BBB Specifics: Child Care

Last week, President Biden and Congress unveiled the latest version of the federal recovery package, coined the Build Back Better plan. This package represents a significant investment in Montana communities, geared toward expanding economic opportunity and lowering costs for families and workers. Historic investments in child care, preschool, school nutrition, and the child tax credit will help lift millions of children from poverty. Over the next week, Montana Budget & Policy Center will provide information on key components of this package.

Child Care

The federal economic recovery package provides $400 billion in additional support for child care and early childhood education for families and workers. In child care funding alone, Montana is slated to receive $67 million in 2022, $95 million in 2023, and $118 million in 2024, to expand access to child care and build out child care capacity.

Why is this investment necessary? Our current child care system is failing Montana families, and our economy is suffering as a result. Even before the pandemic, licensed child care slots in Montana covered less than half of the children whose parents work and need child care. This situation is more dire for parents of infants – with licensed child care capacity filling roughly a third of the need. A family lucky enough to find a slot will pay, on average, nearly 20 percent of their family income for care.

Who would benefit from the child care funding? Families, businesses, and child workers are all set to benefit from this package. Once the program is phased in over three years, parents of nearly 85 percent of Montana children under 6 will access support and see their costs go down. That’s about 63,000 children in the state. Montana businesses across the state are facing workforce shortages, in part due to lack of reliable child care for their workers. This investment will help keep parents in the workforce and is critical for our economy.

Who will be eligible for child care?The program is phased in over three years, expanding family eligibility over time. In the first year, families with incomes at or below the state median income will be eligible for assistance (for a family of three in Montana, that is roughly $71,000). Over three years, states will expand their programs to make more families eligible, with the program ultimately helping all families at or below 250 percent of the state median income (or about $180,000 for a family of three).

In general, a child must have at least one parent who is working, in school, or participating in other eligible activities. There are exceptions to ensure that children who have a disability, are in foster care, are experiencing homelessness, or are cared for by an older family member can receive assistance.

How will this package help families afford child care? States can require families to pay copays, but copays are capped based on income and cannot exceed a certain percent of family income. Families living on lower incomes (below 75 percent of the state median income) are not subject to copays. For families at higher income levels, copays are capped at 7 percent of income. An average Montana family with copays capped at 5 percent will save $116 per week, or $6,032 annually, on child care costs.

How will this bill help child care professionals? Today, child care professionals are underpaid and overworked, facing wages barely above minimum wage. The legacy of employer discrimination, racism, and perceptions of caregiving responsibilities have resulted in women, and specifically women of color, overrepresented in child care work and often paid poverty wages. To receive funding, states must show a plan to ensure child care professionals are paid a living wage and competitive with wages of elementary education professionals. By investing billions in child care, this package makes it possible for child care small businesses to pay wages that will stabilize their workforce and ensure child care professionals are paid for their work.

Will this package help states expand the supply of child care? The bill is geared toward helping states increase the supply and capacity of child care providers over the first three years, so that more families can access child care. The package provides additional support for states to expand payments to child care businesses, as well as grants to grow child care supply and improve quality.

Will the state have to provide additional state funding for the program? There is no state match for the first three years, and after that, the federal government will provide 90 percent of the cost, with states matching 10 percent. For the first three years, funds allocated to states are designed to help build additional child care capacity and increase access to child care for families. During those first three years, states must allocate 50 percent of their funds toward expanding access to subsidies, 25 percent to support building child care supply and improving quality, and 25 percent toward expanding outreach and access to those subsidies (including the state’s capacity to do that work). Starting in 2024, the program will guarantee affordable child care for eligible families, similar to how Medicaid and other social safety net programs operate. The federal government will pay 90 percent of the cost, and states are required to meet a 10 percent match (states and the feds share administrative costs, 50/50). This state match level is lower than most federal programs, including the match levels for traditional Medicaid and federal highway funds, and is on par with the state match for Medicaid expansion.

What if a state refuses to take the additional federal investment? If a state chooses not to participate, the bill will allow local governments or Head Start agencies to apply and receive funds. The federal Department of Health and Human Services will administer the program and provide additional details by rule on how local governments could apply in the event a state chooses not to take the funds.

What is in Build Back Better and How Does it Help Montana?

President Biden and Congress recently unveiled the latest version of the federal recovery package, coined the Build Back Better plan. This package represents a significant investment in Montana communities, geared toward expanding economic opportunity and lowering costs for families and workers. Historic investments in child care, preschool, school nutrition, and the child tax credit will help lift millions of children from poverty. The Montana Budget & Policy Center will continue to update this page with information on key components of this package.

Child Nutrition and Child Tax Credit

Housing Affordability

Child Care

Congress has also set out a plan to pay for these new investments. The revenue framework for the federal reform plan will raise nearly $2 trillion over the next decade from the richest Americans and large, profitable corporations.

Many of our large, profitable corporations are paying no federal income tax. The package will fix that by ensuring that corporations with profits in excess of $1 billion pay a minimum tax of 15 percent on the profits they report to their shareholders. The plan also imposes a 1 percent surcharge when a corporation buys back its own stock – a scheme often used to shift profits to shareholders without paying dividends. The framework also addresses offshore corporate profits with a 15 percent minimum tax.

Our wealthiest individuals are also paying much less than they should in federal taxes. A much-needed high wealth tax will help ensure those with the most begin to pay their share with a surtax on incomes above $10 million. Lastly, the plan targets staggering tax avoidance at the top by increasing IRS funding to improve tax collections of taxes already due and avoided by the wealthiest.

We have a once-in-a-lifetime opportunity to address Montanans’ challenges and create a better country for everyone. We can make housing affordable, make it easier to raise a family, make sure everyone has good food to eat, and make sure seniors can stay in their homes. And we can afford it with policies that impact only the wealthiest. It is possible if Congress acts now.

Make your voice heard by contacting Senator Tester here.

Governor’s Proposed Use of Federal Funds Misses the Mark

This week, Governor Gianforte submitted a request to legislators to use a portion of federal American Recovery Plan funds to pay out-of-state health workers and pump money into criminal investigations. Like putting a band-aid on a broken leg, the proposed short-term “fixes” will do nothing to address the fundamental issues workers and communities face, like housing shortages and the decimated behavioral health system. While a majority of legislators on the ARPA commission approved these recommendations as-is, there is still the opportunity for the legislature to invest in meaningful system changes that will support communities today and into the future.

The executive’s proposal to address health care worker shortages and rising crime rates fails to look at the systemic issues Montana faces: the lack of housing and a broken behavioral health system. To date, Montana has spent just 4 percent of the federal recovery funds awarded, including less than $18 million of the $906 million in flexible fiscal relief funds. Other funding streams allocated to housing and health services do not scratch the surface of the needs.

Housing shortages in nearly every community result in workers and families unable to find safe and stable housing and small businesses facing workforce shortages. For many Montanans in essential industries, in both urban and rural communities, finding housing located close to their jobs that is affordable is nearly impossible. While we deem our frontline workers essential, workers in these occupations face lower wages on average. Frontline workers come from disproportionately socio-economically disadvantaged groups compared to the overall workforce. This is a result of ongoing racist, oppressive, and discriminatory policies and practices that limit economic mobility. A narrow approach of providing bonuses to recruit out-of-state health workers will do nothing for the Montanans who worked tirelessly throughout the pandemic and continue to experience burnout and economic hardship. They deserve our support first and foremost.

In addition, the executive’s focus on patching holes in the criminal justice system will do nothing to address the structural barriers many Montanans face in finding safe and stable housing and appropriate medical care. Social isolation, economic stress, and persistent lack of access to mental health care put even more strain on systems that support people in crisis. These are the conditions that put people at greater risk of becoming involved in our criminal justice system. Past state budget cuts have decimated supportive services in our communities, leaving local governments, providers, and families with too few options to help. As experts in the field have noted, “the behavioral health system in Montana is in danger of imminent collapse unless it receives immediate relief.”

Montana can invest in solutions that will have a lasting impact on Montana families and support thriving communities. We should invest one-time federal dollars to provide hazard pay and housing support for nurses and other essential workers, increase reimbursement rates for mental health and substance use providers, and fund case management, culturally appropriate diversion and reentry programs, and targeted housing assistance in high-demand communities. Montana needs a multi-prong approach to address housing, including the construction of new housing, expansion of housing assistance programs, and support for local governments to address growing homelessness. We can utilize the historic investment of one-time federal funds to provide meaningful support for families, workers, and communities that will outlast the dollars. Let’s not squander our opportunity to build a strong Montana.

MBPC’s Comment to Centers for Medicare and Medicaid Services

On October 14, the Montana Budget & Policy Center submitted comment to the federal Centers for Medicare and Medicaid Services (CMS) urging them to deny Montana’s request to end 12-month continuous eligibility for adult Medicaid enrollees. Roughly 17,000 Montanans risk losing coverage with the end of continuous eligibility, according to a recent analysis. This effort by the state will hurt individuals’ access to coverage, including critical preventative care, and impact Montana’s economic recovery. 

You can find MBPC’s full comment here.

MBPC’s Comment on the 1115 Waiver Amendment

Last week, Montana Budget & Policy Center submitted our comments in relation to the proposed amendment to Montana’s 1115 demonstration waiver for the Health & Economic Livelihood Partnership (HELP) program, as well as, the proposed 1115 demonstration waiver for Montana’s basic Medicaid program (which DPHHS has referred to as the Waiver for Additional Services and Populations, or WASP).

As one of several organizations working to expand Medicaid in Montana, MBPC supported the Health and Economic Livelihood Partnership (HELP) Act, passed by the Montana Legislature during the 64th Legislative Session. As of July 1, 2021, over 100,000 low-income Montanans were enrolled in affordable health care coverage. This effort has moved Montana closer toward closing the coverage gap, has reduced uncompensated care, and has injected billions in taxpayer dollars into our local economies. MBPC urges the Department to consider the impact that more frequent determinations will have on Montanans. Twelve-month continuous eligibility has proved to be a success in Montana..

To read our submitted comments, download the PDF here.

The ARPA Commission needs to make housing an integral part of Montana’s post-pandemic recovery plan

Montana communities across the state are facing significant housing shortages, particularly for households living on lower and moderate incomes. The pandemic brought more attention to this ever-worsening crisis, as families struggle to find a safe, stable, and affordable place to live, employers struggle to hire and keep workers, and communities grapple with growing issues of homelessness. On Wednesday, July 21, the ARPA Economic Transformation and Stabilization and Workforce Development Advisory Commission will meet to discuss upcoming recommendations by the state administration on the use of flexible state COVID relief funds. The Montana Budget & Policy Center, together with 40 organizations, housing providers, and developers as part of the statewide Montana Housing Coalition, submitted a letter urging the state to invest a minimum of $40 million of flexible state fiscal relief funds into the construction and preservation of affordable housing.

Of this $40 million, we urge the Department of Commerce to dedicate at least $30 million in grants for direct financial assistance to fill funding gaps and reduce total development costs for housing projects. These grants will be similar to Community Development Block Grants (CDBG) and Housing Development Partnerships Program (HOME) administered by the Montana Housing Division. The Department can prioritize grants used to:

  • Purchase existing housing to convert to affordable housing; provide preconstruction technical assistance for affordable housing projects; and comprehensive rehabilitation and preservation of existing affordable housing;
  • Match federal, local, and other funding sources; and
  • Provide equity to housing projects that have applied for federal Low-Income Housing Tax Credits but not awarded due to lack of funds and located in communities disproportionately impacted by the pandemic.

Additionally, we urge the Department of Commerce to dedicate at least $10 million in grants to nonprofit housing partners and service organizations for housing and facilities necessary to provide safe shelters and supportive housing. The Department can prioritize grants used to:

  • Rent, acquire, and renovate existing facilities and convert underused hotels, motels, and other properties to shelters and supportive housing; and
  • Provide families at risk of or experiencing homelessness and for survivors of domestic violence.

Check out the full letter here. Montana’s State Fiscal Recovery Funds gives the Department of Commerce an unprecedented opportunity to tackle our state’s acute shortage of available and affordable housing and, by doing so, build stronger, resilient communities. We hope Montanans will make their voices heard and urge the ARPA Commission to make housing production an integral part of Montana’s post-pandemic recovery plan.

MBPC’s Comment on the Proposed End to Pandemic Unemployment Insurance (UI)

On June 8, 2021, the Montana Budget & Policy Center submitted formal comment to the Montana Department of Labor & Industry, raising concerns with the proposed end to pandemic unemployment insurance (UI) benefits later this month. The Pandemic Emergency Unemployment Compensation, providing an additional $300 in benefits, and the Pandemic Unemployment Assistance program, for self-employed, underemployed, and independent contractors, have been critical programs as many families continue to face barriers to employment. According to the National Employment Law Project, approximately 25,000 Montanans could face the loss of benefits used to support their families. For more information, see our blog Ending Pandemic Unemployment Early Won’t Fix Barriers to Finding Work.

To read our submitted comments, download the PDF here.

HB 632 – ARPA Funding

The link below is a short summary of House Bill 632 that appropriates $2.1 billion in federal American Rescue Plan Act (ARPA) funds. Appropriations made in HB 632 are authorized to continue through the biennium starting July 1, 2023. This summary is as of April 13, 2021 as passed by the Senate Finance and Claims Committee.

Summary of HB 632 as passed and signed into law.

House Bill 632: Summary of ARPA Funds

The link below is a short summary of House Bill 632 that appropriate $2.1 billion in federal American Rescue Plan Act (ARPA) funds. Appropriations made in HB 632 are authorized to continue through the biennium starting July 1, 2023. This summary is as of April 1, 2021 as passed by the House of Representatives.

 HB 632: Summary of ARPA Funding

SB 100: A Trojan Horse

The legislature is currently considering SB 100. This legislation purports to “prevent fraud” but is riddled with unintended consequences impacting adults and children accessing Medicaid health care coverage and food assistance. 

SB 100 is a Trojan Horse – it lures legislators in with the promise of saving the state money by rooting out fraud. The fiscal note, however, reveals a different story. The bulk of the purported savings to the state come from more than a thousand Montanans who are currently eligible for coverage losing their health insurance.

The fiscal note for SB 100 assumes that adults enrolled in Medicaid expansion and children on the Children’s Health Insurance Program (CHIP) would no longer have a one-year eligibility period for their insurance. SB 100 would end the current practice, known as continuous eligibility, which allows Montanans living on low incomes to maintain their health insurance even if their income fluctuates during the year.

An expensive and complicated verification process would require those enrolled to verify eligibility at least every six months. This process would create a potential barrier to maintaining coverage often when they most need it. Because families accessing coverage and living on low wages often face fluctuations in wages over short periods, the Department estimates that thousands of enrollees would lose their insurance under this cumbersome verification process. (The exact number of those losing coverage is unclear. The Department estimates the total number of “member months,” which equates to roughly 1,500 adults and 270 children over one year. Still, the reality is that it likely represents far more individual enrollees losing coverage for a portion of the year.)   

Efforts that would cut off coverage for those currently eligible will create uncertainty for both workers and businesses. The reality is that a fair number of those who lose coverage are back on the program within a matter of months. This dynamic, referred to as “churn,” often costs the state more in administrative costs. Those facing critical health issues face the risk of losing coverage and services when they most need them. In a study related to the impacts of churn in selected states, 16.2 percent of those churning on and off of coverage had to switch or change their prescription medication due to changes in coverage, 33.9 percent either skipped medication doses or stopped taking medication altogether.

The reality is that people accessing coverage through the HELP program are often doing so temporarily. Still, coverage during that time is often critical to accessing preventative services, mental health, and SUD services, helping those enrolled reach financial and economic stability. According to the data, individuals accessing HELP coverage are enrolled for an average of two years, with roughly a third receiving coverage for less than 12 months. In 2019, over 60,000 HELP enrollees accessed preventative care services and more than 30,000 behavioral health services. 

The loss of health care coverage by people who are currently eligible results is supposed savings to the state. But it also results in millions of dollars of lost federal revenue – funds that allow people to access health care and help support local businessestribal communities, and rural hospitals.

Fraud is exceedingly rare, and the Montana Department of Justice estimates 50 cases of suspected fraud tied to implementing SB 100. To put these 50 cases in perspective, this represents 0.02% of the total caseload within those programs impacted. The cost savings the bill claims do not come from finding fraud but instead come from eligible individuals losing access to these vital programs and services.

Bills such as SB 100 can be costly. The state will need to build an enhanced verification system and hire employees to re-enroll people who lost their benefits despite still being eligible. The fiscal note which touts the money saved by ending continuous eligibility hides what is likely an expensive endeavor to find a minimal amount of fraud. 

But the actual cost of the bill is not reflected in the fiscal note. It comes when Montanans who are struggling to make ends meet must jump through hoops to feed their families and access affordable medical care for themselves and their children. 

As we strive to recover from this pandemic, we must ensure Montanans have access to health care to keep our communities safe and healthy. SB 100 will jeopardize needed services for children, individuals, and families at a time when they are most in need of help.