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F I S C A L I M P A C T R E P O R T

SPONSOR King

ORIGINAL DATE

LAST UPDATED

2-2-06

HB 363

SHORT TITLE

INCREASE CHILD CARE PROGRAM

ELIGIBILITY

SB

ANALYST Lucero

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

$18,100.0

Recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Duplicates SB159, Relates to SB141,HB13, HB206, HB19, SB161

Relates to Appropriation in the General Appropriation Act

SOURCES OF INFORMATION

LFC Files

Responses Received From

Children, Youth and Families Department (CYFD)

New Mexico Highlands University (NMHU)

State Personnel Office (SPO)

SUMMARY

Synopsis of Bill

House Bill 363 appropriates eighteen million one hundred thousand dollars ($18,100.0) to

CYFD for the following expenditures:

1)

$10,000.0 for childcare programs to two hundred percent of the federal poverty level.

2)

$4,000.0 to increase the reimbursement rate for licensed childcare providers.

3)

$2,000.0 for aim high programs increasing the quality of early childcare programs.

4)

$1,000.0 for scholarships to help early childhood teachers learn more about child devel-

opment and early learning while earning college degrees.

5)

$1,000.0 for wage supplements for early childhood teachers, based on the educational

level that those teachers achieve.

6)

$100.0 to improve accreditation for childcare providers.

House Bill 363 – Page

2

House Bill 363 appropriates $18,100.0 from the general fund to Children, Youth and Families

Department for the purpose of increase childcare assistance, providing a greater reimbursement

rate for providers, and increasing quality.

FISCAL IMPLICATIONS

This appropriation is not part of the CYFD request. The Executive recommendation includes

$2,438.0 to raise the childcare program eligibility to 160% of the federal poverty level. Items 2-6

are not part of the Executive recommendation. Unexpended and unencumbered funds at the end

of FY07 shall revert to the general fund.

SIGNIFICANT ISSUES

The appropriation is in addition to the general fund amount in CYFD’s budget request.

The appropriation enables CYFD to raise the childcare assistance program eligibility to 200% of

the Federal Poverty Level. Current eligibility standards for child care assistance require families

to be at or below 150% of the FPL. However, families that were receiving assistance when eli-

gibility was 200% of the FPL are being “grand-fathered” into the program. CYFD estimates the

grand-fathering to be 1,700 slots at an estimated cost in excess of $5,000.0.

CYFD, in 2006, is expected to overspend the current childcare budget by an estimated 4 million.

CYFD will use carryover of federal childcare funds to resolve the shortfall. This shortfall is in

part attributable to the “grandfathering” of 1,700 slots at FPL levels in excess of the 150%.

Changes to the statewide minimum wage law will have an impact to childcare providers. This

bill recommends $4,000.0 (item 2 from synopsis) to increase the reimbursement to providers.

Many of the provider’s staff members are paid minimum wage. As the minimum wage in-

creases, so to must the provider reimbursement. If the provider reimbursement is not increased

then the agency may fund few child care slots, or the providers may not maintain low staff to

child ratios, or the quality of care may decline.

The Children, Youth and Families Department (CYFD) uses TEACH or Teacher Education and

Compensation Helps scholarships for early childhood professionals. The scholarships pay for

tuition, fees, and books for early childhood workers who are taking classes on early learning.

TEACH scholarships are used to help encourage the development of specialists and teachers

through community colleges.

Wage supplements are designed to encourage child care center workers toward completion of

early childhood programs. Wage supplements are based on the level of education the child care

professional has reached and depending on the level, the individual will receive a bonus from

their employer. The purpose of wage supplements is to decrease early childhood professionals

who start to take classes and then leave to go and work for the public schools. The incompletion

rates of students in early childhood programs create a need for quality child care workers and a

need for completion. This bill creates an incentive for those individuals who are committed to

early childhood and who remain and complete programs in order to fill the need of quality early

childhood professionals. The quality of early childhood experiences impacts learning in the later

years.

House Bill 363 – Page

3

There are approximately 8,000 individuals employed in the field of child care in New Mexico.

The average salary is $7.20 per hour. Child care centers are small employers and rarely provide

benefits for their employees.

PERFORMANCE IMPLICATIONS

It is unclear what the performance objective is of raising the FPL to 200%. The bill does not ad-

dress an increased level of employment, job retention, educational attainment, etc associated

with the additional slots for the parents.

A significant barrier to entering the workforce is childcare. The Office of Workforce Training

and Development is charged with placing displaced workers back in the workforce. Among the

difficulties encountered entering the workforce is childcare. As a new entrant to the workforce

increases earnings, loss of their childcare benefit becomes an issue.

The proposed increase in funding for childcare assistance would allow CYFD to serve approxi-

mately 3,200 additional children per month.

ADMINISTRATIVE IMPLICATIONS

CYFD will absorb any additional administrative costs.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

Duplicates SB159

This bill is related to both SB 141 and HB 013, each of which propose one million dollars

($1,000,000) to provide supplemental wage support and benefits to child care workers.

This bill relates to an appropriation in the General Appropriation Act. HAFC’s substitute for

HB2 has an additional $1,383.6 for child care slots.

OTHER SUBSTANTIVE ISSUES

Approximately 7% (133,454) of New Mexicans are under five years old. (HPC Quick Facts

2005)

The average annual cost of a childcare slot in New Mexico is $3,260.00 (CYFD Childcare Road

Map November 2006)

Poor Families in the State

•

More than 2 in 10 children are poor in this state. (Children’s Defense Fund, January

2003)

•

87,959 (13%) households in New Mexico make less than $10,000 annually, compared to

9% nationally. (HPC Quick Facts 2005)

•

19% of New Mexicans are poor of which 25% are children under 18

•

36% are families with female head of household with no husband present (US Census

2003 Data Profiles)

House Bill 363 – Page

4

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

If HB363 is not enacted the number of quality early childhood professionals will decrease and

there will be no incentives for professionals to complete early childhood degrees. Therefore,

there will be fewer trained early childhood workers to address the shortage among childhood

centers in the state.

DL/mt