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Counties seek to change child care funding structure

Crystal Grant, of Rochester, uses Basic Sliding Fee Child Care Assistance to help cover the cost of daycare for her children, Abigail Knauer and Andrew Knauer, while she attends school.

Rochester resident Crystal Grant recently completed her administrative clinical assistant degree and is looking for work. But without help from an Olmsted County program, the mother of two young children said she wouldn't have the work options available to her now.

Grant, whose son and daughter are 4 and 2 respectively, found out about the county's Basic Sliding Fee Child Care Assistance Program while she was getting her GED at Hawthorne Education Center.

Without the assistance, Grant said: "I wouldn't have been able to do a lot of things — my GED, my college degree. I would probably still be a stay-at-home mom. ...Olmsted is definitely willing to help somebody who's willing to help themselves."

The child care assistance program helps lower income families pay for child care, which is crucial for many working parents if they hope to finish school during their kids' early years.

However, with higher-than-normal increases in child care provider rates this year, the county's budget for the program has been eaten up more quickly, leaving more than 300 families on the waiting list.


Yet, the county is addressing that need by simply spending more money than it has and waiting for reimbursement from the state at the end of the year.

To some, it may seem like a gamble, but the overspend-reimburse approach is one that several Minnesota counties are resorting to in a funding system many are trying to change.

The current system allocates funds to counties once per year , adjusting funding based on recent expenditures, families participating, waiting list numbers and other factors. In many counties, those funds exceed the need, but in others, it falls far short, leaving millions in unspent funds statewide at the end of the year.

In 2013, 14 counties exceeded their allocations by a total of about $3.6 million and the rest underspent by more than $9.5 million. At the end of the year, the state distributes remaining funds to the counties that went over budget.

"You take a little bit of a chance, but history demonstrates that it's been a good risk-reward for the community," said Child Care Resource and Referral Executive Director Patrick Gannon.

In 2013, Olmsted didn't overspend at all, but this year, the county's money is running out faster with additional bonuses for quality providers and rate increases that went into effect after the allocations had been set this year.

Though provider rates increase regularly, it's normally a small amount, such as 3 or 4 percent, Gannon said. For Olmsted County this year, some of the infant care rates almost doubled, and others went up by 10 or 20 percent.

"(That's) great for the provider, but the fund we have, which is set, gets eaten up a lot quicker," said Olmsted County Community Services Director Paul Fleissner.


As a result, Olmsted will join other counties in the risk-reward system of spending up front and getting paid later.

Changing the system

Though a handful of counties are getting by on that system so far, social services employees at the county and state levels are working to change the structure in a way that allows more tailored or frequent allocations.

The concern with the current system is that it doesn't maximize use of the funds available statewide. In 2013, the total spent throughout the year fell more than $5.9 million short of the total allocated.

"There are some structures in place that make it surprisingly challenging for counties to spend all the money," said Elana Gravitz, program manager in the Eligibility and Work Services division of the Hennepin County Human Services and Public Health Department.

A work group to address that issue formed in April 2011 at the request of the Minnesota Association of County Social Service Administrators. Convened by the Minnesota Department of Human Services, it has been meeting periodically since then but has yet to settle on a preferred plan of action.

The group has considered quarterly reallocation, allocation formula changes, state-level management of allocation and the creation of a state-level pool for families on waiting lists.

Most changes to the system, however, would require state legislation. A proposal could be presented to the Minnesota Legislature in 2015, according to the human services department.


"We're looking at it, we hope to make progress on that, and it's slow going," Gannon said. "It just takes a long time to make change happen."

Addressing the need

In the meantime, some counties have to consider their ever-growing waiting lists with how much risk they're willing to take financially, leaving families in limbo for months or sometimes years.

Families at or below 47 percent of the state median income are eligible for the program, which takes into account income and family size to determine how much the county will cover.

Dakota, Anoka, Olmsted, Ramsey and Washington counties all have hundreds of families on their waiting lists, and Hennepin County's list tops 4,000. One family has been waiting since May 2012, Gravitz said.

"These are lower income working people or people who are pursuing higher education in order to get a better paying job," Gannon said. "Really, the goal here is to help people keep working and keep advancing their higher education, in order to lead to greater economic self-sufficiency."

Yet, when people hear that there are more than 300 families on the list, some hesitate to apply, Gannon said.

Amber Massaglia isn't deterred from applying but is worried about what she'll do if she ends up on the waiting list for too long.


Although Massaglia has used the program since 2010, she now has to reapply since her 4-year-old daughter spent much of her summer in Mankato with her dad and didn't attend daycare.

Her daughter will go back to daycare on Monday, and Massaglia will have to write a check to the provider immediately. Her main income comes from work, some remaining student loan money and inconsistent child support, but she's not sure it'll be enough without child care assistance.

"Even working full time and not going to school, what I'm paid per hour, there's no way I'd be able to afford daycare," she said.

Massaglia started using Basic Sliding Fee Child Care Assistance when she was a full-time student at Minnesota State University, Mankato. She has since graduated with an administrative clinic assistant degree from Rochester Community and Technical College and will likely complete her communications degree at MSU in the next year.

"It's provided me the ability to go to school and better myself and to go to work," Massaglia said. "If I didn't have it, I don't know where I'd be actually."

And of her daughter, she said it's bettering her life as well to be able to attend daycare.

"I know that there's a lot of negativity about single moms and that they're living off the government, but I think it's necessary, especially for the ones that are trying to help themselves and be productive members of society," Massaglia said.

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