A Modern Economy Depends on Child Care. Montana Can Make It Affordable and Accessible.

May 2021

Child care is a critical component of a modern and thriving economy. High-quality and affordable care is essential for parents to stay in the workforce. Businesses across all sectors need workers who have a safe and reliable place for their children during the day. The coronavirus pandemic highlighted how important child care is and the complex challenges the system faces across the country. Child care businesses operate on narrow profit margins, often struggle to pay adequate wages, and have high staff turnover. However, this long undervalued industry played a key role in reopening, allowing businesses to recruit and retain workers.

Even before the pandemic, Montana lacked adequate child care for years. In 2017, Montana ranked in the bottom five states for access, meeting only 41 percent of the demand.1 Affordability has also been a problem as families struggled to pay for child care for years. Families paid between $7,900 and $9,100 for child care in 2016, more than the cost of in-state tuition at a four-year public college.2 The affordability situation has not improved. In 2020, families paid between $8,400 and $9,500 for child care.3

In 2020 and 2021, Montana received more than $200 million in federal relief money to support child care and early childhood education, which includes the most recent $111 million from the American Rescue Plan Act.4-11 During the 2021 Montana State Legislature, policymakers sponsored seven bills related to early childhood care.12 The two successful bills increased the number of children in licensed, home-based care and allowed candidates campaigning for office to utilize campaign contributions for child care.13 A better child care system is in reach for Montana. To get there, policymakers should focus on long-term solutions and balance the needs of families and child care businesses.

Access: Many Families Cannot Find Licensed Child Care Providers

More than 74,000 children under age 6 call Montana home, and 67 percent of these children have all parents in the workforce.14,15 Children younger than age 6, particularly those with all parents working, likely need some type of child care before attending school. However, 90,500 school-age children in Montana (ages 6 through 12) may also need care before or after school.16

In 2020, Montana had 1,269 licensed facilities providing 22,531 slots for children ages 0 to 12.17,18 Head Start programs in Montana also provide care to young children. Head Start programs can be licensed by the state, and those programs are included in the state-reported data. Other programs are not state-licensed but do meet health and safety standards set at the federal level. Head Start served 5,755 children in Montana in 2019.19

The current supply of licensed child care does not meet the demand. In 2020, there was one licensed child care slot for every three children under age 6.20 Accounting for the additional Head Start enrollment in 2019 increased the supply to meet 35 percent of demand.21 Another way to measure the number of children needing care is to count only those children with all parents working. Using this measure, the current number of licensed child care slots meets about half (48 percent) of the children needing care.22 This same measure incorporating the Head Start enrollment in 2019 bumps up to 56 percent.23 Meaning that at most, the supply of child care opportunities in Montana meets just half of the demand. It is important to use both measures of demand to assess the current child care supply for two reasons: 1) the number of parents working is only an estimate provided by a survey from the U.S. Census Bureau, and 2) more parents may choose to work if there were better access to care.

While all areas of Montana face a lack of child care supply, the issue is more pronounced in rural and tribal communities. In Montana, six counties lack even a single licensed child care provider: Carter, Fallon, Golden Valley, Petroleum, Treasure, and Wibaux.24 On average, rural counties have child care for 23 percent of children with all parents working, compared to 38 percent for moderately rural counties and 43 percent in the least rural counties.25 Each tribal nation within Montana, except for the Little Shell Chippewa Tribe, operates a tribal Head Start program that collectively enrolled 1,927 children in 2019.26 On average, tribal Head Start programs provide care for 55 percent of children under age 6 with all parents working who live on one of the seven American Indian reservations within Montana.27,28 Through Head Start, tribal nations provide critical access to child care for families living in reservation communities, offering evidence-based and culturally relevant early education to a group that has faced generations of limited access to social and economic resources.29 Across all of Montana, children of color make up the majority of Head Start enrollment (53 percent compared to 21 percent of the population in Montana), underscoring the importance of Head Start for historically marginalized communities.30,31

Families in need of child care for infants and toddlers (age 0 to 2) find even fewer options. The current supply provides one child care slot for every four infants and toddlers with all parents working.32 Child care providers spend more when caring for infants and toddlers to cover higher staffing needs and additional supplies. The higher cost burden dissuades many providers from offering infant and toddler slots, leaving families of young children to navigate waitlists or make difficult decisions on how or if to return to work.

The shortfall worsens even further when adding in school-age children who need before or after-school care. Much of the data for supply and demand focuses on children under age 6, but Montana likely faces a lack of child care for school-aged children as well. Estimating child care need for school-age children is more complex. However, many licensed child care facilities do provide care for school-age children.

The numbers are clear; the current supply of child care does not meet the needs of Montana families. Parents unable to find a licensed child care facility for their children may turn to unlicensed care that does not provide the same reliability or health and safety standards. Parents may also be forced to drop out of the workforce without access to care. This has been particularly evident during the pandemic, where mothers of young children left the labor force at a higher rate than women without children.33 Labor force participation for mothers with young children dropped 7 percentage points between 2019 and 2020 in the three-state region of Montana, North Dakota, and South Dakota.34 Inadequate child care also impacts businesses. When workers cannot access child care, businesses experience lower productivity and struggle to recruit and retain workers. A recent analysis estimates that inadequate child care causes Montana businesses to lose $55 million while parents miss out on $145 million in wages.35

Quality: Not All Available Child Care Is High Quality

High-quality child care provides a safe and nurturing environment for children, involves their families, and creates a supportive environment for workers. Licensed facilities meet basic health and safety standards set by the state, establishing a baseline standard of care. Little is known about unlicensed facilities; however, they exist in Montana. The U.S. Economic Census records businesses that report income as child daycare services. More than 900 businesses report income from child care than are licensed with the state.36

Child care facilities that provide high-quality care go above and beyond licensing requirements. Providers in Montana can participate in a voluntary quality rating and improvement system (QRIS, also called “Best Beginnings STARS to Quality”). Providers advance through five rating levels as they demonstrate improvement on employee qualifications, training, and professional development; supportive learning environments for children; and engagement with families. A provider at QRIS level two begins receiving financial incentives and an increased scholarship reimbursement to use for continued improvement.

More child care providers participate in QRIS than they did five years ago. Despite the steady improvement, a clear gap still exists in the availability of high-quality child care slots. In 2020, 37 percent of child care slots were at a facility participating in QRIS, up from 16 percent in 2014.37,38 State advocates consider reaching QRIS level three as a benchmark for high-quality care.39 Only 12 percent of licensed child care slots met a rating of three or higher in 2020.40

Child care providers must invest time and resources to offer high-quality programs, and it can take a year or more to move through one QRIS level. Montana needs solutions that encourage more providers to participate in QRIS in addition to ongoing support for current high-quality providers to maintain high standards of care.

Affordability: Parents Often Cannot Afford Child Care and Child Care Businesses Struggle to Stay Open

Montana families struggle to afford child care. On average, families pay $9,518 per year for infant care and $8,365 per year for 4-year-old care, making child care more expensive than college tuition at a four-year public college.41 This means a household making $57,200 spends 17 percent of their income on infant child care.42 The Best Beginnings Child Care Scholarship provides money towards these costs for families with lower incomes. In 2020, more than 7,000 children received a child care scholarship.43 However, more eligible children could benefit from the program than are currently participating. Estimates from the U.S. Census Bureau show that 30,000 children live below the income guideline for Best Beginnings eligibility (less than 185 percent of the federal poverty level, or less than $40,626 per year for a family of three).44-46

Child care businesses must balance the true cost of providing high-quality care with what parents can afford. Because of this, many child care businesses operate on narrow margins and often cannot pay employees an adequate wage. Employee wages and benefits make up more than half the cost for most child care businesses (68 percent for infants and 59 percent for toddlers and preschool-age), with other expenses going toward rent and utilities, administrative costs, and classroom materials.47

Low wages for child care workers leads to staffing instability, making it challenging for child care businesses to retain workers and remain open.48 In Montana, 4,380 individuals work in the early childhood field, about the same number that work as high school teachers.49,50 Child care workers are predominately female (84 percent) and more diverse compared to all workers (15 percent of child care workers are workers of color compared to 11 percent of all workers).51 In Montana, the median wage for child care workers was $10.99 an hour in 2020, which means making $22,900 per year if working full-time.52 This is barely hovering above the poverty level for a family of three. Child care workers make less than half the wage of a kindergarten teacher, even though 24 percent of child care workers in Montana have a bachelor’s degree or higher.53,54

The child care system in Montana is in dire need of solutions that consider the cost of care for parents while providing adequate funding for child care businesses that continue to play a critical role in Montana’s economic recovery.

Recommendations

Montana lacks strong state investments in the child care and early childhood education system. Federal funding contributes 24 percent of the estimated cost to provide care to children younger than 6 with all parents working (not including one-time relief money related to the pandemic recovery).55 Parent payments or other private funds make up 74 percent.56 State investments of $9 million per year make up only 2 percent of the total estimated cost to provide care.57 These percentages will shift in the next few years with the influx of federal relief funding for child care and early childhood education. A more stable and equitable early childhood education system is in reach for Montana. However, state policymakers should prioritize investments in quality early childhood education to make that a reality.

Montana needs innovative and long-term solutions to build a better child care system that works for children, parents, and businesses. As Montana begins infusing the millions of dollars in federal relief into the child care system, policymakers should reimagine what child care can and should be in our state and invest in infrastructure and programs that set Montana up for long-term success. Specific recommendations include:

Access

Quality

Affordability

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Footnotes

  1. Watson, A., “Childcare in Montana,“ Department of Labor & Industry, 2018.
  2. Watson, A., “Childcare in Montana.“
  3. Economic Policy Institute, “The cost of child care in Montana,” Oct. 2020.
  4. The Coronavirus Aid, Relief, and Economic Security Act (CARES) money allotted $10 million for child care to supplement the Child Care and Development Block Grant (CCDBG). Department of Public Health and Human Services, “Governor Bullock Announces $10 Million Available for Child Care Facilities in Response to COVID-19 Pandemic,” May 2020.
  5. Tribes located within Montana also received CARES money to supplement the CCDBG for a total of $2.4 million. U.S. Department of Health & Human Services Office of Child Care, “GY 2020 CCDF Final Tribal Allocations,” July 2020.
  6. Gov. Bullock directed an additional $50 million from CARES money to be used for child care. Department of Public Health and Human Services, “Governor Bullock Directs $50 Million to Maintain and Expand Child Care and Support Montana Families,” Aug. 2020.
  7. December relief money from the Coronavirus Response and Relief Supplemental Appropriations Act (CRRSA) included $28 million for child care. U.S. Department of Health & Human Services Office of Child Care, “Coronavirus Response and Relief Supplemental Appropriations Act (CRRSA) of 2021 Allocations for States and Territories,” Feb. 2021.
  8. An additional $6.8 million was allocated from CRRSA to tribes located within Montana. U.S. Department of Health & Human Services Office of Child Care, “Coronavirus Response and Relief Supplemental Appropriations Act (CRRSA) of 2021 Allocations for Tribes,” Feb. 2021.
  9. The American Rescue Plan Act (ARPA) money included $111 million specifically for child care ($42.5 million for expanded child care assistance through the Child Care and Development Block Grant (CCDBG) and $68 million toward a stabilization fund). U.S. Department of Health & Human Services Office of Child Care, “ARPA Supplemental Stabilization and CCDF Discretionary Funding Allocation Tables – States and Territories,” Apr. 2021.
  10. ARPA money also included $28.6 million for child care sent to tribes within Montana. U.S. Department of Health & Human Services Office of Child Care, “ARPA Supplemental Stabilization and CCDF Discretional Funding Allocation Tables – Tribes,” Apr. 2021.
  11. ARPA money also included $3.5 million for Head Start. Federal Funds Information for States, “Estimated State Funding in the American Rescue Plan,” on file with author.
  12. Rep. Buckley, A., “Establish a business task force on child care,” HB 624, Montana 67th Legislature, as introduced on Mar. 10, 2021. Sen. Bogner, K., “Increase the number of children who can be present in day-care homes,” SB 142, Montana 67th Legislature, as introduced on Jan. 25, 2021. Rep. Buckley, A., “Allow campaign contributions to be used for candidate childcare,” HB 221, Montana 67th Legislature, as introduced on Jan. 22, 2021. Sen. O’Brien, S., “Generally revise child care scholarship program laws,” SB 311, Montana 67th Legislature, as introduced on Feb. 22, 2021. Sen. O’Brien, S., “Generally revise laws related to preschool programs,” SB 342, Montana 67th Legislature, as introduced on Feb. 25, 2021. Sen. Gross, J., “Revise Montana parents as scholars program eligibility,” SB 356, Montana 67th Legislature, as introduced on Feb. 24, 2021. Sen. O’Brien, S., “Establishing high-quality child care business development grants,” SB 407, Montana 67th Legislature, as introduced on Mar. 29, 2021.
  13. Sen. Bogner, K., “Increase the number of children who can be present in day-care homes,” SB 142, Montana 67th Legislature, as introduced on Jan. 25, 2021. Rep. Buckley, A., “Allow campaign contributions to be used for candidate childcare,” HB 221, Montana 67th Legislature, as introduced on Jan. 22, 2021.
  14. KIDS COUNT Data Center, Child population by single year of age in Montana, 2019.
  15. U.S. Census Bureau, “Age of Own Children Under 18 Years in Families and Subfamilies by Living Arrangements by Employment Status of Parents, American Community Survey 1-Year Estimates, Table B23008, 2019,” accessed on Apr. 22, 2021.
  16. KIDS COUNT Data Center, Child population by single year of age in Montana.
  17. KIDS COUNT Data Center, Licensed child care facilities by STAR level in Montana, State Fiscal Year 2020.
  18. KIDS COUNT Data Center, Licensed child care capacity by STAR level in Montana, State Fiscal Year 2020.
  19. Office of Head Start, Head Start Program Information Report, 2019, on file with author.
  20. KIDS COUNT Data Center, Percent of all children under 6 that can be served by licensed child care capacity in Montana, State Fiscal Year 2020.
  21. In 2019, 1,459 slots from licensed Head Start facilities is subtracted from the licensed capacity of 22,304. After adding in the 5,755 Head Start enrollment, total supply in Montana is 26,600, compared to the estimated population of 75,154 children under age 6. (Child Care Licensing Data) Department of Public Health and Human Services, Early Childhood and Family Support Division, Early Childhood Services Bureau, special data request for child care licensing, on file with author. (Head Start Enrollment) Office of Head Start, Head Start Program Information Report. (Population Data) KIDS COUNT Data Center, Child population by single year of age in Montana, 2019.
  22. KIDS COUNT Data Center, Percent of children under 6 with all parents working that can be served by licensed child care capacity in Montana, State Fiscal Year 2020.
  23. In 2019, the 1,459 slots from licensed Head Start facilities is subtracted from the licensed capacity of 22,304. After adding in the 5,755 Head Start enrollment, total supply in Montana is 26,600, compared to the estimated demand of 47,459 children under age 6. (Child Care Licensing Data) Department of Public Health and Human Services, Early Childhood and Family Support Division, Early Childhood Services Bureau, special data request for child care licensing, on file with author. (Head Start Enrollment) Office of Head Start, Head Start Program Information Report. (Population Data) KIDS COUNT Data Center, Child population by single year of age in Montana, 2019. (Parents Working Data) U.S. Census Bureau, “Age of Own Children Under 18 Years in Families and Subfamilies by Living Arrangements by Employment Status of Parents, American Community Survey 5-Year Estimates, Table B23008, 2014-2018,” accessed on Apr. 22, 2021.
  24. KIDS COUNT Data Center, Licensed child care facilities by STAR level in Montana.
  25. County designation is based on the Center for American Progress designations of least rural, moderately rural, and most rural. Designations are assigned using the U.S. Department of Agriculture’s Economic Research Service codes for rural- urban continuum. The Montana Early Childhood Needs Assessment identified these designations in Montana on page 18. Least rural counties include: Cascade, Custer, Dawson, Deer Lodge, Fergus, Gallatin, Glacier, Hill, Lewis and Clark, Missoula, Park, Richland, Roosevelt, Silver Bow, Toole, Yellowstone. Moderately rural counties include Beaverhead, Big Horn, Flathead, Lake, Lincoln, Pondera, Powell, Ravalli, Valley. All other counties assigned to most rural. Smith, K., “Montana’s Early Childhood System: A Comprehensive Statewide Needs Assessment,” Sept. 2019. Percentages are calculated as average among counties for: KIDS COUNT Data Center, Percent of children under 6 with all parents working that can be served by licensed child care capacity in Montana.
  26. Office of Head Start, Head Start Program Information Report.
  27. Office of Head Start, Head Start Program Information Report.
  28. Children needing care estimates (denominator of the percent) are from Census estimates at the American Indian Reservation geography. U.S. Census Bureau, “Age of Own Children Under 18 Years in Families and Subfamilies by Living Arrangements by Employment Status of Parents, American Community Survey 5-Year Estimates, Table B23008,” accessed on Apr. 22, 2021.
  29. Bipartisan Policy Center, “Data and Funding Gaps in Tribal Early Care and Education,” Apr. 2021.
  30. Children of color include those identifying as American Indian or Alaska Native, Asian, Black or African American, Native Hawaiian or other Pacific Islander, Biracial/Multi-racial, other, or Hispanic. Data from: Office of Head Start, Head Start Program Information Report.
  31. National Center for Health Statistics, Bridged Race Population Estimates, 2019.
  32. KIDS COUNT Data Center, Percent of infants and toddlers with all parents working that can be served by licensed child care in Montana, State Fiscal Year 2020.
  33. Boesch, T., Grunewald, R., Nunn, R., Palmer, V., “Pandemic pushes mothers of young children out of the labor force,” Federal Reserve Bank of Minneapolis, Feb. 2021.
  34. Boesch, T., Grunewald, R., Nunn, R., Palmer, V., “Pandemic pushes mothers of young children out of the labor force.”
  35. Dillon, T., Baldridge, J., Sonora, R., Grunewald, R., “Lost Possibilities: The Impacts of Inadequate Child Care on Montana’s Families, Employers and Economy,” Bureau of Business and Economic Research, University of Montana, Sept. 2020.
  36. Data includes businesses that report income as child day care services under NAICS code 6244. Employers, Individual Proprietorship, and Partnerships are all included. U.S. Census Bureau, “Nonemployer Statistics for the U.S., States, Counties, Metropolitan Areas, and Combined Statistical Areas; and by Legal Form of Organization and Sales, Value of Shipments, or Revenue, U.S. Economic Annual Survey, 2018,” accessed on Apr. 22, 2021. U.S. Census Bureau, “County Business Patterns by Legal Form of Organization and Employment Size Class for the U.S., States, and Selected Geographies, U.S. Economic Annual Survey, 2018,” accessed on Apr. 22, 2021. Licensed facilities in Montana in 2018 is from: Smith, K., “Montana’s Early Childhood System: A Comprehensive Statewide Needs Assessment.”
  37. KIDS COUNT Data Center, Licensed child care capacity by STAR level in Montana.
  38. Smith, K., “Montana’s Early Childhood System: A Comprehensive Statewide Needs Assessment.”
  39. Smith, K., “Montana’s Early Childhood System: A Comprehensive Statewide Needs Assessment.”
  40. KIDS COUNT Data Center, Licensed child care capacity meeting STAR level 3 or higher in Montana, State Fiscal Year 2020.
  41. Economic Policy Institute, “The cost of child care in Montana.”
  42. The median income for households in Montana in 2019 is $57,248. KIDS COUNT Data Center, Median household income in Montana, 2019.
  43. KIDS COUNT Data Center, Children receiving Best Beginnings Child Care Scholarship in Montana, State Fiscal Year 2020.
  44. U.S. Census Bureau, “Age by Ratio of Income to Poverty Level in the Past 12 Months, American Community Survey 5-Year Estimates, Table B17024, 2015-2019,” accessed on Apr. 16, 2021. Population estimates are multiplied by poverty percentage. National Center for Health Statistics, Bridged Race Population Estimates, 2019.
  45. Letter from Department of Public Health and Human Services to Administration for Children and Families, 60 day report on Montana’s planned use of Child Care and Development Fund (CCDF) Coronavirus Response and Relief Supplemental Appropriations Act (CRRSA), Feb. 2021, on file with author.
  46. Office of the Assistant Secretary for Planning and Evaluation, 2021 Poverty Guidelines for the 48 Contiguous States and the District of Columbia.
  47. Estimates are for center-based child care. Center for American Progress, “Where Does Your Child Care Dollar Go?,” Feb. 2018.
  48. Smith, K., “Montana’s Early Childhood System: A Comprehensive Statewide Needs Assessment.”
  49. Center for the Study of Child Care Employment, “Early Childhood Workforce Index 2020,” Feb. 2021.
  50. The 4,030 high school teachers are counted from three categories of secondary school teachers, including those that teach special education and career/technical education. U.S. Bureau of Labor Statistics, Occupational Employment and Wage Statistics, May 2019 State Occupational Employment and Wage Estimates Montana, accessed on May 11, 2021.
  51. Center for Economic and Policy Research, CEPR’s Analysis of American Community Survey, 2014-2018 5-Year Estimates, Apr. 9,2020, on file with author.
  52. U.S. Bureau of Labor Statistics, Occupational Employment and Wage Statistics, “May 2020 State Occupational Employment and Wage Estimates Montana,” accessed on May 14, 2021.
  53. Center for the Study of Child Care Employment, “Early Childhood Workforce Index 2020.”
  54. Montana Early Childhood Project, “Registry Demographics,” Jan. 2020-Dec. 2020, registry data was a special request and is on file with author.
  55. Federal estimates include: Child Care Development Fund (CCDF) both for the state and tribes located within Montana; Preschool Development; Head Start/Early Head Start; Tribal Head Start/Early Head Start; Temporary Assistance for Needy Families (TANF) funds transferred to CCDF and other Child Care Assistance/Non-Assistance; Individuals with Disabilities Act Part C (Grants for Infants and Families) and Part B, Section 619 (Special Education for Preschool-Age Children). Total federal estimates are for $106 million. Exact amounts from each program are on file with author.
  56. The cost of care coming from parent payments or other private sources is subtracted for the estimated total cost of child care for the 23,815 infants/toddlers with all parents working and 25,776 preschool-age children with all parents working. Using the average cost of care for these age groups, it is estimated that the total cost in Montana for the child care system is $442 million ($9,518*23,815 infants/toddlers=$227 million; $8,365*25,776 preschool-age=$216 million). Parents or other private sources are estimated to cover the gap of $328 million that isn’t covered by state or federal funding sources.
  57. State estimates include $9 million included in the General Fund to support the state match for CCDF. No additional state money is currently funding early childhood education initiatives. In prior years, Montana set aside money towards a preschool pilot program, however that money has since been cut from the budget. Estimated amount comes from Department of Public Health and Human Services, “Child Care and Development Fund (CCDF) Plan for Montana, FFY 2019-2021.”
  58. Department of Public Health and Human Services, Early Childhood and Family Support Division, Early Childhood Services Bureau, “Draft Montana FY2022-2024 CCDF State Plan for Public Comment Period,” Apr. 2021.
  59. Smith, K., “Montana’s Early Childhood System: A Comprehensive Statewide Needs Assessment.”
  60. Smith, K., “Montana’s Early Childhood System: A Comprehensive Statewide Needs Assessment.”
  61. National Head Start Association, “7 Ways State Policymakers Can Step Up to Support the Children of Head Start as the American Rescue Plan Moves to U.S. Communities,” May 2021.
  62. National Head Start Association, “State Investments in Head Start to Support At-Risk Children and Families,” Dec. 2020.
  63. Smith, K., “Montana’s Early Childhood System: A Comprehensive Statewide Needs Assessment.”
  64. Smith, K., “Montana’s Early Childhood System: A Comprehensive Statewide Needs Assessment.
  65. Center for the Study of Child Care Employment, “Early Childhood Workforce Index 2020.”
  66. Smith, K., “Montana’s Early Childhood System: A Comprehensive Statewide Needs Assessment.”
  67. Office of the Assistant Secretary for Planning and Evaluation, 2021 Poverty Guidelines for the 48 Contiguous States and the District of Columbia.
  68. Economic Policy Institute, “The cost of child care in Montana.”
  69. U.S. Census Bureau, “Age by Ratio of Income to Poverty Level in the Past 12 Months, American Community Survey 5-Year Estimates, Table B17024, 2015-2019,” accessed on Apr. 16, 2021. Population estimates are multiplied by poverty percentage. National Center for Health Statistics, Bridged Race Population Estimates, 2019.
  70. Department of Public Health and Human Services, Early Childhood and Family Support Division, Early Childhood Services Bureau, “Draft Montana FY2022-2024 CCDF State Plan for Public Comment Period.”
  71. Smith, K., “Montana’s Early Childhood System: A Comprehensive Statewide Needs Assessment.