New Regulations Put Financial Strain on Childcare Providers

Students in a Washington Head Start classroom welcome Sen. Patty Murray (D-Wash.). (Kai-Huei Yau/Associated Press.)

Oregon, already one the least affordable states for childcare, may have an increase in costs according to an audit released by Secretary of State Kate Brown.

The so-far unknown costs of new federal inspection and fingerprinting requirements from Oregon’s Department of Education and Department of Human Services are set to take effect in 2015 -- and state agencies responsible for child care oversight aren't yet sure how they’ll manage them.

The potential cost hikes for child care providers could potentially cause them to raise their rates, or even stop providing care altogether further reducing affordability and access.

Although the state currently offers subsidies and tax credits for child care, those breaks are set to come to an end by 2016.

“Child care helps children with early learning and helps parents enter the workforce,” Secretary Brown said. “Oregon has to ensure access to affordable child care so that families can succeed.”

One national study conducted in 2012, ranked Oregon as the least-affordable state for center-based infant care for a married couple. The average yearly cost for center-based care was nearly $13,000 for an infant; $10,000 for a four-year-old; and $5,000 for a school-age child, according to a study by the National Association of Child Care Resources and Referral Agencies.

Many factors drive child care cost: payroll, regulation, facility rent, mortgage payments and utilities are just some. Cost of living differences within regions also impact how much families can pay for care; in Oregon, care in urban areas is significantly more expensive than in rural areas.

Throughout the state, providers in 4,360 facilities and homes offer about 150,000 slots for 165,000 children needing care. 

For many Oregon child care providers, the new federal rules will require more comprehensive background checks and fingerprinting, increased on-site monitoring and more information posted online at state websites for parents to reference.

The higher workload resulting from new inspection requirements—up to a 71% increase—may exceed the capacity of state field offices across Oregon, according to Brown’s audit.

Conversely the new rules could also improve safety. Under the new regulations, most child care providers serving families receiving government subsidies, even ones that aren’t required to be licensed will be inspected. The old rules only required inspection of licensed providers.

Also, Oregon currently inspects only licensed child care facilities. The new regulations will require inspections of most providers who serve families receiving government subsidies for care, even providers that are not required to be licensed.

Oregon, like other states including like Georgia and Oklahoma (who both provide universal preschool) uses child are subsidies and tax credits to reduce the financial strain of costs for parents.

In the United States, only California, Rhode Island, and New Jersey offer paid leave.

“Our audit can help the state evaluate policies that affect Oregon’s child care industry, whether they are policies on affordability, access, safety, or quality of care,” Audit Director Gary Blackmer said.

Despite some of the uncertainty around the new regulations, auditors found that state agencies can still better their preparation for its arrival.  Auditors recommend that ODE and DHS initiate administrative or statutory charges required to allow inspections of unlicensed providers.

ODE and DHS also should determine the costs of the new regulations and monitor whether the state is meeting the demand for fingerprinting services and inspections.

Secretary Brown commended ODE and DHS for agreeing to the audit recommendations to comply with proposed federal regulations and potentially reduce their impact on providers, parents, and their children.