Texas Senate committee hearing reveals clash between child care centers, state pre-K program

Two months out from Texas' next legislative session, the call to reverse negative ripple effects from a 2019 state law, which expanded public pre-K in Texas, was a common theme spoken by state officials and child care providers during a Senate committee hearing this week.

Several stakeholders shared testimony before the Senate Committee on Natural Resources and Economic Development on Thursday, Nov. 14, regarding one of the committee's priorities for the upcoming session: enhancing workforce productivity by improving child care access and availability to working parents.

A variety of policy proposals were brought forward that would allow private businesses to contribute to their employees' child care situation, including a cost-sharing program among the employer, state and employee or utilizing franchise tax credits for employers to put toward child care benefits. But a key focus of the roughly four hours of testimony was pleading for fixes to state legislation that's caused a major dent in the bottom lines of child care operations, which are suffering financially from the expansion of public pre-K in their local school districts. Advocates say a better integration of both systems working together is vital to solving the issue.

Multiple child care providers shared grim data on how much revenue they've lost due to a loss of enrollment from this age group. James Ihedigbo, who operates six Kiddie Academy child care centers across the Houston area, said he's lost $1.5 million in revenue in the past year. One of his locations lost 24 children, ages 3 and 4, in one week to the local school district.

"Despite our best efforts, we're struggling with rising costs, regulatory burdens (and) economic shifts that are driving the price of our care and limiting the availability to provide quality programs," said Ihedigbo, who is also a former NFL player and Super Bowl champion.

"Quality child care is a cornerstone of a thriving workforce, and by extension, a thriving economy. Finding and affording quality child care should empower our families to build better futures for themselves and their families, not hold them back. Unfortunately, (for) many of the families across Houston and the state of Texas, this is far from the reality," he added.

Committee Chair Brian Birdwell, a Republican whose district represents part of Dallas-Fort Worth, said if House Bill 3 isn't tweaked this legislative session, "there's going to be a crash."

"There's going to be a crash, particularly in the urban areas, but there's going to be a crash of the number of private childcare providers out there. What HB 3 may potentially have caused is for, particularly everything in the pre-K, to now be nothing but a school district functionality. The government has inadvertently taken over child care, and that was never the intent," he said toward the end of the hearing.

House Bill 3 was passed in 2019 and addressed various aspects of Texas education, including a requirement of full-day pre-K for all eligible 4-year-olds. Children who are unable to speak or comprehend English, who are experiencing homelessness or who have a parent in the armed forces are among those who qualify for the full-day program . The implementation of this at the local level requires districts to consider partnerships with quality child care providers first, although they can request a waiver that lasts up to three years if they prove they had sought out a partnership.

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Monica Martinez, associate commissioner for standards and programs at the Texas Education Agency, said during testimony that districts are facing obstacles with figuring out funding formulas to make pre-K partnerships with local child care providers work. Some districts also have said they're already serving all of their eligible pre-K children, while others have said they're concerned about staffing shortages and quality of education in a community child care space, she said. There's also been confusion on the different state requirements for 3-year-old classrooms and 4-year-old classrooms.

"In a most recent survey, there were over 500 child care providers that were very much interested in entering into a partnership, but there was not a district that was willing to partner with them. So the district willingness is the piece that we're really trying to work on," Martinez said.

Bryan Daniel, chairman of the Texas Workforce Commission, voiced policy recommendations related to strengthening the foundation of pre-K partnerships by using his agency's resources combined with TEA resources. The Texas Workforce Commission administers child care subsidies to eligible families and oversees the state's quality improvement program for providers known as Texas Rising Star.

"I think that does two things," he said of improving pre-K partnerships. "One, I think it really does extend our ability for child care providers to provide beyond those pre-K students for a quality offering for all. I think it really does position those students that can participate in a quality pre-K program for much greater success in early elementary school, which is going to chart the course for their entire educational opportunity there in their community."

Eric Bonhard, owner of the Goddard School of Southlake, said his business has been reeling since 2019 from the expansion of 3- and 4-year-old pre-K district offerings in the area. His center saw a 30% loss in revenue at the beginning of the 2019-2020 school year, he said. Teachers had to be laid off, spending was reduced and cash reserves were depleted.

"Since then, (tuition) rates at our school have risen over 35% while employee compensation and benefits have increased by approximately 60%. Despite our efforts to raise wages to retain quality teachers, many of our staff still struggle to cover basic living expenses such as rent, food and utilities," Bonhard said. "Although Texas often touts itself as business friendly, the state's child care sector does not enjoy the same support."

The committee hearing came one day after the Employers for Childcare Task Force released its legislative agenda focusing on policies that would allow parents to join or rejoin the workforce through child care solutions. A group of more than 120 organizations including chambers of commerce, faith-based organizations and child care providers also released last month a legislative agenda calling on lawmakers to take action on the state's waitlist of about 80,000 children who are awaiting a subsidy, in addition to expanding pre-K partnerships and more.

The upcoming session is underscored as one of the first times, if not the first, to include assigned priorities in both the Senate and House of Representatives related to child care. House Speaker Dade Phelan last month announced child care accessibility and affordability as one of the focuses of eight work groups for House members to voluntarily join ahead of session.