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.”

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. 

“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?”

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.

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As predicted, lawmakers on Tuesday easily overrode Gov. Phil Scott’s veto of H.217, a bill set to invest well over $120 million annually into Vermont’s ailing child care sector, enacting the measure into law. 

The only surprise, at the end of the day, was how quickly it all happened. The House voted early in the day, 116 to 31, to override Scott. (It takes a two-thirds majority to override a gubernatorial veto.) And as of early afternoon, the plan remained for the Senate to take up the measure on Wednesday, followed by a noontime celebration with advocates, parents, and child care workers on the Statehouse lawn. But as the whirlwind day wore on, the upper chamber decided to conclude its business ahead of schedule, and voted 23 to 7 to override Scott.

“The child care bill which we overrode today is, I believe, a historic achievement,” Senate President Pro Tempore Phil Baruth, D/P-Chittenden Central, told his colleagues after the vote.

He encouraged senators to attend the event with advocates, still planned for Wednesday. “It will be, I think, a joyous celebration,” he said.

The child care legislation is intended to help mitigate twin problems in the labor-intensive sector: poverty wages for many workers, and sky-high prices for families.

Starting on Jan. 1, 2024, the state will reimburse child care providers at a rate 35% higher than they did this year — enabling them to significantly raise wages.

Currently, families living at or below 150% of the federal poverty level are not charged a co-payment to receive a full subsidy from the state. The bill would eliminate co-pays for those making up to 175% of that metric, increasing that threshold from $45,000 to $52,500 for a family of four. And the bill would extend partial child care subsidies to families up to 575% of the federal poverty level — $172,000 for a family of four.

The bill is the culmination of nearly a decade’s worth of advocacy from Let’s Grow Kids, a well-funded nonprofit that has led the charge on child care in Montpelier. But the cause was also strengthened by the Covid-19 pandemic, which underlined both the sector’s fragility and importance to the state economy, and a new Democratic supermajority in the House and Senate, which moved aggressively to enact several new expansions to the social safety net. 

But while Democrats and Progressives universally supported the bill, votes did not fall entirely on party lines — a few Republicans and independents also backed the measure.

“This is a historic, celebratory moment for Vermont, one that child care advocates, parents, employers, and lawmakers have been working towards for years,” Aly Richards, CEO of Let’s Grow Kids, said in a statement. “The 2023 Child Care Bill will change the lives of thousands of Vermonters and is a monumental step forward for our state in addressing the ongoing child care crisis.”

The bill will be funded in part by a new 0.44% payroll tax, which is why Scott objected to the legislation. The Republican governor has long supported additional investments in early childhood education, but has always drawn the line at raising taxes to do it. The draft state budget he presented to lawmakers in January included $50 million to boost child care subsidies, a proposal legislators incorporated into their own financing mechanism. 

Read the story on VTDigger here: Lawmakers override Gov. Scott’s child care veto.

Efforts by Montana legislators and Gov. Greg Gianforte to tackle Montana’s childcare shortage this year have produced several new laws, including measures that expand a program helping lower-income families pay for care and exempting small, in-home daycares from state licensing requirements.

The former measure, a $7-million-a-year expansion of the state’s Best Beginning’s program, had been a particular priority for Democrats and childcare advocates who had spent weeks waiting for word on whether Gianforte, a Republican, would sign the measure.

In a statement Wednesday, Gianforte’s office touted the expansion of the Best Beginnings program as part of his broader “pro-family, pro-jobs” budget.

Legislative Democrats had worried the Best Beginnings bill was becoming a political football as the governor sought to derail veto override efforts on other bills. In a statement Wednesday, they called the bill “the most significant investment in childcare in the state’s history.” 

“Ensuring Montana families have access to quality, affordable childcare means our economy can thrive — and so can our communities and kids,” bill sponsor Rep. Alice Buckley, D-Bozeman, said in the statement. “I am so proud we have finally taken action to address our state’s childcare crisis.” 

The Legislature passed the Best Beginnings bill, House Bill 648, April 28, but it was only transmitted to the governor for his signature this week after spending more than a month waiting on an administrative signature from Senate President Jason Ellsworth, R-Hamilton.

Childcare is both a major cost-of-living issue for Montana families and a significant economic challenge as the cost and availability of care limits how much many parents, women especially, can work at a time when the state is facing a tight labor market.

Research by the Montana Department of Labor & Industry estimates the state has licensed childcare capacity for only 43% of kids who need care. Labor department economists also say childcare for kids under 5 costs Montana families $16,269 on average in 2022 — a figure equivalent to a quarter of the state’s median household income and well above the 7%-of-income figure used as an affordability benchmark by the U.S. Department of Health and Human Services.

(The labor department’s economists estimate that need by tabulating the number of kids under age 6 who live in homes where both parents are employed or actively looking for a job. They note that many working parents likely default to unlicensed care.)

That shortage, labor department economists say, has a direct impact on the state’s workforce. They estimate family responsibilities or a lack of childcare kept 23,000 Montana parents from working last year and forced another 45,000 to work fewer hours.

Tori Sproles, who runs Child Care Connections, a Bozeman-based agency that works with parents and childcare providers, said in a recent interview that the conundrum is that childcare is both prohibitively expensive for many families and a high-overhead industry that fails to pay well enough for childcare business owners and their staff to readily make ends meet.

“The biggest hurdle is the affordability of it on both ends,” Sproles said.

The Best Beginnings bill makes the program available to slightly higher-income families, shifting its eligibility cutoff from 150% to 185% of the federal poverty line. At the 185% level, a family of four would qualify for the program at an income of $55,000 a year and a single parent with one child would qualify with an annual income of $36,000.

The bill caps how much participating families pay, limiting their childcare expenses to 9% of their income. It also shifts the program’s reimbursement policy so that payments are no longer tied to attendance requirements — a policy that proponents say can put parents and providers in a bind if kids have too many sick days. 

The governor’s budget office estimates HB 648 would add about 700 children to the program and increase its cost by about $7 million a year.

Other bills focused solely on regulatory pieces of the childcare puzzle without putting additional public dollars toward subsidies.

Most notably, Rep. Jennifer Carlson, R-Manhattan, sponsored House Bill 556, which exempts many small, in-home daycare operations from licensing administered by the Montana Department of Public Health and Human Services. Anyone caring for up to six kids in a private residence will no longer be required to seek a license unless they participate in Best Beginnings or other public subsidy programs.

The state’s existing regulations require licensing when someone is providing “supplemental parental care” to three or more kids, excluding their own children.

Carlson said recently that she thinks licensed daycare programs make sense in larger cities, particularly for families who don’t have a reliable network of family or friends to fall back on. But she argues it’s a different situation in small towns where people know their neighbors well enough to know who they trust looking after their kids and routinely flout the letter of the current rules.

“The government does not have to run every single part of our life,” Carlson said. “People have been watching other people’s children since the dawn of man.”

As the bill worked its way through the Legislature, opponents argued the state licensing process provides a way to ensure that people who are running childcare businesses are subject to requirements like background checks, home safety inspections and first-aid training.

Sproles, who testified against the bill, said in May that people who provide unregulated care have rarely been prosecuted. She also said she’s concerned that exempting more small providers from licensing could put parents in situations where they mistakenly assume a daycare provider has been vetted by the appropriate authorities.

“There are people out there who drop off their kids to people they don’t know — and nobody in that house is going to be background checked,” Sproles said. 

“Just because someone has a license isn’t a guarantee of safety,” countered Carlson, pointing to a 2022 audit that found the health department had in three cases approved childcare licenses at addresses also listed as the residence of someone on the state’s sexual and violent offender registry. “As a parent, it’s your responsibility to know who’s watching your kids, not the state’s.”

Another bill sponsored by Buckley, House Bill 187, explicitly defines providing home-based childcare as a “residential” use of property rather than a “commercial” one, a statutory tweak intended to shield small daycare providers from being constrained by restrictive homeowners association covenants. It passed with bipartisan support and was signed by the governor April 19.

Gianforte also approved a Republican-sponsored bill, brought by Rep. Terry Falk, R-Kalispell, to relax some currently required daycare center staffing ratios, allowing among other changes a 6-to-1 instead of a 4-to-1 provider-to-child ratio for 1-year-olds and a 20-to-1 rather than a 14-to-1 ratio for kids 6 and older. The new law, House Bill 422, also allows some staffers caring for kids 2 and older to work in another room during nap periods.

Falk argued the changes better align Montana law with national standards and will make it easier for childcare centers to pay workers sustainable wages. Opponents countered that they believe the lower ratios are necessary to keep kids safe and that loosening the regulations will make childcare workers more likely to burn out. The bill passed with support from all Republicans and opposition from nearly all Democrats.

Democrats brought several other bills, unsuccessfully, to put additional public dollars into childcare support. One bill would have created a $1,600-a-year tax credit to supplement childcare worker wages. Another would have put $150 million from the state’s budget surplus into a childcare trust fund, where interest earnings would have been used to produce a long-term revenue source for childcare scholarships.

Sproles said she was pleased with the conversation that happened around childcare at the Legislature but thinks more action will be necessary to address the challenge.

“We’re not done,” she said. “These are baby steps toward some of the bigger things we need to tackle as a state.”

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