Vermont’s new child care law makes the state a national leader — but falls short of the movement’s goals
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On the very first day of summer, many of Vermont’s top politicos gathered on the Statehouse lawn for a cheeky kind of bill-signing ceremony. They were there to celebrate H.217, which will inject more than $120 million annually into Vermont’s child care system, getting enacted into law.
Gov. Phil Scott had vetoed the bill — he objected to the 0.44% payroll tax that will partially fund the measure — but lawmakers overrode him by comfortable margins the day before Wednesday’s photo op.
And so, since the governor would not sign it, the children would. A large-scale printout of the bill was propped up on a tripod, and, after the speeches wrapped up, Senate Majority Leader Alison Clarkson, D-Windsor, stood at the ready, colored markers in hand.
“Anybody who is under four feet tall, please come forward,” her colleague, Senate President Pro Tempore Phil Baruth, D/P-Chittenden Central, instructed the small crowd of lawmakers, lobbyists, advocates and their children. “We have markers for you. You have to finish the job today.”
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Advocates and Democratic lawmakers, who had made child care one of their banner priorities for the session, had reason to celebrate. Taking into account regular federal funding and the state money Vermont already spends on prekindergarten vouchers, the measure will roughly double the public dollars spent on early childhood education in the state. Just weeks before, the wonky online outlet Vox had declared the new law would make Vermont “a national leader on child care.”
But in America, the bar is low. The U.S. is an outlier among rich, industrialized nations in how little it invests in early childhood education. And advocates and experts alike say that while Vermont’s new law will make significant progress, it will not, by itself, actually fix a broken child care system.
“This is a great downpayment on a child care system that works for parents and providers. It is not the full investment,” Elliot Haspel, a national expert who testified before lawmakers about the bill, told VTDigger.
“If all there ever is, is $120 million — maybe a little bit more — if we ask ourselves 10 years from now, ‘What’s the child care system in Vermont going to look like?’ It’s not going to look radically different than it does today. It’s going to be moderately more affordable. It’s going to be moderately better paid,” he said.
The problem of child care is simple math. Because it requires very low adult-to-children ratios, it is enormously labor-intensive to deliver. But because most families must pay out of pocket for the service, providers set their tuition far below the true cost of care. The result is prices that families still struggle to pay — and wages that leave child care workers unable to make ends meet. Basic benefits, like health insurance, remain out of reach for much of the workforce.
Vermont’s new child care measure is designed to mitigate that problem in two ways: by dramatically expanding which families are eligible for child care subsidies, and raising the rate (by 35%) at which the state reimburses providers who participate in the subsidy program.
The new subsidy system will be enacted in several phases, but by October 2024, families making up to 575% of the federal poverty level — that’s $172,000 for a family of four — will be eligible for partial subsidies. That will extend state aid to an estimated 80% of families, offering help to a greater share of the population than any other state in the country.
“The fact that Vermont has the subsidy going up to over 500% of the federal poverty level makes it very unique,” said Diane Schilder, a senior fellow in the Center on Labor, Human Services, and Population at the Urban Institute, a Washington, D.C.-based think tank.
But how those new subsidies actually impact a family’s bottom line will depend on whether, or how much, a provider chooses to raise their tuition to match the state’s increased reimbursement rates. If providers increase their prices at the same rate as reimbursements, the new subsidies were designed to basically hold families harmless — not make out-of-pocket costs much cheaper.
And while Vermont will extend help to more families than anywhere else, one state has it beat when it comes to how many families will receive entirely free care. New Mexico, where voters in 2022 approved a constitutional amendment guaranteeing access to child care, offers no-cost care to anyone making up to 400% of the federal poverty level (that’s $120,000 a year for a family of four). A family making that much in Vermont will still pay estimated co-pays of $1,000 a month.
Advocates and, in a 2021 law, legislators themselves set the goal that families receiving state aid would not pay more than 10% of their household income on child care. This year’s measure “does not achieve that,” Rep. Theresa Wood, D-Waterbury, the chair of the House Human Services Committee, matter-of-factly told VTDigger.
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“We are in fact raising the cost of child care in the state because we are addressing something that has gone unaddressed — which is payments of fair wages to people in the early care and learning sector,” Wood said.
But the new subsidy structure will nevertheless provide a dramatic improvement in affordability to one set of families: those with more than one child in care.
“The second child is free. If you have a second child, you don’t pay (another) copay. And I think that is something that is not widely understood,” Wood said. “That could make a huge difference.”
On the other side of the equation, Vermont’s latest measure may not necessarily raise workers’ wages as much as advocates had hoped. H.217 significantly raises reimbursement rates — but not by as much as was recommended in a study commissioned by lawmakers and completed this winter. That same report found that Vermont faced a funding gap of up to $279 million to meet its child care goals. This year’s bill invests a little less than half of that.
The new law also doesn’t require providers to raise wages, although it does state that lawmakers may do so in the future, and a report on child care worker wages is due back to the Legislature in January 2026. For Sen. Ruth Hardy, D-Addison, that’s a key part of this year’s unfinished business.
“I think the workforce question is another one that remains open,” she said. “Will this be enough infusion to really solve the workforce problems that we’re seeing in early childhood education or will we continue to struggle to find high quality people to take these jobs and stay at these jobs?”
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Hardy also advocated strongly, at the outset of the session, to move Vermont to full-day pre-kindergarten. She was unsuccessful, but the bill does create an “implementation committee” tasked with setting out a plan for getting Vermont to full-day, publicly funded prekindergarten for 4-year-olds by July of 2026.
Most stakeholders agree that the 10 hour-a-week voucher Vermont currently offers to the families of 3- and 4-year-olds for prekindergarten isn’t enough. But setting aside the question of finding additional funding, changing the system might still be tricky politically.
The vouchers have become a key source of revenue for private child care providers, who are anxious that expansions in public school-based prekindergarten programs could mean an exodus of staff to better-paid settings, and who argue that schools don’t offer the year-round care that families need. But further investments in a mixed-delivery system also make certain lawmakers nervous in light of recent U.S. Supreme Court rulings that complicate the guardrails states can impose on such vouchers.
As Vermont contemplates further work on early childhood education, Schilder said lawmakers need to think seriously about how to help providers navigate the complicated patchwork of state and federal programs that currently fund the sector, including by building out state-level capacity to smoothly administer such programs. And she also argued Vermont will have to think seriously about how to meet the needs of parents who work nights and weekends.
“If you have a fully funded system that provides full day care, it doesn’t necessarily meet the needs of the more than a third of young children who have parents who work non-traditional hours,” she said.
Like Haspel, she’s also emphatic that while Vermont should celebrate what it has done, this measure invests only a fraction of what’s needed. To offer a child care system that looks like what’s generally offered elsewhere in industrialized nations, she said, a low-end estimate of the state’s total spend would have to approach $700 million.
“This is making a dent and not necessarily addressing the entire problem,” she said.
Read the story on VTDigger here: Vermont’s new child care law makes the state a national leader — but falls short of the movement’s goals.