DC Council Must Make Changes to Mayor’s Budget Proposal to Promote Equity in DC’s Early Learning System

Chairperson Mendelson, members of the Committee, thank you for the opportunity to testify. My name is Tazra Mitchell, and I am Chief Policy and Strategy Officer at the DC Fiscal Policy Institute (DCFPI) and an Executive Committee member of the Under 3 DC Coalition (U3DC). 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 would like to commend Mayor Bowser for expanding the child care subsidy program in her fiscal year (FY) 2024 budget proposal and policymakers for making bold progress on fair pay for more than 3,000 underpaid early educators, most of whom are Black and brown women, over the last year. However, while the Mayor’s proposal takes a strong step forward on affordable child care, it takes two steps back on protecting key funding sources that support an equitable, robust early education system that serves all young children and their families.

To promote equity in DC’s early learning system, we encourage the DC Council to:

• Keep in place the Mayor’s proposal to expand eligibility in the child care subsidy program to more moderate-income families struggling to afford child care;
• Restore the $5.4 million cut to the Early Childhood Educator Pay Equity Fund (PEF) and acknowledge the harm of cutting dedicated early education funding, including federal funds for the child care sector and sports wagering funds;
• Ensure that the PEF equity adjustment gives greater weight to providers participating in the child care subsidy program; and,
• Amend the PEF to ensure that directors of early learning programs receive pay commensurate with the credentials required by the Office of State Superintendent (OSSE) licensing beginning December 2022.

Use Savings in the Child Care Subsidy Program to Expand Eligibility

Protecting and strengthening the child care subsidy program—which pays all or part of a family’s child care costs directly to the child care provider—is critical to any racially just early education system and an inclusive economy. DCFPI supports the Mayor’s proposal to expand the subsidy program to include families making up to 300 percent of the federal poverty level (FPL, about $90,000 for a family of four). OSSE estimates that 2,200 children will become newly eligible for the subsidies, and a supermajority of these children are Black and brown, according to analysis of Census data.^[1],[2] U3DC supports this expansion given affordable child care is out of reach for many families, with infant care for one child taking up nearly 29 percent of a median family’s income in DC.^[3] Families with low and middle incomes feel this unsustainable burden most because child care costs exceed the federal affordability standard of 7 percent.

The good news is the District can afford to let more families in. Utilization rates for the child care subsidy program have been dropping over the last two years, as demonstrated in point-in-time data provided in OSSE’s oversight responses.^[4] The utilization rate is the number of children using subsidies compared to the number of licensed slots. The Mayor’s budget reinvests savings from underutilization to expand eligibility to more moderate-income families struggling to afford child care. Experts believe the drop in the utilization rate is largely due to a declining birth rate and the mismatch between supply and demand, with some child development facilities (CDFs) having long wait lists for infants while having difficulty filling other toddler slots. Barriers to the application process may also be a factor causing utilization to drop.

Mayor Failed to Reinvest Other Early Education Savings to Strengthen the Sector

Preserving and improving the quality, accessibility, and affordability of child care is an ongoing need of the early education system. Every last cent in the child care budget is needed to continue addressing each of these dimensions to ensure that every child has access to high-quality, affordable early learning. Yet, the Mayor’s proposal undermines progress towards these goals by:

• Making a $5.4 million recurring cut to the PEF in the financial plan under the guise of “right-sizing” a program that OSSE hasn’t even fully launched;^[5]
• Proposing a $9 million recurring cut to Temporary Assistance for Needy Families (TANF) due to falling utilization rates rather than further reinvesting those savings back into the sector;
• Sweeping $3.3 million in sports wagering funds dedicated to early education into the general fund; and,
• Cutting $8 million in American Rescue Plan funding for Back-2-Work Child Care grants aimed at boosting the supply of child care slots in child care deserts in Wards 7 and 8.

The recurring cut to PEF conflicts with the vision of the DC Council, which intentionally crafted the PEF to be a “non-lapsing” fund, allowing any unencumbered dollars remaining at the end of each fiscal year to be carried forward to be used for the same purposes. It is essential to restore the $5.4 million cut, and going forward, preserve all PEF funds and its non-lapsing status given the many uncertainties about the costs of and participation in the program before OSSE has been able to fully launch phase II, known as the long-term compensation program, next October. We recently witnessed how the negotiated Washington Teacher’s Union (WTU) contract grew the cost of parity overnight. Future contracts will do the same, and there will undoubtedly be other pressures such as growing health care costs.

Raiding PEF funding undermines the District’s ability to sustain the growing costs of the program, put more funding into the equity adjustment, and expand the compensation program to directors of CDFs. The combined effect of the other proposed cuts to early education could be problematic for a sector trying to re-establish more solid footing after the pandemic. This is particularly true for providers who stand to benefit from the Back-to-Work Child Care grants, which help preserve the supply of child care in neighborhoods most harmed by the pandemic and improve affordability of child care by targeting providers participating in the child care subsidy program. Funding for these grants would better position the District to address supply issues that are in part driving underutilization in the child care subsidy program and contribute to child care deserts East of the river.

Ensure the PEF Equity Adjustment Gives Greater Weight to Providers Participating in the Child Care Subsidy Program

As required by the FY 2023 budget, OSSE will soon submit to the Council the parameters that they will use in the long-term compensation program. This includes the funding formula for disbursing funds to CDFs, the equity adjustment that will provide additional funds to CDFs serving families with fewer economic resources, and a salary scale that puts early educator pay on par with their counterparts at DC Public Schools. The design of these elements, particularly the equity adjustment, carries crucial implications for the program’s ability to build towards a racially just early education system and thus warrants an interrogation from Council and stakeholders.

OSSE should limit the extra funding that the equity adjustment provides to CDFs participating in the child care subsidy program to ensure that children in families with the most significant barriers experience the greatest benefit. The funding could be based on the percentage of enrolled children whose families use a subsidy, as the Early Childhood Educator Equitable Compensation Task Force suggested.^[6] Such targeting would help mitigate current and historic inequities that make these CDFs less likely to have the resources to meet the PEF’s salary requirements and provide families with high-quality care. An added benefit is that this adjustment could incentivize additional subsidy participation, which would increase the supply of high-quality slots for DC’s most vulnerable children.

Given OSSE’s update is coming after both performance and budget oversight hearings, DCFPI also encourages the Committee of the Whole to hold a roundtable with key stakeholders this summer to assess the strength of OSSE’s program design and to offer improvements and implementation recommendations. If necessary, COW should use the budget process to ensure there is adequate funding for a strong equity adjustment, particularly in the face of the Mayor’s proposed $5.4 million recurring cut.

Expand the PEF to Include Fair Compensation for Directors

The DC Council should expand the PEF to include directors of CDFs, which U3DC estimates will cost nearly $15 million.^[7] Throughout the COVID emergency, directors played a key role in stabilizing the sector and stood with educators to serve young children and their families. Much like school principals, directors set the educational tone of the program, train and support educators, and manage their facilities’ administrative and financial well-being. Directors have been essential partners to OSSE on the rollout and success of pay supplements by keeping teachers “staff type” accurately updated in the licensing data, which is used to govern their eligibility for higher compensation. And as of December 2022, OSSE licensing requires directors to attain a minimum of a bachelor’s degree, reflecting that what early learning program directors know and do has a significant bearing on the quality of education young children receive.

Using the PEF to ensure that directors receive pay commensurate with the required credentials could motivate more of them to stay in the field and incentivize quality leadership in the child care sector. The Task Force discussed the importance of including directors in the compensation program to prevent loss of leadership in early learning programs. Their report listed wage compression as a risk to monitor, among other ripple effects of increasing teacher salaries without doing so for directors and other staff. Wage compression occurs when there is little difference in pay between colleagues—such as teachers and directors—despite significant differences in things like skills, experience, and job responsibilities.

Under the long-term compensation program, original estimates for minimum salaries range from $39,250 for an assistant teacher with less than a Child Development Associate credential to $66,735 for a teacher with a bachelor’s degree or higher. That highest minimum salary for teachers is nearly double the pre-PEF median wage for educators, and higher than what some directors earn. Director salaries range between $53,216 to upwards of $93,128, according to salary estimates in the District’s cost of care model.^[8] Larger and better resourced programs are likely to be on the higher end of that scale, with the largest and best resourced programs likely offering salaries greater than indicated in the cost of care model. OSSE is updating the minimum salary requirements to reflect parity with the new WTU contract and the cost of care estimates, meaning U3DC’s estimate of nearly $15 million is poised to change.

A roundtable would allow stakeholders and experts an opportunity to provide feedback on OSSE’s new salary minimums and model and flag any wage compression challenges that may arise.

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