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Nebraska targets child care subsidies to help balance budget

March 21, 2017 GMT

LINCOLN, Neb. (AP) — Nebraska officials are targeting a child care subsidy for low-income families to help balance the state budget, drawing criticism Tuesday from some lawmakers who say they should find the money elsewhere.

The bill by Sen. Merv Riepe of Omaha would temporarily lift a requirement that state officials adjust child care subsidy rates to reflect providers’ increased costs. The Department of Health and Human Services has signaled that it wants to keep its rates flat, saving the state millions of dollars even though child care costs are likely to rise.

“I don’t feel we should be filling our shortfall on the backs of child care providers,” Sen. Sara Howard of Omaha said as lawmakers debated the measure.

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Current state law requires the department to pay a rate that falls between the 60th and 75th percentile of what all providers charge, based on a survey. The department currently pays a rate in the 60th percentile, meaning that 60 percent of Nebraska providers that were surveyed charged a rate equal to or less than what the state pays.

If the bill passes, that state’s rates could slip into a lower ranking among providers because of rising costs.

Howard said she was concerned the proposal would harm the state’s provider network, making it harder for working parents to find high-quality child care. If their expenses rise, child care providers are likely to make up the difference by paying lower wages, making it harder to attract caregivers who are well-trained and experienced.

Senators adjourned for the day without voting on the bill.

“This is a fundamentally critical piece of our economy, a fundamentally critical piece for our families to be able to take care of themselves,” said Sen. Sue Crawford of Bellevue.

The bill would save the state an estimated $7.4 million in the upcoming fiscal year, which starts on July 1, and $1.9 million the following fiscal year. Nebraska lawmakers still have to approve a budget to address a projected $895 million revenue shortfall in the upcoming two-year budget.

State officials will likely have to raise the rates by Oct. 1, 2018, when new federal child care regulations go into effect. Federal officials have warned that, if state officials keep the current rates, they’re likely to get disqualified from the program and lose out on $30 million in federal aid.

Sen. Mark Kolterman of Seward said the tight budget year has forced lawmakers to make tough decisions.

“We’re asking everybody to make serious adjustments to their budgets,” he said. “Everyone’s taking a hit.”

Still, Sen. Justin Wayne of Omaha said the bill would essentially cut a “jobs program” for child care providers and the parents who rely on them.

Nebraska has 3,000 providers around the state who serve about 18,400 children a day, said John Cavanaugh, the chief executive officer of the Holland Children’s Movement, a group that advocates for working families and children. Cavanaugh said most of the families who benefit from the subsidy make less than $25,000 a year. To participate, they must either have a job or be enrolled in school.

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Cavanaugh said the budget proposed by Gov. Pete Ricketts and should have included the program among other priorities that are in line for a funding increase, such as K-12 public schools. Ricketts spokesman Taylor Gage noted that the governor’s budget doesn’t call for a rate cut.

Cavanaugh said it’s particularly important that young children from poor families “aren’t just being warehoused” at a critical time in their development.

“Why pick on the very poorest children in the state?” he said. “These are the children who need the most help.”

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Follow Grant Schulte on Twitter at https://twitter.com/GrantSchulte