Testimony at the Budget Oversight Hearing for the Office of the State Superintendent

Chairman Mendelson and members of the Committee, thank you for the opportunity to testify today. My name is Danielle Hamer, and I am a policy associate at DC Fiscal Policy Institute (DCFPI).  DCFPI is a non-profit organization that shapes racially-just tax, budget, and policy decisions by centering Black and brown communities in our research and analysis, community partnerships, and advocacy efforts to advance an antiracist, equitable future. DCFPI is a member of Under 3 DC, a coalition committed to securing a strong start for every infant and toddler in DC.

DCFPI commends the Mayor for preserving the nearly $72.9 million in the Early Childhood Educator Pay Equity Fund (PEF) dedicated to raising early education compensation to achieve parity with DC Public School (DCPS) teachers in her fiscal year (FY) 2023 budget. This investment is a crucial first step in strengthening DC’s child care system and recognizing the long undervalued work of a mostly Black and brown early care workforce.

DCFPI encourages the DC Council to protect this investment—including keeping PEF as a non-lapsing fund—in the FY 2023-2026 financial plan. We also encourage you to implement the following recommendations to meet the promise of the Birth-to-Three law and ensure that the implementation of the PEF supports early educators and advances equity in the child care system:

• Adopt the Early Educator Equitable Compensation Task Force’s recommendations on the PEF,^[1] and support the Office of the State Superintendent’s (OSSE) ability to swiftly disburse supplements for FY 2022 and efficiently implement the permanent compensation plan for FY 2023 and beyond.
• Include health care as a crucial part of the compensation plan, as intended by the Birth-to-Three law.
• Guard against benefits cliffs as early educators begin to receive their pay supplements. And,
• Ensure long-term sector stability and equity through monitoring the Child Care Subsidy program.

DC Council Should Protect the Pay Equity Fund and Require An Equity Adjustment

The DC Council created the PEF to be non-lapsing, and DCFPI encourages you to keep that designation through at least the end of the financial plan as OSSE launches different aspects of the compensation program and the community conducts outreach efforts to boost participation rates among educators and providers. Earlier this month, the Task Force submitted recommendations on program design for the PEF, including a short- and long-term funding mechanism, a new salary scale for early educators based on educators’ role, credentials, and experience, and implementation steps for the District to follow. The Task Force is comprised of 15 community members, stakeholders, and experts who came to an agreement on this program design, and policymakers should follow the recommendations built upon their expertise, research, and consensus.

DCFPI commends the Task Force for including an equity adjustment in the long-term funding mechanism, which would prioritize investment in Childcare Development Facilities (CDFs) serving Black and brown communities and large numbers of children receiving child care subsidies. The equity adjustment would create an enhancement for child development facilities based on the percentage of enrolled children whose families use a subsidy and the creation of a social vulnerability index.^[2] As the Task Force proposal reports, this additional boost in funding would help mitigate current and historic inequities that make these CDFs less likely to have the resources to meet the PEF’s salary requirements, advancing the guiding principle of centering those furthest from opportunity.^[3] This recommendation is a crucial component of centering equity in the PEF by ensuring that the child care providers who serve DC’s lowest income families receive adequate resources to compensate their teachers and provide families with high-quality care. An added benefit is that this adjustment could incentivize additional subsidy participation, which would benefit a greater number of families with low incomes.

Because OSSE needs to conduct additional research on the underlying factors that would make up a social vulnerability index tailored to DC’s context and needs, with community input, the Task Force’s current $52.6 million to $54.8 million cost estimate^[4] does not include the equity adjustment. As such, it is even more important to allow the PEF to be non-lapsing as OSSE tests this equity element against real scenarios and refines it over time to ensure the program is meeting its intended equity goals. Keeping the fund as non-lapsing would better ensure OSSE has the resources and capacity to continue to scale up the program and bolster the child care sector in future years. Given the equity implications, the Council should consider codifying a requirement for an equity adjustment into law, with some flexibility on OSSE’s end to make adjustments, and require this component to go through the rules process to ensure proper community engagement.

Council Should Prioritize Efforts to Incentivize High Subsidy Participation Rates Among Providers

The Task Force recommendations would not require providers to participate in the child care subsidy program in order to participate in the PEF compensation program. A key benefit of the equity adjustment is that it, if well-structured, could incentivize additional subsidy participation among providers due to the higher compensation payment for which a provider would be eligible. Higher participation rates in the subsidy program among providers would give a greater number of families with low incomes access to high-quality and affordable care.

Council should ensure the equity adjustment includes tuition costs and overall is strong enough to incentivize participation in the District’s subsidy program. Otherwise, unfortunately, there is a risk that the compensation program could undermine participation in the child care subsidy program. In the case that the equity adjustment does not provide an adequate enhancement to provider payments to meet the PEF’s salary requirements and fails to establish a clear prioritization for providers who take on subsidy students, there are risks that the number of providers in the subsidy system may decline or stagnate. If providers receive sufficient payments from the compensation program and the equity adjustment makes only a marginal difference to their bottom line, they may elect to avoid the related administrative work and requirements of the subsidy program. As fewer providers take on subsidy students, the providers who are currently taking majority subsidy students could be overburdened, meaning less capacity and less quality for infants from low-income families.

Upon program implementation, the Council should create an oversight plan to monitor participation rates for the District’s subsidy program as one mechanism crucial to keeping early care affordable. If participation rates in the child care subsidy program decline (which would be to the detriment of children who are furthest from opportunity), then Council would need to interrogate the drop and policy changes that would better ensure the program is centering equity.

Council Must Recognize that Fully Parity in the Birth-to-Three Law Includes Health Care

DCFPI urges the Council to recognize that full parity in the Birth-to-Three Law includes health care and other benefits. As such, you should ensure that these benefits are included in the compensation plan, whether it be in FY 2023 or later in the financial plan. In the law, parity for early educators means compensation equivalent to the average base salary and fringe benefits of an elementary school teacher employed by DCPS with the equivalent role, credentials, and experience. Benefits include health care, paid time off, and retirement.^[5] While proposing a plan for fringe benefits was not part of their charge, the Task Force’s report provides suggestions for ensuring educators can retain and/or access health care benefits and are connected to resources to understand how compensation may affect their benefits.

Higher pay and affordable health care work hand in hand to fairly compensate early educators.

Excluding health care benefits as part of the compensation program would not only violate the spirit of the Birth-to-Three law, but it could cause some workers to be worse off in the end if their total wage increase fails to outstrip any increased cost in health care coverage that they face due to higher wages. Higher costs could be a result of losing Medicaid eligibility or facing a higher premium through employer-sponsored insurance or through the marketplace. The proposed base salary levels for all assistant teachers ($39,250) and lead teachers ($48,216) are higher than the Medicaid income threshold for single workers without children ($27,000) and single workers with one child ($37,700); other workers could lose eligibility depending on their family size and credentials.

Whereas DCPS provides health care coverage directly and uniformly to teachers, some early education providers cannot afford to provide health care coverage to their employees. There is a mix of experiences across the sector, with some workers having employer-provided insurance, Medicaid, or subsidized insurance through the marketplace. Council should assess mechanisms available for ensuring all early educators have affordable health care coverage, including a direct grant to employers to help offset the cost of insurance or potentially a direct subsidy to the employee through the marketplace. The Task Force report suggests that District leaders explore creation of targeted marketplace subsidies for child development facilities and for individual child care staff.^[6] This idea aimed at meeting full parity would require additional public investment.

Roll Out of Higher Compensation to Early Educators Must Guard Against Benefits Cliffs

The Council should ensure that OSSE implements a plan to notify educators about the ways in which their work and income supports might be reduced by higher wages or require participating employers to provide that notice to their workers. The Task Force report provides recommendations to connect educators to resources, proposing that OSSE works with partners to identify existing potential counseling resources. The Council should set aside funding to help early learning professionals navigate potential public benefits and health care disruptions they may experience. This funding could support small grants to direct service providers who can advise early educators about potential benefit cutoffs or reductions, or at minimum, support the production of materials on potential benefit cliffs and the local counseling resources available.

The Council should also ensure that OSSE chooses the frequency of payment for the short-term supplemental payments—such as a one-time lump sum or monthly and quarterly payments—that leads to the fewest disruptions in health care coverage for these workers.

Thank you for the opportunity to testify, and I am happy to answer any questions.