Unified School District. "We're open 6 [a.m.] to 6 p.m. and we definitely sometimes have kids that stay the entire time."
"Right now, it's almost impossible to find a spot for an infant or toddler," said Berk, with Outer Limits. "If you're the parent of an infant or a one-year-old and you need child care next week, forget it. We have families going on waitlists as soon as they're pregnant, and some of them don't find space."
He said the infant rate that his center charges is almost double what DES pays per month in subsidies.
$56 million in limbo
If child care research and requirements have been updated from the standards set 18 years ago, shouldn't the same be done for the reimbursement rates? Saint Hilarie said the providers she works with feel that meeting these extra requirements would be tolerable if they were receiving fair rates.
In May, Arizona lawmakers declined to use about $56 million of guaranteed funds intended for childcare assistance from the federal Child Care Development Block Grant. The U.S. government provides this money to all 50 states and no matching funds are required.
Despite harsh criticisms from industry professionals and childhood education advocates, legislators maintain that they didn't want to use the money because it was unclear exactly how DES would spend it.
"We are currently working with the governor's office to develop a plan for CCDF dollars," Bezio, with DES, wrote. "We will be working through that process, as well as through the legislative process next session."
Berk, who is also the vice president of the Arizona Early Childhood Education Association, hopes that when the next legislative session begins a state representative will step up and sponsor a bill that the could give DES the authority to use that money now.
"To me, the biggest issue is that we didn't take free money, which is horrible," he said. "The biggest issue is that children who are most at-risk are no longer going to have access to the programs that will actually make a difference in their lives."
Although many early childhood teachers work in the private sector, they become part of a larger problem happening in Arizona right now: inadequate pay and career incentives for educators.
According to Child Care Aware of America's report on Arizona last year, there were 9,400 child care workers employed in licensed centers. Their average annual income was $24,390.
"If [teachers] get an associate's degree, the pay is not much different than someone who just enters the field and that's really hard," Berk said. "Target right now has a sign on their door saying 'We start at $12 an hour.' That's not unusual. [Early education teachers] are not making $12 an hour, and it's a really hard job."
At the same time, DES continues to focus their efforts on increasing the quality of care throughout the state. With the new health and safety requirements imposed by the CCDBG, the department provides training and development programs for early childhood education teachers. Although, these opportunities are only offered to providers that have active contracts with DES and that number is falling quickly.
"The department has prioritized DES-contracted providers to ensure all training requirements are met," Bezio wrote. "As those requirements are met, the Department will consider adding additional provider groups based upon availability of funds."