Child care costs about the same in Western Mass., but the subsidies are much smaller

At Square One's Main Street location in Springfield, CEO Dawn DiStefano read with one of the children.Suzanne Kreiter/Globe Staff

SPRINGFIELD — When Sheneya Johnson returned to work after having her second son, she spent her workdays using her expertise in early education to help others navigate the child care system. At the same time, she was struggling to find a classroom opening for her own son in a part of the state where the task of securing care is particularly challenging.

Ultimately, she got a spot for him at Square One on Springfield’s Main Street, where she works one floor up from him as an administrator. Since her son, Quani Wallace, now 4, joined the program, she has seen a “huge shift” in his development, she said.

The squeeze on the child care industry is a statewide problem, but the challenges are even more acute for Johnson and others in Western Massachusetts, where the current state formula provides for a much smaller subsidy than it does in Eastern Massachusetts, even though the cost of providing the care is relatively similar in both places.

Providers in the western part of the state have said for years that a high need and low reimbursement rates have dissuaded providers from taking poor children or from opening in the first place, further stretching an already overburdened industry and negatively impacting the development of children in their region.

When her older son, Isaiah, was a toddler, Johnson waited six months for a spot to open so she could have care while she worked her second-shift job. Johnson’s mother and the child’s paternal grandmother stepped in to help, and Johnson was able to continue working.

“If it wasn’t for them, it would have been a nightmare,” she said. “I probably wouldn’t have been able to work.”

At Square One, Sheneya Johnson worked at her desk. Suzanne Kreiter/Globe Staff

For years, subsidy rates have been set using a federal market rate survey of what programs charge private-pay families. But because the data doesn’t account for many nuances unique to different parts of the state, the rate system has large discrepancies from region to region.

Families who live in rural or low-income communities with a limited child care supply may rely on friends and family — informal arrangements that are not captured by the survey and therefore don’t reflect the financial need in the community. Other factors that make living in Western Massachusetts expensive, such as a lack of public transportation, are also not taken into account when the rates are set.

In order to better understand the true cost of care, the state partnered with an Illinois-based group, Center for Early Learning Funding Equity, to consider not just market rate data, but other pieces of information including feedback from parents and providers, housing costs, health insurance data, and provider data collected by the state through the pandemic-era C3 grant program, which includes program size, staffing information, and salary numbers.

The group’s findings were presented at the state Board of Early Education and Care meeting earlier this month.

For each toddler, a child care center in Western Massachusetts receives a subsidy of $61.16 per day. In Boston, that rate is $85.90, according to state figures. But CELFE’s data show that the costs for providing care does not vary substantially across the different regions.

Dawn DiStefano, CEO of Square One in Springfield, said that by ignoring regional challenges and nuances, the federal government has unintentionally created a yawning gap that has significantly affected day-to-day operations for DiStefano and her peers.

In Boston, she noted, many child care centers serve both families that rely on vouchers and families who can pay full private tuition. Those centers can operate with a business model where the cost of care gets balanced out by the tuition paid by wealthier families.

She said that in cities like Springfield, fewer families can afford private child care. As a result, providers like hers, which serves hundreds of children she categorized as “at risk,” have to fund-raise to make up the difference.

Square One raises about $500,000 a year to fill the gap between the funding provided by vouchers and the actual cost of providing the care.

“One of the biggest mistakes we’ve made historically was using the market rate study,” she said of the federal requirement for voucher funding. “It makes me incensed that we are using the $500,000 we raised to keep the lights on. That is not a reflection that we should be proud of.”

Unlike other businesses, where the cost of providing a service may be close to the price charged, many parents can’t afford to pay what it actually costs to staff and run a facility.

The high cost of providing the care has pushed providers to a breaking point, leaving families with few options, according to Stephen Huntley, president of the Massachusetts Association of Early Education and Care and executive director at Valley Opportunity Council, which operates child care centers in Holyoke, Chicopee, and South Hadley.

He noted that while the Legislature’s past increases to the subsidy are nice, it still stings to “look over the fence to our neighbors in Boston,” where providers are receiving much larger increases.

“We have been starving at the same level for the past many years,” he said.

But that may be changing.

The state is seriously considering the CELFE data that shows the cost of providing care is actually more similar than different across the state, officials say. Other states have already started to use data beyond the federal market rate survey to set more accurate rates, a path Massachusetts intends to follow.

Education Secretary Patrick Tutwiler said in an interview that the state values the work providers do in Western Massachusetts, and that the new data “should land us in a better place” in terms of parity as the department sets new subsidy rates moving forward.

“We are in a really fortunate position right now, given that we’ve got a robust set of data, to make some really intentional decisions around rates going forward,” Tutwiler said.

Providers say they can feel a shift. For the first time in years, the funding discrepancies are on state Early Education and Care board meeting agendas, and officials are speaking out about the needs for a better formula for child care subsidies.

And while it’s unlikely the state will be able to fund the full cost of care, a more holistic rate-setting process, combined with slight increases and continued pandemic-era grants, aims to make the system more equitable for the next fiscal year.

Johnson, the Springfield mother of two, said she hopes the state puts its words into action. Without a change, she said, more parents in Western Massachusetts will either be forced to pay for care they can’t afford or leave the workforce entirely to care for their child at home.

“Just because you live in Springfield doesn’t mean you’re poor, but just because you need child care doesn’t mean that you can afford it,” she said. “The numbers have to match up with our wages, our cost of living, and making sure that we have enough openings so that families are not making that choice of child care versus work.”