Solving the Daycare Shortage

The Opportunity GAP cannot be closed until the daycare problem is solved. Even if the state government would fully support the Scholarship model, there are not enough daycare slots for the segment of society that can afford them. Of the total daycares, only 20% are considered high-quality.

There is widespread interest in solving the Achievement Gap. From the Minneapolis Business Partnership to the wealthy that have signed the Giving Pledge. I believe capital is abundant, waiting on the sidelines for a solution to the Opportunity/Achievement Gap.

Infants and toddlers have to be protected because of vulnerability. Highly regulated daycare is necessary.

Increasing the scholarship model to a similar dollar value that k-12 could change the landscape in the daycare business. State funding for children from impoverished families on a sliding scale of income should be available to all high-quality daycare centers.

Disrupting Daycare

Expanding the market-

Higher state funding for impoverished families would benefit the existing for-profit daycare centers. However, there is already a shortage of daycare centers. The term ‘Daycare Deserts’ was coined to describe areas of the state where there are four children for every available daycare slot.

Expanding the market by bringing 40,000 new children with available funds will increase the market for the for-profit centers.

The fact that there are not nearly enough centers and how to do new daycare centers in a timely manner.

Non-profit daycare centers

Similar to the banking industry which is served by both for-profit banks and not-for-profit credit unions. Both banks and credit unions have many branches. 

1. High-quality daycare targeted at but not limited to low and moderate-income families.
2. With a capital infusion, daycare centers can operate with a positive cash flow.
3. All children attending will be required to pay tuition
   • Financially able Families will be responsible for their children.
   • Impoverished families’ tuition will be paid on a sliding scale by the state.
   • Parenting classes could be mandatory.
4. The base minimum hourly wage would be set by the market.

The nuts and bolts:

• Minnesota Department of Children (New)
  • Carved out of Health and Human Services & Department of Education
  • Focus on children from birth to five, but continued services until high school graduation.
    • Before the pandemic, there was a discussion regarding splitting the Minnesota Department of Human Services because it was too large.
    • Education Minnesota (a teacher’s union) White Paper lists the state’s inability to keep track of impoverished children as the primary reason the Scholarship model will not work.

• Expanding the market
  • Adding 40,000 state-funded children would benefit most existing and would also add many new daycare centers. The market would be much more extensive and more viable.
    • “a rising tide lifts all boats” John F. Kennedy
  • The state would subsidize impoverished families based on a sliding scale of income.
  • State funding should also include accommodations for geographic location.
  • An increase in payments from the state would be available to all high-quality daycare centers.
• Increased income for workers
  • Targeting a goal of $15 to $20 per hour
    • The pay increase would attract daycare workers from other daycare centers and would raise wages in the industry.
• Governance            
  • Non-profit daycare board of directors would jump-start a center.

Key information such as expenses and fees helps all parties understand what it will cost to run the program. It will help the legislature understand how much it will cost for each child enrolled.

While this may seem complex, breaking it into manageable pieces would lead to success.