SB 192-INCREASE CHILD CARE GRANTS    KRISTY TIBBLES, legislative assistant to Senator Drue Pearce, testified that SB 192 would increase the monthly base rate for child care from $33.00 to $50.00 per child and remove the $50.00 cap that currently exists in the Child Care Grant Program. This is a state funded program that provides grants to licensed child care centers and homes for the benefit of the facility and the children. The grants are used for staff salaries, benefits, substitute staff, goods or services relating to the health nutrition and safety of children in care, age appropriate equipment and supplies and activities for the children. CHAIRWOMAN GREEN reported she had heard from many child care providers in her community particularly as other state and federally funded programs receive substantial grants and training. Side B She's always encouraged to hear of increased opportunities for people to make a choice on child care. YVONNE CHASE, Deputy Commissioner of Early Development for the Department of Education and Early Development, agreed that it is essential for small child care providers in particular to get the necessities to continue in business. Because this is a flexible pot of money, it allows for a wide variety of uses, which is of particular value to small providers. Clearly, as the number of providers increases, the base rate decreases if the current level of appropriation stays the same. Because the department doesn't know how the final bill will be configured, they have submitted a fiscal note that reflects a range of costs depending upon whether just current licensed providers in the child care grant program receive a base increase or whether current and new program members are included. She emphasized that this is not an entitlement. CHAIRWOMAN GREEN asked whether there is a possibility that child care providers will simply drop out of the business altogether causing a shortage of care givers. DEPUTY COMMISSIONER CHASE said that all states are finding that because this is such a low pay industry, it is difficult to attract and retain quality people. Small providers feel this may be the only money that may allow them to increase salaries, provide training and perhaps offer some health insurance. CHAIRWOMAN GREEN asked whether the language in this legislation could change a grant to an entitlement program. DEPUTY COMMISSIONER CHASE was not certain whether the language would make it an entitlement but this is why they gave a range on the fiscal note. CHAIRWOMAN GREEN responded this might be an optional grant program, which would keep it from being an entitlement. She then read the following: "A grant under (a) of this section shall be $50.00 per month for each child the child care facility cares for, or for each full time equivalent as determined by the department." She then asked whether that was an entitlement. DEPUTY COMMISSIONER CHASE replied that currently and in the past, a child care grant is not an entitlement. They have increased the rate and limited the number of providers who may participate depending on the amount of funds available. CHAIRWOMAN GREEN then asked Ms. Tibbles whether she could clear up the confusion since she did not want to "change a may to a shall if that's not the intention." MS. TIBBLES replied that Senator Pearce's intention was to make the base level $50.00 and then apply geographic adjustments. She was not sure about what she meant by entitlement. CHAIRWOMAN GREEN said a comparable entitlement would be Medicaid. If seven people came in for service then seven people receive the service. Anyone who meets the qualifications automatically qualifies, so it is not possible to determine how many people will qualify ahead of time. If this is the case, she wanted to make sure that the fiscal note reflects that adequately. She pointed out they could pass the measure along and let the Finance Committee make the decision. DEPUTY COMMISSIONER CHASE closed by saying that the department is supportive of the Child Care Grant and also of the increase of the base rate. She wanted to make sure it was understood that as the number of providers increases, those same funds are spread across more providers and the base rate goes down. CHAIRWOMAN GREEN said, "That's the difference in [an] entitlement program. Nothing goes down; just the total amount goes up every time someone else walks through the door." JOY LYON, President of Alaska Chapter of the National Association of the Education of Young Children (AAEYC) represents individuals and groups across the state that are concerned about young children. She testified in strong support of SB 192. Grant funds are typically used for staff salaries that average just $8.14 per hour. An increase in the base rate is needed to help attract and hold quality staff and reduce the current 40 percent turnover rate. Additionally, the Child Care Grant is the only incentive for family child care providers to become licensed. Number 507 GWENI MAKI, owner and director of the ABC Child Care Center, testified in support of SB 192. The increase in the base rate would allow her to improve salaries for her staff to decrease staff turnover. SENATOR WILKEN wanted to cover several finance issues that would be developed further when the bill is heard in the Finance Committee. First he pointed out this is a $34.528 million program. The legislature and administration can take pride in the fact that by midyear 2001 there is no longer a wait list for day care. In 2000, the grant program was $1.7 million and in 2001 it was $2.25 million and in 2002 it is $3.7 million which means a base rate of $23.00 in the first year, $33.00 in the second and with the monies appropriated in 2002 it will rise to about $40.00. This reflects extraordinary growth in the grant program and really shows you the impact of this bill. When you multiply the area cost differential by $33.00 you get about $48.00 per day for those areas with high costs. When you use $40.00 and use the same area cost differential you get $58.00. Therefore, the $50.00 cap locks in people with higher costs at $50.00. Raising the base rate to $50.00 would mean those same people would get somewhere around $78.00 per day making this a very expensive bill. With the increase from $23.00 to $33.00, he wanted to receive information on how that money was used. He sent a letter to 50 child care providers in Fairbanks asking them how they used the extra money and he received a response from just three providers. He said he would try again and expected to receive an answer. Next, he expressed disappointment in the fiscal note. He thought it was possible to take the existing day care population and multiply it by the higher number, which would give the fiscal impact today. DEPUTY COMMISSIONER CHASE replied that was the reason for the range in the fiscal note. The lower end represents moving the individuals currently on the program up to the $50.00 base rate that is adjusted for their area of operation. SENATOR WILKEN asked whether that was the $1.5 million. DEPUTY COMMISSIONER CHASE said it was the additional funds bringing the total up to $3.7 million. Next she showed the total estimated population that is available to apply for the grant if it were open to all licensed providers and they opted to apply. In years past, she thought many did not apply because the small amount of money available was not worth the additional paperwork. As the rates increased, more providers returned to the program. SENATOR WILKEN cautioned her to have a better fiscal note when the bill was heard in the Finance Committee. DEPUTY COMMISSIONER CHASE agreed to do so. SENATOR WILKEN then pointed out that several years ago, with HB 40, daycare moved to the Department of Education providing a starting point in government. The legislature wants to be able to look back ten years from now to evaluate the costs. During the interim they will be working with the department so that next year there will be more information about what providers are doing or plan to do with the money. Since this is an expensive but necessary program there needs to be accountability. With that, he reiterated his support for the program. CHAIRWOMAN GREEN said one of her concerns is that there tends to be a disincentive for private daycare providers. She does not want all providers to be government directed programs. She wants to equalize the gift to Head Start and Boys and Girls Club but does not want to put others out of business. It is her preference to allow individuals a choice of child care options. SENATOR WARD moved SB 192 and accompanying fiscal note from committee with individual recommendations. There being no objection, the bill moved from committee.