What do we mean by a publicly funded, high quality, universal ECL system?

Four things: access, cost-sharing, talent, and accountability.

– Everyone who wants childcare gets childcare. That’s what makes it universal.

– Families will spend no more than a capped percentage of their household income for the care of their children. That makes it affordable.

– Early childhood education providers will be credentialed in early education and will be paid livable wages akin to K-12 teachers today. This will help to assure a high quality and sufficient workforce.

– Continual assessment of people, programs, outcomes, and transparency around data collected will make this new system accountable to families and taxpayers.

Why does the current system not already do this?

Because it’s a patchwork quilt of private and public resources with significant variation in funding, facilities, professionalism, and other resources. We have grandparents and friends and siblings caring for a few kids informally in their homes. We have secular or religious communities coming together and building their own micro childcare programs. We have caregiving entrepreneurs pursuing their childcare business dreams. We have businesses (hello Smugglers Notch) reluctantly stepping into the childcare space because it’s the only way to find workers. What we have is not really a system at all.

What do we view as the economic benefits of a universal ECL system?

There are many. Some are immediate, but most of them long-term. As businesses, we know the power of investment today to generate plentiful returns tomorrow. This is exactly that. We expect a comprehensive ECL system to:

• Increase employment as parents return to the workforce
• Create happier, more productive employees (happier kids, too)
• Increase Vermont’s tax base
• Attract families to Vermont
• Generate better overall K-12 education and continuation outcomes
• Reduce negative social outcomes (substance misuse, imprisonment, mental health, etc.)
• Raise healthier, better prepared, and engaged Vermonters

 What do we view as the non-economic benefits of comprehensive ECL?

While there are plenty of tangible economic benefits (see the list above), the moral reasons are perhaps even more compelling. The last few years have made us all hyper-aware that children and families suffer dramatic inequities of access, which begin before birth and persist through adult life. We believe with all our hearts (and minds) that leveling the opportunity playing field from birth with a comprehensive ECL system will help close the opportunity gap and reduce social inequities.

Why now? What’s different or what has changed?

What’s different is the stated desire of the Legislature to address Vermont’s childcare crisis, and a sense of urgency and priority in addressing this issue. If we want to have a say in how systems are built and legislation moves forward, we need to be involved. But the movement toward comprehensive ECL isn’t new. Let’s Grow Kids has spent the better part of a decade building the practical and political foundation for such a system. Building Bright Futures, the private/public partnership that studies and monitors Vermont’s current childcare programs, stands ready to continue and increase its oversight role. Your Vermont Business Roundtable has been a steady advocate for ECL improvement for more than two decades. And now COVID has revealed the vulnerabilities in families and schools in a way that we didn’t fully see before.

What are we currently spending on ECL, and what’s needed in additional spending to meet the goal?

Exact numbers for current spending are difficult to pinpoint since we mostly have a private funding system. The RAND/JFO report states that in Vermont, $109 million of state and Federal money was spent in childcare for 2018-2019 (estimated to be $126 million in 2022 dollars). The estimate for a complete high-quality early care system is $645 million per year in 2022 dollars, with some caveats on limitations for included care (such as for childhood special education, which has separate Federal funding programs). Depending on the scope of the programs included and the subsidy scales implemented, the RAND report estimates that the revenue need is between $179-193 million per year on the low end, and $256-279 million per year on the high end. The balance would be privately paid for by families on a sliding income scale, with approximately $162 million coming from families with incomes higher than any of the subsidy schedules considered (those with household incomes above 5.0x poverty level).

What are some of the sources of revenue that are being contemplated?

There are many under consideration, each with their own benefits and challenges. One proposal is a payroll tax, split between employee and employer, on the philosophy that the benefits accrue to those payers and the system would be practical to implement. Other possibilities include an income surcharge on higher income taxpayers, reallocation of existing resources, changes to the income tax structure, “sin” taxes, or other combinations of sources.

The Roundtable has been clear that our support for new revenue is not without limits or parameters: sources must be evaluated based on transparency, fairness, adequacy, sustainability, and ability to be implemented and governed cost-effectively.

There’s plenty of money in the K-12 system. Can’t we just fund it with that money?

Many of our members have raised this suggestion over the years. The Roundtable has concluded that it is practically and politically unfeasible for Vermont’s “Plan A” to expect the existing Education Fund to include comprehensive ECL. The reality is that every year Vermont’s decentralized K-12 education system manages to spend pretty much all that’s in the fund. Education is expensive in Vermont because of our many small communities (no economies of scale) and our small-is-beautiful approach to life. We have come to believe that prioritizing a restructure of the K-12 system as a precondition to fully funding pre-K would leave more generations of Vermont children behind. Driving demonstrated savings back into the system to reduce cost pressure is a long-term opportunity for implementing a functional ECL system.

What about other spending offsets?

We believe strongly that a comprehensive ECL system will help reduce a host of intractable social ills that Vermont (and the rest of the nation) have failed to overcome. Think addiction, imprisonment, chronic unemployment, mental health, gun violence, anti-social behavior, and so forth. While we don’t see comprehensive ECL as an immediate panacea, we expect over time, perhaps as long as a generation, to see declines in community social ills and the commensurate costs. If spending offsets can be identified, we would strongly support using them, however, we have come to believe that fully funding universal pre-K is critical even if it requires new revenue.

Where will all of that money go?

Mostly to the teachers who will care for and educate our youngest citizens. As you can imagine, childcare is caregiver intensive. We estimate that as much as 70% of the money will go to fund salaries and benefits for caregivers and managers.

Who oversees Vermont’s Childcare System today?

Childcare oversight in Vermont is a coordinated model, currently split between the Agency of Education and the Agency of Human Services. Depending on the services provided and care required, there are three divisions and a separate department within those agencies rendering care for early childhood special education, licensing and center oversight, early intervention mental health, home visits, and more.   

Vermont is already seen as being unaffordable. Won’t this just make Vermont even less affordable as a place to do business?

With the right ECL system, Vermont will be more affordable and more appealing to young families. That’s because many families with children struggle to participate in the workforce. We expect that labor force participation will trend up, household incomes will increase, and Vermont may even become a magnet for families.

Can’t we just fund part of it? Isn’t that better than nothing?

Maybe, but it requires being intentional with the rollout. Some elements may be modular, which can allow for phased implementation. But it’s important to know that the returns on investment are not linear – we don’t necessarily get 50% improvement for 50% of the investment. The concern is that partial funding is effectively more of what we have now: childcare subsidies for the most vulnerable, private pay for those who can afford it, and many lost in the middle. Vermont will better thrive economically if all our children have equitable access to high quality care.

How will we ensure that the spending will be responsibly managed, and won’t balloon over time?

The Vermont Business Roundtable has successfully advocated for active stakeholder involvement in the governance process throughout this initiative, and the legislature has acknowledged our interest in this area. Building Bright Futures has been tasked by the State as the system watchdog, and we regularly and actively engage with their team including a formal seat on the State Advisory Council, regular involvement in focus group and design sessions with the systems analysis and finance teams, and ongoing opportunities to provide insights and feedback into the process

State government doesn’t have a great track record on implementing large public programs. Can’t this just be done in the private sector?

While state government’s track record may be uneven, ECL is too vital, too big, and too fragmented to leave to the market. The private sector is currently forced to play an outsized role in ECL, and it’s not working. ECL is critical modern infrastructure and should be funded as such. Some public/private partnerships may well be part of the systems solution.

What are the downside risks of inaction? What happens if this doesn’t get done.

We will get more of the same. Too many young people unprepared for life in Vermont as adults.

So, are we just abandoning the idea of badly needed K-12 reform?

No, but after careful deliberation, we have chosen to prioritize comprehensive ECL because we think it’s more achievable in the short term. We will continue to advocate for appropriate, ongoing K-12 improvements consistently and continually, and we believe that a quality, universal ECL system will create the necessary momentum and energy needed for broader educational reform.

Page Updated on January 17, 2023