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Minnesota faces federal penalties for too low child care funding

MINNEAPOLIS — Minnesota may have to pay millions of dollars in federal penalties this fall for chronically underfunding a program that helps subsidize child care expenses for low-income families, according to state officials.

The state’s publicly funded child care assistance program helps more than 15,000 families and repays day care providers for looking after eligible children.

However, the program has subsidized just 16.3 percent of total costs charged by home day care providers and 23 percent of the costs billed by larger providers, according to a report that the Minnesota Department of Human Services issued this week to legislators.

Those percentages fall below the federal minimum for reimbursement rates.

Unless Minnesota lawmakers increase the subsidy, the state could lose from $2.75 million to $5.5 million of the $69 million it receives yearly through a federal block grant to help with program outlays, the Star Tribune reported. DHS officials noted that Minnesota would be subject to penalties starting Oct. 1.

“We are at a critical point,” said Lisa Bayley, deputy assistant commissioner for children and family services at the DHS. “Everything shows that having that consistent, stable, quality child care, day after day, is critical for kids’ development and for keeping families together.”

Minnesota’s reimbursement rate for its child care program has not increased since 2014. The statewide number of family child care providers has dropped by 35 percent over the past decade, from 12,200 in 2009 to fewer than 8,000 last year.

Minority families, who make up the majority of families in the in the child care assistance program, are disproportionately affected. As of last year, more than 67 percent of the program’s 30,000 children were people of color, according to state data.

Karen Devos runs the lone child care center in northwestern Minnesota’s Norman County. She has used some of her own income so that she wouldn’t have to turn away impoverished families over the last three years. But with three children of her own and household expenses, Devos said she cannot continue bankrolling such costs indefinitely.

“I will do everything in my power to serve a family in need, even if that means taking a pay cut,” she said. “But something has to give, or else people will either go out of business or quality will fall away.”