Jacob Stewart, director of state government relations at the Early Care and Education Consortium, has been closely following the Build Back Better Act and its potential implications on the child care industry.
In this podcast, he breaks down what could happen should this act (as it stood at the end of 2021) become law, as well as state implementation.
Jacob Stewart, director of state government relations at the Early Care and Education Consortium, has been closely following the Build Back Better Act and its potential implications on the child care industry.
In this podcast, he breaks down what could happen should this act (as it stood at the end of 2021) become law, as well as state implementation.
Welcome to the childcare business podcast brought to you by pro care solutions. This podcast is all about giving childcare, preschool daycare after school and other early education professionals, a fun and upbeat way to learn about strategies and inspiration you can use to thrive. You'll hear from a variety of childcare thought leaders, including educators, owners, and industry experts on ways to innovate, to meet the needs of the children you serve from practical tips for managing operations, to uplifting stories, transformation, and triumph. This podcast will be chalk full in insights. You can use to fully realize the potential of your childcare business. Let's jump in.
Speaker 2:Hi, everyone. Welcome to the childcare business podcast. This is Ryan Walton and excited to have you join us today. And like I say, at every time I'm really excited about our guests today. We, we actually have Jake Stewart with us from, um, the early care and education consortium. Uh, Jake's the director of state and government relations, uh, for the organization. And, and we thought it was appropriate like in the current climate and, and what's happening in our industry to spend some of our time on these episodes, talking with, you know, some of the individuals and groups that are out there really advocating for the industry as a whole. Um, and like most of us in the childcare space, Jake and his organization, they've been, you know, really closely following all of the build back better act and all of the implications that it has, you know, for individual providers and for the industry, uh, as a whole. And so, you know, today we're gonna talk a little bit about what happens with, um, that current act and if it becomes law and the implement implications for everyone. So, um, you know, really excited to dive into some of the, the conversation on that topic. Jake, welcome to the show.
Speaker 3:Thank you for having me. I'm excited
Speaker 2:To be here. Yeah, absolutely. So I wanna talk specifically today, as much as we can get into the weeds on some of the things happening at the, you know, federal level at the state level around legislation, but can you share a, a little bit about the actual mission and purpose of E C E C and what it is you guys do specifically?
Speaker 3:Yeah. So you said it really well, just a moment ago that we, we really advocate for the industry for the field as a whole. Um, so the way we're structured is, uh, we're a membership organization with, with many high quality childcare providers that are part of it, but it's not just, um, uh, the providers. We also have some, um, education service, um, companies that are a part of the organization. We have some state associations actually who represent a large swath of the field that are part of our organization. And, and really though our goal is to advocate for the industry as a whole. And of course we, we want to also, we align with the goal of trying to get access to high quality childcare for all families as well. We just want to bring the provider voice and perspective to all of these conversations, both at the federal level and at the state level as well.
Speaker 2:Got it. And do you guys, just in terms of the roots of the organization, cause I know, you know, it, I think there's been a spotlight put on your organization and others, you know, like yours through the course of COVID and the impacts it's had on the industry, but were you guys around, you know, pre 2020 and doing AB advocacy well be before, you know, the current timeframe.
Speaker 3:Yes. And there have been several iterations of E C E C that, to be honest, I'm less familiar with because, um, I joined actually at the beginning of the pandemic, they brought me on, um, in their state role and, and this is really, um, even my colleagues though had only been with E for a year and that's when their was a lot of restructuring that happened. So, um, but ECE has been around, um, for, for a while. I, I think at least, um, over 10 years and the membership has looked very different in that time. Um, but I think, uh, I'm really excited to be a part of it in it, in this new iteration and, and uh, and then of course, you know, by, for a lot of their work was national and they wanted to expand to the state world. And so, uh, they brought me on, um, for that purpose. They never had anyone in that role before. And so, um, I've, I've had, um, you know, a great time trying to do the work at the state level, which I think anyone in this field is, is equally important sometimes more impactful than, than what happens federally. They both breathe into each
Speaker 2:Other. Yeah, they do. They overlap. And so are you in terms of the work that you're doing, uh, individually, is it in all 50 states? So you kind of taking what's happening at the federal level and then deciphering that down to each of the individual 50 states. So you kind of have contact and interactions in all states or in
Speaker 3:Theory. So we do have a, a set of, or a handful of priority states about, about a dozen or so states where we, we spend a little bit more time in, however, we will also, um, do work in all 50 states. So for example, when, um, the cares act was passed, we, um, wanted to come up with a list of recommendations that we knew would be very helpful for the industry. Uh, this was at the height of the pandemic at a time where we know, um, most of the industry was struggling. So we put together letters, recommendation letters on, on that, on the, um, the cursor, you know, cursor dollars that were passed in December of that year. Um, we sent those out to all 50 states, but cuz we knew that that was a message that could be, that should be heard by all the governors in all states. We also, um, invited other, uh, provider organizations to, um, join that letter. So actually, um, that letter, we got, uh, over 200 national and state level organizations, um, to sign on to our recommendations. So we really want to, um, make sure that we're, we're pushing for recommendations that help all providers, not just our own providers and even in states that we're not necessarily actively involved in. We wanna make sure that these messages are
Speaker 2:Yeah, that's amazing. Cuz I don't think, I mean I would, myself included would say like, I don't think that that maybe the average professional in our industry understands how much work goes in from an advocacy standpoint to make sure that, you know, the government, um, and public dollars and public assistance is channeled properly into the hands of provider at, at the individual like city levels as well. Do you just in terms of like outta curiosity for me looking at like the board of directors and your participants, is it a challenge because as a group that's advocating for the industry as a whole, you have a lot of different voices and different perspectives. I, is that a challenging model to like take a bunch of D at like business leaders and people have different like models and try to consolidate to have a unified voice. Cause that's essentially what you guys are doing, right. Trying to find what are the commonalities and then making those commonalities a focus from a legislation standpoint.
Speaker 3:Yeah. And so we have writers who have very different models, right? We have some who, uh, primarily serve subsidy families, for example. So all things related to CC D B G right now, um, really matter to them. But we have, we have some providers who are private pay or work with franchisees or, and um, but I think that this is actually a microcosm of the field at large. And one, one problem, you know, I've been in this, in this space for several years, even before E C E I was at childcare where America and, and one problem I've always noticed is the competitiveness of, of different types of providers against one, another family childcare versus center based childcare, private pay versus subsidy, serving nonprofit versus for profits versus public schools versus, and there is always this tension. Um, you know, and I, I see that tension a lot at the state level as well. I don't think that's necessary. I think we are asking for many of the same things. And a great example is when we talk about preschool, uh, when we talk about preschool, we're talking about a mixed delivery system, a strong system that is rooted in parent choice. Um, that means that we need to be lifting each other up, um, and, and really advocating together for the same priorities. So I see the common threads and, and maybe that's my job here is to, uh, continue to communicate these. Um, and it's not easy. So, uh, especially at the state level, but, um, E C E though, uh, we have commonalities that, that do make it easier. So for example, one is, is high quality. Um, that's, that's, uh, you know, that's something that really brings these providers together wanting to expand high quality to all families, um, and safety is huge as well. Um, so that makes it a lot easier, but I, I think that that needs to be expanded, um, more broadly, uh, across the field and to, to stop the infighting.
Speaker 2:Yeah. That's a, that's an interesting observation. And because I would say I've, I I've seen and heard that too, where there's, you know, you've got different cohorts or groups and, and there might be a, a, a thought process, like one's better than the other or there's advantages. But I think you guys talk actually a lot about this and you just made reference to it is that that mixed delivery system, I think is kind of, uh, one of the key tenant, or at least from what I've read and studied about your organization. Um, something that you guys spend a lot of time focusing on that it's very, very important for the path forward in our industry. Can, can you define what that is and why you think it's so important?
Speaker 3:Yeah, so mixed delivery is, uh, you know, and I, I like to apply to preschool, but we can just apply it broadly to early learning. So childcare as well. Um, it is a, a wide number of programs that, uh, families are able to choose from for their child early learning programs, um, that range from centers, uh, family childcare homes, public schools, uh, um, uh, religious programs. And I think what's important is that they meet and agreed upon set of quality criteria. Mm-hmm<affirmative>. Um, and so there's at least sort of a, you know, that is what connects the system together, but it is sort of having a wide array of services and a wide array of programs that are, are part of the system that families can choose from. Um, you know, as opposed to, let's say, I, I would say on the other end of this, just a public school only system, right. Where families could only choose public schools and, and didn't have a choice. Um, so I do think mixed delivery is rooted in choice. I think for a long time, um, this field has known that mixed delivery is important. I think this past year has, has we've finally broken through to, uh, policy makers and lawmakers on not only what mixed delivery is, but why it's important. And so for the first time, I I've really seen law acres in 2020 actually articulate what mixed delivery is. That's new a few years ago. I don't think anyone even paying a to that term except for people within the field. And now we have a new question, which is how do we actually achieve mixed delivery? We know it's and I we've done a great job. Why it's, how do we actually get there? And that is a very complex question that I think, um, a lot of people in the field are trying to tackle.
Speaker 2:Yeah. And, and I, I bet it did feel like validating to you guys, as you start to hear policy makers now, like actually talk about mixed delivery and the importance of it, but when you guys, so just to kind of frame the problem for our audience, cause I think individual, you know, providers that listen to our podcast will be, you know, small business owners, in many cases, administrators, people looking to get into the industry, maybe own their own centers and they feel the problem. Like they feel the financial challenges of, of making a sustainable childcare operation work. But when you guys look at like the, the benefits of mixed delivery and what we're trying to solve for, I mean, it really does come down to like the economics of childcare, right? Like without some to type of public, um, interference, the economics of childcare, as it currently stands is really tough to sustain it. Is that accurate? And can you, I mean, can you elaborate on that? Like why the economics are so hard to make work without getting the government involved?
Speaker 3:Yeah. On the provider side, this all comes down to ratios. So, you know, infinite toddler care, um, of course has very low requirements when it comes to teacher to child ratio. So, you know, in, in some states it's as low as one to three or one to four, maybe one to six, but there's still really low. And, and that sort of model is, is really hard to sustain as a by itself because it just requires such a high wage, um, portion of, of a revenue. So then what a lot of providers do is they provide services for preschool age children, where the ratios are not as strict and they can maybe serve up to, you know, 20 children with, with one teacher. And then they also might school, age kiddos as well. And, and very similar that the ratios are much larger for school age. And that's where a lot of providers are actually able to make their profit. And so we do, we definitely bring up this argument to a lot of policymaker and, and this should be continued to be discussed with policymakers be because what's difficult about preschool. Um, let's say a proposal to run preschool through all public schools is that it's a very well intended proposal. Um, it's, it's trying to just get preschool for more families. The unintended consequences of that though means that those four year olds that providers often depend on, um, to help keep costs low for families or, or lower for families, um, or make their profit on, they end up siphoning off those, those families who of course are going to prefer, um, you know, free childcare or cheaper childcare at wherever they can get it. And when those families get siphon off, those providers are left with, um, some difficult choices, um, either, uh, increase family fees in order to, uh, for infant and toddler care, which is already super expensive in order to maintain their operations or, uh, cut back in other ways or, or in some cases have to, to close entirely. And, um, so it, it's really, really difficult to explain this sometimes to, to lawmakers who, again, their heart's in the right place, um, in, in wanting to have, you know, public preschool in, uh, public schools. Um, but we, we really need to emphasize that point that there's a unintended consequences in, in, with childcare and that are not just fell on providers. The they're fell on families as well. And, and that's the, the real key focus there.
Speaker 2:Yeah. Cuz especially like if I, if I play that back to you, what, what I heard you say, which makes a ton of sense to me is if the government says, Hey, we're trying to solve the issue about getting kids ready for school by offering universal pre-K. So every child gets, you know, free pre-K education. Families can leverage that. But what happens is that doesn't include infants and toddlers. So all of the private childcare sectors providing care for infants and toddlers. And like you said, you know, essentially maybe breaking, even in those age groups with the idea, being that in my center, I'm gonna have those older children with lower ratios, which allows me to have margins that makes my entire business sustainable and, and profitable. But if you take away those older kids, I'm left with either a breaking, even which business owners aren't gonna wanna do B this isn't sustainable. So I'm not gonna be in this business or C, which is probably what you'd see a lot is my rates for infants and toddler are gonna go way up is maybe I'm saying that slightly wrong, but is that essentially what is gonna happen if we say we're gonna fund pre-K for everybody at no charge,
Speaker 3:Unless it's mixed delivery. Yeah, exactly. Right. And I, and I think that's what we need to start educating providers on is, um, you know, for a long time, just the idea of universal pre-K, there's a lot of pushback and what we wanna start educating providers on is there is financial opportunity in universal pre-K if, and only if it's a mixed delivery model. And so this is really important because we need provider voices to be saying this, you know, sometimes it's just a few of the policy wants like myself that are trying to explain this to, to policy makers. But when it's, you know, a constituent, that's a small business owner, that's really making this point. The message I think, is heard a lot more. So, um, we, we would love to transition this conversation into not one that necessarily mixes universal preschool. We can support universal preschool and recognize that there is a lot of potential in universal preschool. Um, but it really needs to be facilitated in the right way. And that starts with mixed delivery
Speaker 2:With delivery. And so going back to the entire model now was this was this same challenge, present pre pandemic. Cause I know like, you know, we've talked a lot about the changes that have happened and the spotlight that shined on our industry because of, you know, getting the economy back on track, is this a fight that was also being fought prior to 2020, but it's just become more accelerated now or is this kind of new coming out of the pandemic and changes that happen from that?
Speaker 3:It is not. If, if you ask a lot of providers it's not new because they've had this for a long time, what is new is, is the federal and the national focus on it, which I think is an opportunity because, uh, previously there were, were a lot of local, you know, local school districts or, um, counties that were moving towards these universal preschool systems. And, and I would say in, in many states it was kind of a slow, it's been a slow eating away at the, uh, private market for a while and, you know, slowly ramping up of the, of the, uh, school-based preschool, um, over time that I that's actually almost harder to deal with because it it's a lot easier when there's a singular piece of legislation and, and that really ramps people up. But when it's slow over time and it's very local, um, it, it's very hard to coordinate and, you know, your providers kinda dealing with this headache on a local level, but it's not all providers. And it, you know, in, in different states, actually, it, it looks different. Um, and that's, that's the other point too, is that in, in some states they do the mixed delivery component very well or, or a lot better than others. And so I think now for the first time, this, the build back better act is putting a spotlight on this and we're finally able to see, okay, what is it that we're looking for out of preschool and who's doing it well, who's not doing it well, what needs to be a part, what needs to be included in this legislation? Um, and so that, that's, I almost think of that as a good thing, because prior to the pandemic, uh, prior to the build back, better act, even being a thing, um, just this, these conversations were too localized to really help coordinate any, uh, larger scale efforts.
Speaker 2:Yeah. So, so when you talk about, like, I know we're talking about preschool as the example, and there's other kind of like arms to this, but I think it's a good one to touch on cuz a lot of people can relate. So in a mixed use environment from maybe the E C E perspective of like, Hey, this is a, a model that, that makes a lot of sense, is it, you know, we're gonna provide funding to subsidize preschool, but it's going to be mixed delivery, meaning public institutions and public delivery mechanisms, as well as private would have access to the same funding. And then what happens is the programs that actually can do the best quality programs. Parents are gonna choose those and have free choice of those programs. And that's going to just raise the level of, you know, preschool program in this example across the board, is that fairly accurate? So like both private and public would receive access to the same funding and then parents choose is essentially yes,
Speaker 3:Which is what exactly what we prefer. And, and let's not forget the family economics here, right there, there are conveniences or preferences that the family's gonna have for their child that, um, may not be offered by a public school. Right. And so we believe this system is better meets the needs of, of all types of families. Um, let's also not forget that most public schools don't offer wraparound services or, or additional care services that a lot of private providers offer. And so sometimes for families, it's a headache to have to, you know, figure out, drop off and pick up and, and those day to day, um, at activities. And so there, there's a family economic, uh, piece here outside of just, you know, the, the payment piece, um, you know, their day to day can be vastly improved if they had a choice of the provider that they could, they could go to. Um, but one thing I also wanted to highlight and that you made me think of is oftentimes I think we, we make the comparison since childcare and preschool with K through 12, which is natural, you know, because it's early learning. Um, but sometimes I think the better comparison is actually the healthcare system, you know, in a healthcare system, we have a number of different providers to meet different needs, different health needs. We don't have a singular type of provider if we did actually, that probably wouldn't be a good thing. Uh, and so we have the same diversity in, in childcare and preschool programs. Um, the way subsidy reimbursement works is actually very aligned with the way that reimbursement works in healthcare. Um, and so I say this because I think if policy makers understood that this isn't K through 12, this actually functions a lot more like a healthcare system, some would make the argument that that high quality childcare is a, is like a health intervention for tri children, right. It gives them a healthy, um, environment to grow up in. And, and, um, so it, I find that very interesting and, and I often think about ways I could, can draw those comparisons for lawmakers to make the argument a little bit more clear.
Speaker 2:Yeah. To kind of tell the story and share it from another perspective in another industry that is maybe doing some things right. That allows us to provide that, that free choice and the mixed delivery. I also saw an interesting thing. I think it was maybe on the ECC website, it was a, maybe a promotional video, but it talked about the, the us military as a model, like meaning in terms of how the military views, I believe the government views funding in the military and kind of using that as like, Hey, this is a public service. And so actually getting the government behind it and using that model to say, Hey, if you're a private provider, who's providing great outcomes to families in your community, the government views that as vital and is gonna support so that you can continue to sustain that. Right. Absolutely.
Speaker 3:And it's, it's a win-win win, right? So it's the government providing enough funding for obviously military families to receive childcare. Um, quality is there. So, you know, we know that children are going to be in safe, high quality environments. The providers can get contracts and actually make a profit and, you know, can continue to, to build out these services and, and try to meet the needs of military families. And so, and I think that's the attempt that build back better is trying to do is to try to take this program and apply to, um, the entire country essentially, and, and envision, you know, reenvision childcare to where there is enough public funding providers can still make a profit. Um, it just, the difficulty here is that obviously with military childcare, the federal government can sort of make these decisions and, and assurances with build that, that, or we have the added layer of complexity of state implementation. So we just need to make sure that states all get this right. But I, I agree that I think pointing states to the military model is, is, would, would be a great idea.
Speaker 2:Yeah. Ma makes it makes sense. There's a lot of, lot of, at least a lot of best practices that can be pulled for from that. It seems like that could be applied the, the other group real quick. Cause I, I do wanna talk about the build back better, you know, money and some specifics that, you know, you can speak to about, you know, what, what does that mean? What's the definition of it? How does that money get into the hands of providers? What do they need to do maybe to access it? But I also wanna talk about, you know, the other group is impacted by all these changes, which is teachers and staff in the centers. Cause I, I would say one of the most common themes that we've had with every childcare provider that we work with over the past year and a half has been the impact to staff, like both their ability to take care of their staff from a financial standpoint, but now even finding staff to be able, you know, now that rooms can reopen, we've heard so many stories of centers saying I have the space and I have the demand, but I literally can't fill those places because I can't find teachers. And so I know, you know, all the financial model that we talked about, talks about the provider and the outcomes for parents and for children. And, but can you speak to the issue around staffing in our industry and maybe how you guys view some of these financial implications tying into staff and, and how we can recruit and take better care of the teachers in the space.
Speaker 3:Yeah. So this is another example of something that was an issue pre pandemic. So it's turnover was always high. Um, you know, was always difficult for, for a lot of providers to pay, you know, high enough wages, uh, to, to their staff. So of course that led to high turnover. Um, it's hard to find qualified staff, of course. And, and, and so the, the demands of, of an early childhood professional, that's working in an actual, um, program, um, they're high demands and, and in some states there's high expectations that they have, you know, certain certificates and certain, you know, requirements and, um, you know, combine that with low pay. It, it makes it very difficult to, to that pipeline is, is just not strong enough to, um, serve the needs. And so then enter the pandemic and already a, a problem that was sort of boiling underneath the surface there just completely, um, was exacerbated. And so right now at absolutely, I mean, there are entire classrooms that are closed because of just the inability to find staff, you know, add in the fact that we're still dealing with a health crisis. So the few staff that you do have, if any of them, you know, test positive for coronavirus or, you know, get sick, they, they can't, you know, they, you, and not able to come in, there's another classroom close, um, for that day or for the next two weeks. And, and so, yeah, it has been a huge problem. And this is something that we've been trying to communicate to, to, um, policy makers as well because providers want to pay their staff more like the desires there and, and they, they are trying to figure out ways to be able to do this. Um, but right now I think the piece that's always been missing is that public investment, um, you know, the, the public funding to help boost those margins, you know, and I, and I really want, um, I want everybody advocates and policymakers alike to be okay with talking about profit margins. Um, because that's, that's how you reinvest in staff. That is how you reinvest in wages, um, is when we, when we think about those profit margins and, um, unfortunately for a long time, I don't think state policy makers really paid attention to that. Uh, when we look at subsidy, for example, reimbursement rates in some states are embarrassingly low. Um, and so pro are making a loss for every, you know, family with subsidy that they're taking that's, that's not sustainable. Um, at all.
Speaker 2:Yeah, it's not, I, I think I read, and I think this might have been on the report that you guys published, but I wanna say the number was only 15% of us families who are eligible for help with healthcare actually received it. So it's, it's not accessible. It hasn't been enough, which is, you know, led to more and more kids, the bigger the gap, you know, and, and in terms of education, there's all sorts of like system wide challenges with that. The other, as you're talking about staff, the other statistics that really caught my attention, if they're accurate, it is, I think I saw 53% of all workers in childcare also leveraged some type of government assistance in their personal life, just because the average pay for a childcare, a teacher is like under 12 bucks an hour nationwide. And so it, that is a huge issue. And then, like you said, you add in all the things that came with the last year and a half, and people have just said, there's, there's another place I'm gonna go work cuz all this isn't worth it. Right. It's hard to find people.
Speaker 3:Right. And yeah, exactly.
Speaker 2:Do you guys have, like in terms of like the build back better now and the specific like mechanics of all right, we, we framed the problem. Like the economic system and structure needed to be shifted. We, we know that there's deserts all across the country. And so the supply and demand isn't quite perfectly aligned from coast to coast. Um, and we gotta fix it and we've gotta be able to pay T features better. And I love what you said Jake about like not to be shy about talking about profitability. Cause cuz look at the end of the day, a business is in business. It, even if it's mission driven, it has to be sustainable for the stakeholders to say, Hey, the mission makes sense. And so part of that is, you know, being profitable. Um, so we know what the problem is. So how do we get like what is the current status of build back better of all the different funding sources coming? And is there anything that you can share around for individual providers, what they need to do to go like tap into that or take advantage of it?
Speaker 3:Absolutely. So in build back better, what, what it's doing for the industry is, um, there are two different entitlements is, is what we call them. So two different sections of the bill that are going to really impact this field. The first is a, a childcare section that focuses on birth to five specifically, which is an important point because CCD B G childcare and development block grant, um, is birthed through 13. So it still encompasses school age. And by the way, we'll still continue regardless of if, uh, bill black better gets passed. Um, but this childcare provision is focused on, uh, zero to five. Um, and I would say it's very important for everyone in this industry to pay close attention to what that childcare is entitlement is doing. So the first thing it does is over, uh, a period of four years, it's going to increase the threshold for families to, uh, be able to qualify for financial assistance for childcare. So, um, right now it differs from states from state to state. So it could be, you know, I've seen as, as low as 130% of the federal poverty line will, will qualify for assistance in some states, uh, it's um, 85% of state media and income, which, you know, I know these are like very technical terms, but that, that's a huge difference when we're looking at state media income versus the federal poverty line, which is obviously really low. Well, the build a lack better act. It's going to immediately start with, um, one families that are 100% state media income will, will qualify and below will qualify. Um, and then over a period of four years, that's going to raise, uh, to 250% of state media income. Now that is, that is significant. I don't want to vary that point because we're talking about families that make two and a half times more than the state media income are now going to be eligible for financial assistance for providers. That means a lot of the families that they currently serve, um, are going to be eligible. And at the very least they're gonna have families be asking questions about, um, MIS eligibility, um, and whether or not that provider accepts it.
Speaker 2:So that'll be, if I heard you, right, that'll be families that are currently in a center, not eligible for assistance that are paying out of pocket over the four years, that the build back better, you know, grant is, has provisions for more and more of those families will be eligible. So I've maybe been paying out of pocket all along, but there's gonna come a point based on my income level, um, where I'm gonna be eligible. And then the benefit to the provider at that point is I can make my services available, more people and it subsidize and gives me a way to bring in more revenue, which takes care of all the outcomes we're talking about.
Speaker 3:Right, right. Yeah. So, so there's definitely a benefit to, to fill, you know, the, the open space we were talking about in centers. Yeah. Like there is gonna be more demand
Speaker 2:For sure. Cool. And so that's the that's you mentioned there was two different aspects to the build back better there's that the early childcare piece. And then what was the other component you
Speaker 3:Were talking about? There's the separate component? The other component is the preschool piece and, uh, you know, Democrats have been messaging, this is universal preschool. And I, I don't know if I would call this universal. It is just a lot of funding to qualify, um, you know, lower income families or for preschool programs. And through some, some hard fought advocacy actually from providers. Uh, there are very strong provisions that are written into build back better that this needs to be a mixed delivery system. Um, and there's, there's certifications that states have to meet to show that it's mixed delivery. Actually, there's, there's one phrase that I think is really key here and it says there needs to be an equitable distribution of child or of preschool slots among different types of providers. So I think, I mean, my opinion is that there is a lot of opportunity with the preschool dollars, especially if you're in a state, um, or live in a, a, a, you know, operate in a county that, um, right now preschool is, is being eaten up by the school districts. This is a really good opportunity to, to press reset on that and to get the state, to rethink a system that includes private providers more and, and give, gives them an opportunity to, to provide preschool services for families and have qualified for a voucher, let's say,
Speaker 2:Yeah, cuz generally speaking, I mean, in any industry across any, you know, kind of, you know, platform, competition's good, like being able to give families more choice is generally gonna up the level of quality across the board. Um, so what's the current status of that? Like for people maybe aren't in the weeds of, you know, especially, I would say I would include myself in this bucket. There's been all sorts of emergency provisions over the past year and a half. So, you know, the government making funds available to help, um, you know, small business owners, including our industry kind of keep their doors open. I think some of that has been emergency short term focus, the build back better. What's the current state of that? Has it been passed? Is it still working through details of legislation? Can you speak to
Speaker 3:That? It's a great question. And, and also I'm gonna add the caveat that literally from the time people are listening to this, the, the status could change. Cause it seems to change on a week, week basis. But let me back up a little bit because people may have heard the news, um, in November that it did pass the house. Um, the house of representatives officially passed bill back better. And I do want to say that that was more of a formality, so the house passed it so they could kickstart the negotiation process. They sent it over to the Senate, um, which is where it's being negotiated. Now. Now keep in mind, and this may be no secret that this is really a negotiation among Democrats. Um, because Democrats are, are hoping to pass this with, with uh, 50, 51 votes, essentially with vice presidents. So, um, that's really negotiations happening and there have already been changes made even since the house had already passed it, there, there will likely continue to be changes made. And that means that the house will have to pass it again. So that's why I say it's, it was more of a formality when they passed it the first time. Um, but it's, it's not passed the Senate yet. And, and honestly this is where the timeline is very murky. We just found out, um, it's likely going to be pushed back after the holidays, um, into the new year. Um, and so the passage could be in January and, and I think people need to start getting comfortable with the idea that it could be as late as February or March. And, um, but also just keep an open and, and flexible<laugh>
Speaker 2:Mind, mind about, about the time of it. And, and so during that, just, you know, for an organization like yours, who's advocating for, you know, providers as part of that bill, uh, what, like what role does your organization and, and advocacy take on during this period? Like, do you literally, as Democrats and as you know, the, as Congress, I think as negotiating it, are you guys like talking to those legislators and you have people that are kind of lending that voice and making sure that, Hey, if you're gonna make changes, this isn't something that's gonna be great for the industry. And so you guys still have a pretty active role. As of right now,
Speaker 3:We've had, we've had a yeah, and actually for the last three months. And I, the, the first time that billback better acts text was released was early. And we've been fortunate to have conversations with, with, um, Democrats, Democrats have been open to these conversations and they have actually already included provisions, um, that have really helped, um, strengthen the bill for providers, the, the mixed delivery, um, provisions around preschool that I mentioned, for example, um, was really helpful. There's been some additions and these are all small additions, so we don't have to get into the, the details of that. But I will say we are very grateful that, um, Democrats and committee staff have taken the time, um, sometimes on the weekends<laugh> to talk with us and, and talk through, um, these provisions and, and get things included to really strengthen the bill. And I think, I mean, in my opinion, that really demonstrates their commitment to getting this right. Um, and they've, they've made those additions, um, several times now. And so we really appreciated
Speaker 2:That. Yeah. There's a lot of complexity to that. I mean, because obviously they is piece of the bill is specific to our industry and childcare, but obviously that bill encompasses the entire economy. So you've got advocacy groups similar to E CEC on every level for every industry kind of advocating for the same types of things. Like where are those funds gonna go? How do we allocate'em? Um, so I can imagine, yeah, it's, there's a lot going on there.
Speaker 3:You know, the other thing too, is that our work doesn't stop when, uh, if and when bill gets passed and there's so much more work to do even on the federal level, because the first thing that will happen in, in all providers should know this by the way, because they should involved in the process and should be expressing their, um, but the first step will be a regulatory and rule making process. So, you know, this is all gonna go to the department of health and human services, and they're going to have to make a lot of clarifications and, and rules around provisions of the bill. And so that's gonna be a very important process as well. Um, and then after that, we'll see, um, you know, state implementation process. And, you know, the first question is, are states, which states are going to actually accept the funds. This is not a requirement. Um, states don't have to take the funds. It's actually gonna function very similarly to what we saw with Medicaid, where, where states actually had to opt into the funds. Um, so I say that because think sometimes there is this sky is falling mentality, um, that sometimes comes out of, um, you know, the oppositions, uh, talking points saying like, as soon as this is passed, everything is done. It, it, it's not, and there's still so many more decision points that need to be made. Um, it, it's not like the next day everything's gonna be different.
Speaker 2:Yeah. It's not like every, the next day all the funds are deployed and, and, uh, everything's perfect, but, but in terms of like how that actually works and I'm sure it's different on every bill and, and this in some ways is unprecedented, but like, let's say that March, end of March, just based on your timeline and it gets pushed out. And by the end of March, there's, you know, um, an approval of the bill, like, what does that look like for an individual provider? It sounds like it might be different based on the state because the states are gonna have to opt in and then the states are gonna have to have deployment mechanisms. Um, but what that ends up looking like for a provider, let's say in a state that is doing a good job, does that look like how quickly would those funds be available in your opinion? And I know it's like a four year window, it sounds like before it's revisited, but quickly would providers start to benefit from this bill?
Speaker 3:Yeah. And, and so let's talk timeline for a moment cause, um, it, it does, uh, there is that it will take four years and, and Ms. Bill will, um, is eventually trying to get to this, you know, 20, 25 to 20, 27 window where things are really supposed to work the way it wants it to work. So, um, we'll start with year one. It does have, you know, some provisions around 2022, um, tool be, you know, families at a hundred percent of state media income. However, I think, uh, other than that, we're gonna see some other changes, but not necessarily a huge fundamental shift other than we're gonna see more families eligible for the funds. Um, states are the way reimbursement's going to work will still be very similar. However of, um, states are gonna begin a process. Um, and this is really important because you know, the economics here are crucial. Um, right now the way that these reimbursement rates are determined are through something called a market rate survey. So, um, states do these market surveys and these surveys basically look at the price of childcare, um, cross all types of programs. Um, and then they, they sort of come up with, uh, a, a range or like a, yeah, they, they come up with a range and then they decide to pay based off of a lot of states do like, let's say 65th percentile. So, you know, they, they look at providers at that 65th percentile price. And basically what the state is saying is we'll reimburse that much. It's, it's an outdated system. And it's part of the reason why rates are often too low, especially for higher quality providers. Cause the way I just described this, it means, I mean, they're serving providers all over the quality spectrum and that means naturally these prices are going to be depressed a little bit. Um, and so what this legislation is gonna require states to start to do, um, is, uh, something called a cost estimation model and what this cost estimation model's supposed to look, look at is, uh, the cost it takes to provide high quality care and services. Um, it's going to look at everything from, um, fixed costs. So facilities, um, you know, rent, all of that. Um, it's gonna wages as well. So we were talking about this, this wage piece and, and it's really not just gonna look at wages now, but where do we want wages to be? Um, it's going to then of course look at all the quality initiatives, curriculum costs. It's gonna take all of these costs and it's gonna require the state to provide reimbursement based on those costs. And so there's a lot of promise to that. Will
Speaker 2:It also factor in like, um, local markets? So like, you know, a center in New York city versus a center in upstate New York and, you know, know cost of living and it'll factor in all those types of things. So the idea of being a provider in an individual location is gonna get reimbursed at a rate that makes sense for their location and their cost of doing business, essentially.
Speaker 3:Yeah. And that's, that's written into, uh, build back out text itself too. It needs to take yeah. Geographic location, the type of program, obviously, you know, a family childcare program, the expenses they're gonna look different than a center. Um, all of those need to be taken into account. And right now, uh, states can do this now, actually. And, and there's one stated in the country that just started doing this and that is New Mexico. Um, on July, first of this year, they became the first and so far only state to tie their reimbursement rates to a cost estimation model. And I think any subsidy serving provider in Mexico can tell you that, especially for its infant and toddler care, reimbursement it for drastically improved the rates to the point where they were, um, at, or even a little bit above their private pay rates.
Speaker 2:That's gotta make it if I'm not mistaken, that's like some of your roots are in New Mexico, right. So like, is that a coincidence or was that part of you working on that and getting to say, Hey, that's my home state and I get to work on it.
Speaker 3:I, I would love to say the credit for that, but I can't, but yeah, you're right. I actually used to be a teacher of a public, a middle school teacher in New Mexico. So yeah. I have a lot of, a lot of roots there, but I am it does, I do, uh, take pride in it though. I, I think it's great. And, um, and I also think anyone that's looking to get into this business, um, this is a trend that's gonna happen regardless of build back better. I am a, of other states that are looking into cost estimation models, um, and, and states are starting to realize that this is sort of what the direction that things need to go. So I encourage anyone that's looking to get into this field to really, or that's, especially anyone that's already in this field to look at the, the promise that these cost estimation models have, because, um, especially if you're a, a provider that serves subsidy, um, this is something that could really, um, help, uh, your business.
Speaker 2:Yeah. And is there, like on the, in that vein, Jake, is there places that providers in their state can go like, are there recommendations you have, I often ask that of our guests around? Um, I know sometimes there's that mindset of like, I'm just one provider and there's not much I can do to go influence this, but it, you know, it requires individuals to, you know, take that initiative and make sure their voice is heard cuz then you know, that builds and, and gains momentum, which is what you guys are doing. Any suggestions or recommendations. So for individual providers and any of the 50 states, if you were to say Hey, to, to really influence this conversation for the industry, here's some things you could do, any, anything that you could highlight.
Speaker 3:Yeah. And I'm taking into account too, that providers are busy. You know, if you're a small business owner, you don't have time, like you're not like me all day going through emails and having these conversations you, so I think, um, the first thing I would mention is that, um, in many states there might be an association or group that, um, is really dedicated to this and can help do that work for you and give the information for you. And I would absolutely look into, um, being a part of that. There might be a small fee to be a part of that association, but it is gonna be so worth it. And more importantly, that association, um, more than likely will arm you with the information on the changes that are gonna happen. And, and those changes are gonna help you be a, a more prepared business owner, right? If, if you know, the policy changes that are coming, you can adjust your business practices to reap as many benefits as possible, but you can only know that with information. And I think, um, a lot of associations and, and, and if, if there's not, you know, there's some states where there's not associations and I wanna be mindful of that. And so, um, you know, reach out to me if, if that's our start one yeah.
Speaker 2:Starting association,
Speaker 3:Right. Starting association or, or, you know, you can reach out to me, we can see if there's national groups that you can be a part of. If you're, if you're a family childcare provider, there are absolutely national groups that you can be a part of, um, that can help, um, army with information. Um, but we, we wanna make sure that all providers are really informed in this process, us and also I, and, and I really wanna highlight when it gets to the state implementation piece and all of this. Um, the number one thing I'm gonna be telling every state policy makers is that providers need to be at the table, uh, for, for all of this, you, they, they can't be making, you know, even the cost estimation model, they need to be consulting and working with providers, um, before they determine, you know, what, what the cost costs are. And so, um, of course I can say that. And then if there aren't actually providers standing up to be at the table, then it, it really, uh, doesn't help, but we need provider voices, really paying attention and states will be required. You know, states have to put together plans. They can't just make decisions, Willy nilly, they do have to consult the field. And so we really want providers to be paying close attention to those opportunities, to raise their voice. And I know that might require you to sit on a webinar or attend a, a hearing, um, late at night when you're already tired, but the, the future of your business is a stake. And I think it would be well worth your voice and well worth, um, your time, um, in those situations when, when we come.
Speaker 2:Yeah. I, I love that. You know, for me, in particular, especially we were talking before we, we started recording about an episode. We did a few weeks ago, you know, that include like childcare wear of America and, you know, storm and, and, and, you know, some of the, their group, um, to me, it's really encouraging to know that there's organizations out there that like our industry, isn't just like kind of bumbling through and hoping things work out that there is an organized effort of really talented people that are advocating for the industry as a whole. And I think that has been one of the things that there's this sense that think providers understand that they have to be a part of that too, and let their voice be heard. But to know that there's organizations like E C E C that are, you know, in Washington DC advocating for the way that this is gonna play out for providers and families and kids, um, is re really reassuring to me like,
Speaker 3:Yeah, and I hope this actually extends to the local level as well, but, and this, you know, this kind of goes back to what I was saying with the infighting of like all these different types of providers kind of viewing the others, uh, skeptically. And, and I hope that this can turn into is you all can view each other as on the, the same side of things, right. We, we need all these voices. It's not just the, the center based operator and the family childcare program and the religious program. Everyone really is on the same side here and can advocate for one another and, and hopefully can start viewing each other as an ally in, in really, uh, championing the new needs that, that we all are gonna be asking for.
Speaker 2:Yeah. So, so encouraging to hear the work that's being done. And I mean, and the fact that we're close with the bill back better, that the bill is, you know, kind of in negotiations right now. I mean, hopefully like you said, there is a plan for 20, 22, but even in, in the years to come all sort of advancements coming and, and funding. So, um, Jake, I'll tell you what I know being respectful of time. Um, I knew this would be a really informative conversation. It would be, I was hoping it would be mostly you getting to share a lot of what you shared, which has been really helpful because I, you know, I know dealing with individual providers, like you said, everybody busy and they hear rumblings of things that are happening, but I think this will help narrow down some of the specifics that are going on at the federal and state levels. So really appreciate you coming on the show. It was extremely informative.
Speaker 3:Yeah. And, you know, down the line, as we get to those, um, key moments, you know, it build back better pass is, or, you know, what states are doing. I'm always happy to, to come back and, and try to lift up those things again, because you know, our work is, is, is not ending if it passes. It's really just beginning. If it passes then would, I'm always happy to highlight sort of the, the next steps there. So everyone's aware.
Speaker 2:Yeah, please do. I mean, and, and we'll stay in touch with you, you, cuz I would love to, you know, maybe have a regular update where, you know, we piggyback off of this initial conversation and say, this is where things stand now, you know, we're in a lot of ways, we're, you know, obviously we're a, we're a vendor in this industry, but based on, you know, the, the user base that we represent, um, there's a lot of commonality of trying to make sure that we all stay didn't advocate for the industry. So yeah, let's do it for sure. Really appreciate
Speaker 3:It. Thank you so much. And uh, we'll stay in touch.
Speaker 2:Yeah. Have a great day.
Speaker 1:Thank you for listening to this episode of the childcare business podcast, to get more insights on ways to succeed in your childcare business, make sure to hit subscribe in your podcast app. So you never miss enough episode. And if you want even more childcare business tips, tricks and strategies, head over to our resource center@procaresoftware.com until next time.