Wisconsin youngster care suppliers scuffling with meals prices get a funding increase

In different times, Ramona Mathews would often find herself lost in the endless aisles of the grocery store. The trips provided a break from her busy life as a family child care provider and accountant — it was her “quiet time.”

Thanks to inflation and supply chain issues, those days are long gone.

“I used to love going to the grocery store, now I hate it,” said Mathews, who runs Honey Tree Daycare out of her Wisconsin Rapids home. “I’m counting my pennies to make sure I’m getting what I have to get.”

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At a time when inflation is in double-digits, Mathews and other regulated family child care providers, who serve a smaller number of children than centers do and typically run their businesses out of their homes, will see an approximate 18 percent increase in food reimbursement as participants in the US Department of Agriculture’s Child and Adult Care Food Program.

Compared to that of past years, the reimbursement rate increase for July 2022 through June 2023 is jarring, as it is based on a common measure of inflation: the consumer price index. Although rates differ depending on whether meals are considered breakfast, lunch/dinner or snacks, this year’s rates all grew well beyond the “teeny tiny cent increase” family child care providers are accustomed to, said Samantha Marshall, director of programs for CACFP Roundtable, a nonprofit organization that operates separately from the federal food program but aims to educate others about it.

The new rates, published last week, could be a game-change for many family child care providers who, faced with rising food costs due to inflation, had worried that a small increase in federal aid would force them to pass costs on to families already struggling to afford care.

“This is awesome,” said Tammy Dannhoff, who runs Kids Are Us family child care out of her Oshkosh home, after she read the rates. “With this increase I will more than likely not have to increase my (tuition) fees.”

Before rates were released, uncertainty loomed

The new rates dovetail with the passage earlier this summer of the Keep Kids Fed Act, which extended a pandemic-era support that provided family child care providers the maximum federal reimbursement for CACFP food costs, a funding level known as Tier I. The measure also included a baseline 10 cent increase in reimbursement per meal. That increase was included in the new reimbursement rates.

Many providers expressed gratitude at the time for being kept on the Tier I level. Dannhoff typically has 7 children in her care. As such, she estimated based on the 2021-2022 rates that dropping back down to the lower reimbursement level would have cost her $350 a month.

For Mathews, this figure charted between $318 and $478, as the number of children in her care fluctuates between 6 and 8.

But, because the Tier I rates were not announced in late June when the Keep Kids Fed Act passed, providers could not even begin to accurately estimate how much they would see in reimbursements this year at that time. Many doubted that they’d get much more than the 10 cents per meal boost.

This presented a daunting possibility: if food costs kept rising, providers would have to pass them onto parents – many of whom already devote large portions of their income to child care.

“It helps and you’re grateful for it, but it’s not enough,” Mathews said when she learned of the act’s passage. “The inflation levels are so high at this point (that) I hate to say the 10 cents a meal is not enough.”

Mathews previously avoided raising her rates to account for high food prices by subsidizing her child care business with money she earns from her accounting work. She said this acted as a quick fix, but was not a sustainable solution.

Corrine Hendrickson, who runs Corrine’s Little Explorers out of her New Glarus home, said that she told parents she was preparing to raise her rates to offset high food costs.

Dannhoff was entertaining this option too. Despite child care providers operating on razor-thin margins and often charging less than the actual cost of care, Dannhoff was wary to go this route.

“My worry is, ‘Are they going to be able to afford it? Am I going to lose a parent? Am I going to have to try to negotiate something different?’ It’s always hard,” Dannhoff said.

Together, increased reimbursement rates and legislation put some daycares in the clear — for now

With the impacts of the Keep Kids Fed Act and newly published reimbursement rates combined, Dannhoff and Hendrickson said they have seemed to evade raising the cost of their care.

Under the new rates, Dannhoff is expecting to be reimbursed approximately $793.80 per month, roughly a $120.40 increase per month from the previous year.

For Hendrickson, this figure will be approximately $1,047.80 a month come late fall when she expects enrollment to stabilize. Under last year’s Tier I rates, she would have seen $898.20 per month.

Mathews is expecting to be reimbursed $846 to $1,128 each month depending on how many children are in her care. However, she said, that still only covers a portion of the cost of the large number of meals she submits for reimbursement every month.

In June 2022 she served a combined 493 reimbursement-eligible meals and snacks. In May 2022, she served 418.

“$1,100 sounds like a lot of money until you sit there and say, ‘but that is to feed 498 meals.’ It’s a whole different ballgame when you put it that way,” Mathews said.

And there are other food costs. Mathews said some children haven’t eaten before they arrive, and some need other snacks throughout the day, so she provides more than just the two meals and snack CACFP reimburses her for. On average, she said, she bears the cost of about 20 additional meals and snacks per month.

“I look at it this way: I don’t want crabby kids, so if they haven’t had breakfast I am going to feed them, reimbursement or not,” Mathews said. “Kids can’t have fun and learn if they are hungry.”

In reviewing the USDA’s Economic Research Service’s Food Price Outlook 2022 findings, Mathews said the future looks even more bleak. While she thinks the newly-introduced reimbursement rates could have been sufficient for early 2022’s prices, she does not believe they’ll provide a substantial amount of relief now.

“You’re reading these numbers and (you know) they’re just going to go up even higher from what they’ve already done,” Mathews said.

Adding to the challenges family child care providers are facing, federal nutrition requirements limit the types of food providers can serve. Often, this limits providers’ opportunities to cut costs or swap foods out when supply chain issues cause them to be out of stock.

For example, Velveeta does not count as a credible “cheese food,” and there is a whole grain requirement. Mathews said per the requirements she has to be careful about the chicken she feeds the children — it can be difficult to tell if chicken nuggets bought in the freezer section are CACFP-compliant, so her best bet is to purchase chicken breasts. These typically come at a much higher price tag.

“Purchasing healthier food options is more expensive and that is what providers are doing when adhering to the CACFP meal patterns,” Marshall said.

Can providers hold the line on family child care costs?

Mathews is preparing to have tough conversations with parents about raising their rates in January. Already, she has seen parents decide to cut back on the number of days they spend in care, as they cannot afford a full week of care.

Data shows many families struggle to afford child care. In Wisconsin, the average monthly price for full-time child care is $915, or about 17% of the median household income for families with younger children, ChildCare Aware of America research shows.

For infants, this care is often more expensive. The Economic Policy Institute found the annual cost of child care for a Wisconsin infant is $12,567 – more than tuition at some in-state colleges.

“We’re already dealing with this,” Mathews said.

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Hendrickson views the Keep Kids Fed Act and finalized 2022-2023 reimbursement rates as positive steps, but stories such as the one Mathews shared are not too far removed from her mind. As the language expressed in the act, this relief is not expected to last forever, she said.

More policy changes may come, until then, providers share cost-saving tips

Marshall said it is essential that providers share their experiences and concerns with the broader community.

“As advocates, while we are happy and commend Congress for taking action to provide some relief to CACFP and especially family care providers, we agree with the providers,” Marshall said. “We encourage them to call their representatives and share their stories.”

When talking to politicians and community members meals, Marshall said providers should share the real cost of feeding kids balanced — including the prep time and how much they spend even with being reimbursed.

She also said new federal legislation such as the Healthy Meals, Healthy Kids Act could help family child care providers. The act, now in committee, would provide reimbursements for additional meals and make the way in which family daycares and group centers are reimbursed more equal.

Marshall hopes the bill will make it to the House of Representatives for a by September.

Mathews and Dannhoff were also eager to share their cost-saving tips with other providers, even though they caution they will not fully eradicate the present food struggles:

  • If it’s on sale, stock up, Mathews recommended. After all, there is no telling when that particular food will be marked down again.
  • Check the ‘reduced’ rack when buying bakery items such as breads, Dannhoff said. Even though these items may be nearing their expiration date therefore earning them their orange sticker, a little planning can ensure the kids consume them in time.
  • Familiarize yourself with CACFP-compliant substitutions. Dannhoff said to look for flexibility in the CACFP requirements. She said she often substitutes meat, like chicken, with peanut butter to meet the protein requirements. While she said it’s not her favorite thing to feed the children, they love the inexpensive peanut butter sandwiches.
  • Visit farmer’s markets. This is a trick Mathews and Dannhoff both take advantage of. Mathews said she can often buy fruit and produce in bulk at the markets, and vendors are sometimes willing to negotiate to fit her needs.

Marshall recommends child care providers visit the Institute of Child Nutrition’s website for more cost-saving tips and meal planning resources, as well as the USDA’s SNAP-Ed Connection website.

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Madison Lammert covers child care and early education across Wisconsin as a Report for America corps member. She is based at the Post Crescent in Appleton. To contact her, email [email protected] or call 920-993-7108.

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