David Trimmer is a guest contributor to Brief Policy Perspectives and a first-year MPA student.
The U.S. House recently passed a version of President Biden’s domestic spending bill. Two significant provisions seek to create a universal Pre-K system and affordable childcare programs in every state. However, the political process has been grueling for Build Back Better (BBB) and has come with a heavy cost to Biden’s original plans. Looking at the current text and how the early childhood programs are designed, those who want transformative policies that will help families take care of and educate their children may be extremely disappointed.
First, let’s examine the implementation of universal Pre-K in BBB. The original proposal for Pre-K was for the federal government to send the majority of the money needed to fund Pre-K programs to the states so they could set up their own system. Now in the program’s first three years, only a fraction of what is necessary would be sent to the states. The federal government will effectively send block grants to the states that are inadequate to fund a universal program properly. Looking closer, in the first year, states will receive four billion dollars in total. A generous estimate says that this amount would only be sufficient to fund free pre-k spots for around 5% of children. This change would likely result in many states rejecting the Pre-K program, primarily those with Republican-controlled governments. For states that opt into the program, it would be very difficult to pick up the remaining cost, likely requiring them to ration out Pre-K spots to children. Therefore, the proposed plan is anything but universal.
Childcare is Even Worse
The childcare program also suffers from this implementation problem as states need to agree to accept federal funding and commit to the cost-sharing agreement. However, the childcare plan would also be means-tested. To gain access to the subsidies, parents will need to meet the requirements of an activities test which includes employment or training of some kind. The activity test will likely exclude some of the poorest families from gaining access to subsidies, and they will be unable to afford childcare.
Additionally, subsidies will only be available to families making below a certain threshold. The BBB text, as it stands, states that families making one dollar above their states’ median income would be ineligible for subsidies for the first year. The following two years would only see a modest increase to the thresholds. With wages for childcare workers mandated to be increased by tens of thousands of dollars, the price of childcare will rise, making the unsubsidized cost unbearable for some middle-income families during the program’s first three years. For example, a family of two making 75,000 dollars a year and a family of three making 90,000 a year would have to pay the entire cost of high-quality childcare, which is estimated to be $25,000 a year. When this amount is compared to these families’ net incomes, the unsubsidized cost would be close to half of their yearly earnings. Therefore, childcare will not be affordable for everyone.
The Senate’s Opportunity
The Senate has yet to pass a version of Build Back Better and therefore has an opportunity to re-allocate more funding to the Pre-K and childcare programs, so they are more transformative. Senate negotiations will likely result in the removal of paid family leave and immigration reform, as well as a SALT deduction limit. Therefore, around 400 billion dollars could be allocated to the Pre-K and childcare programs. The Senate could increase Pre-K funding for the first three years so states could set up a Pre-K system properly. Senators could also eliminate the activities test for the childcare program and raise the thresholds to a point where middle-class families are not overwhelmed by the unsubsidized cost of childcare. If the Senate took this opportunity, it would enhance the quality of the Pre-K and childcare programs for those who participate now and make the provisions worth fighting for when they are up for renewal.
Build Back Better has good intentions, and there are still some positive aspects about the bill. However, the Pre-K and childcare programs are designed in a way that will deny people access and offer inadequate benefits for many who qualify. If these problems are not solved in the Senate, Build Back Better will fail to provide the early childhood services it promises to deliver.