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Introduced by Representatives Mrowicki of Putney, Andrews of Rutland City, Donahue of Northfield, Fisher of Lincoln, Frank of Underhill, French of Randolph, Morrissey of Bennington, Orr of Charlotte and Pugh of S. Burlington

Referred to Committee on


Subject:  Human services; child care subsidies; study

Statement of purpose:  This bill proposes to authorize a study designed to address the chronic underfunding of state child care subsidies and, ultimately, to ensure that low and middle income working families are able to pay for quality child care.


It is hereby enacted by the General Assembly of the State of Vermont:


The general assembly finds that:

(1)  Today’s young children are tomorrow’s Vermont.  Recent science on early child development shows that there much we can do today to ensure that all Vermont children grow into solid members of our communities tomorrow. We now know that early experiences build the architecture of a child’s developing brain, and the quality of those experiences establishes either a sturdy or fragile foundation for all development that follows.  Nurturing, responsive, individualized interactions with caring adults are essential to establishing a sturdy foundation.  Child development is community development as well as economic development, as healthy, capable children are the building blocks of a solid and productive society.

(2)  Vermont’s child care industry plays a significant role in Vermont’s economy.

(A)  The total economic impact of the child care industry in Vermont is approximately $426 million annually.  Every dollar spent on child care in Vermont stays in the Vermont economy.

(B)  It is estimated that the child care industry employs approximately 5,000 people in Vermont and contributes to the creation or support of 2,232 indirect jobs.

(3)  Economic conditions in the United States require that both parents in many families work outside the home.  Nationally, 61 percent of married couples with children under six years of age had both parents in the workforce in 2000.  In 2002, 80 percent of Vermont women with children under the age of six were in the workforce.

(4)  National studies consistently show a high return on public investment in early childhood development.  For example, every $1.00 spent on quality early childhood services saves in later education, criminal justice, welfare, foster care, and other social services costs.  Estimates of savings range from $2.00 to over $7.00 for each $1.00 spent on quality early childhood services.

(5)  National experts recommend that families spend no more than 10 percent of household income on child care in order to ensure that other basic needs are met.

(6)  For a Vermont family of four with two working parents and two preschool age children (ages three and four and one‑half), with a median household income of $62,331.00 the cost of child care equals $13,000.00 and represents 21 percent of the family’s household budget.

(7)  For a single parent earning $13,500.00 a year in the hospitality industry, with two preschool age children (ages three and four and one‑half), the same cost of child care ($13,000.00) would represent 96 percent of the household budget if there were no state subsidy.  Child care costs after being reduced by the maximum available child care subsidy would still leave a co‑pay of $3,984.00, which equals 29.5 percent of this single parent’s budget.  Among working families who pay for child care, more than 27 percent of low and middle income families spend more than one‑fifth of their earnings on child care.

(8)  Vermont’s child care subsidy program, administered by the department for children and families, provides financial assistance to

low and middle income families for purchasing child care.  The financial assistance is in the form of a subsidy to eligible families.

(9)  Income eligibility guidelines still reflect the 1999 federal poverty guidelines and state median income.  This means that families who could benefit from child care financial assistance are not even eligible to apply.

(10)  According to the department for children and families, there is a significant gap between the current child care subsidy rates and the prevailing market rates for care, especially for children under age three.

(A)  A family earning $28,000.00 with a four‑year‑old child in

full‑time child care has a shortfall of $130.00–200.00 each month, even with a subsidy.

(B)  The annual subsidy amounts are currently $2,586.00 for a family of three, $3,115.00 for a family of four, $3,645.00 for a family of five, and $4,176.00 for a family of six or more.  These rates have not increased since 1999.  In 2000, the average market price for child care was $5,487.00 annually.

(C)  If the subsidy rates had increased by three percent annually since 1999, the rates would now be $3,180.00 for a family of three, $3,831.00 for a family of four, $4,483.00 for a family of five, and $5,136.00 for a family of six or more.

(11)  Recent increases in the federal temporary aid to needy families (TANF) work requirements without concomitant federal resources are putting additional pressures on the state’s child care subsidy program.

(12)  As a result:

(A)  working families who need help paying for child care are not eligible for assistance or get far less than they would be eligible for if the income guidelines were updated.  As a result, the ability of some parents to enter the workforce or to select quality, state‑regulated care for their children is undermined;

(B)  child care providers are more and more reluctant to accept children on subsidy because the subsidy rates lag so far behind market rates; and

(C)  families who have to make up the difference between what the state pays and what providers charge often fall behind in co‑pays.  This results in providers having to absorb losses until they can no longer afford to do so, at which point children end up with disruptions in care while parents struggle to find lower cost care or are forced to stop working.


(a)  The child care subsidy committee is created to evaluate and make recommendations regarding Vermont’s child care subsidy program as detailed in subsection (c) of this section.  The committee shall be composed of three representatives appointed by the speaker of the house, not all from the same party; three senators appointed by the president pro tempore of the senate, not all from the same party; one business community representative appointed by the state chamber of commerce; one child care provider appointed by the commissioner for children and families; one employee of the state’s child care resource and referral agencies appointed by the commissioner for children and families; one member appointed by the governor; one member representing a statewide child advocacy organization appointed by the commissioner of children and families; and one working parent receiving a child care subsidy appointed by the building bright futures state council.  Initial appointments shall be made upon passage.

(b)  The work of the child care subsidy committee shall reflect the following goals:

(1)  strengthening Vermont’s economy by enabling more low and middle income working families to enter and remain in the workforce;

(2)  ensuring equal access to state‑regulated child care by providing low and middle income families with child care assistance;

(3)  expanding choices for low and middle income working families by providing subsidies that reflect current market rates;

(4)  ensuring that Vermont serves all eligible families and does not maintain a waiting list;

(5)  establishing by 2010 eligibility guidelines that reflect the current federal poverty levels and state median income and subsidies that reflect prevailing market rates; and

(6)  once the eligibility guidelines and subsidies are consistent with current levels and rates, ensuring the child care subsidy program continues to meet existing needs by adjusting them annually for inflation.

(c)  The child care subsidy committee shall report its findings and recommendations to the general assembly not later than January 31, 2008.  The report shall reflect the goals stated in subsection (b) of this section and shall include:  an assessment of the importance of the child care subsidy program to Vermont’s economy and to early child development; an estimate of the money needed to bring income eligibility guidelines to current levels and bring Vermont into compliance with federal guidelines, suggesting that subsidies should be at least 75 percent of the market rate; a review of how other states are making investments in quality child care through the use of subsidies and of any available cost‑benefit analyses of such investments; a calculation of the economic benefit to Vermont of investing in the subsidy program; an assessment of possible funding sources for the child care subsidy program and a recommendation on how to fund the program without compromising funding for other critical public services such as economic development, educational, and human services programs; and an analysis of possible inflation factors and a recommendation on which to use once target funding levels have been met.

(d)  The department for children and families, the legislative council, and the joint fiscal office shall provide staff support as requested by the committee.

(e)  The committee is authorized to meet up to six times while the general assembly is not in session to perform its functions under this section.

(f)  Legislative members of the committee shall be entitled to compensation and reimbursement for expenses under section 406 of Title 2.  All other members not receiving compensation for service on the committee from another source are entitled to compensation under section 1010 of Title 32.

(g)  The committee shall cease to exist on February 1, 2008.

Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont