Blog Posts > Solving Child Care Requires Strong Public Investment
August 16, 2024

Solving Child Care Requires Strong Public Investment

In recent years, much attention in West Virginia and around the country has focused on the need for quality, affordable care for families with young children. As advocates have long emphasized, child care (and care work more broadly) makes all other work possible. As such, public investments in child care could be considered to have a greater spillover economic impact than investments in other industries, given that they support jobs both in the child care sector and for the families who are able to work in other industries as a result.

Even so, the United States has long underinvested in its child care system compared to other affluent countries; however, pandemic-era federal dollars helped stabilize the industry by providing additional funding that families used to help afford the cost of care and child care centers used to increase worker wages and benefits and improve facilities. As these federal dollars expire, West Virginia faces a child care cliff, with centers closing and families at risk of losing their child care subsidies if the state does not increase its investment. Broadly, policymakers agree that child care provides economic and child development benefits but have not been able to get additional funding across the finish line.

One question that repeatedly arises is why the free market hasn’t “solved” the child care crisis. Our new issue brief out this week dives into the child care landscape in West Virginia, as well as the market failures and challenges that impact the industry. 

Read Kelly’s full brief here.

Read a recent article providing further details about West Virginia’s child care crisis here.

Calls For More Tax Cuts Conflict With Slowing Revenues, Growing Unmet Needs

West Virginia lawmakers are under pressure from Governor Justice to override the tax cut triggering mechanism created as part of the 2023 state income tax law and enact additional cuts. But state revenue and budget pressures, including slowing revenues, costly enacted legislation, and a myriad of unmet needs come into direct conflict with rushing to push through more tax cuts that mostly benefit the state’s wealthiest households.

As policymakers consider slashing revenues even further, it is important to understand both the state’s revenue mix and forecasted expectations in coming years. Even after 2023’s cuts, the personal income tax is West Virginia’s largest source of state revenue, bringing in 39.2 percent of funding for the general revenue fund in FY 2024. After the personal income tax, the next largest sources of general revenue are the consumer sales tax, corporate net income tax, and severance tax, respectively.  

Declining Revenues, Partially Self-inflicted

Annual growth is critical to maintain public services relative to inflation year-over-year, which increases the costs of goods and services that the state provides to residents. Historically, the personal income tax has grown at a faster rate than the state’s other major tax sources, making it the most stable and important source of state revenue. Between 2009 and 2019, the personal income tax grew at an average annual rate of 2.6 percent, compared with the sales tax at 2.0 percent and the severance tax at 1.4 percent; conversely, the corporate net income tax rate declined by 3.1 percent primarily due to corporate tax rate cuts over this period.

With 2023’s personal income tax cuts, Justice Administration officials within the Department of Revenue projected that personal income tax collections will decline by 1.7 percent annually between 2023 and 2029. Cumulatively, the department projected the total general revenue fund to experience negative 1.5 percent growth over that period.

Continuing to chip away at the personal income tax would naturally make the state budget more reliant on regressive, declining, and volatile sources of revenue. The sales tax, which falls most heavily on low- and middle-income West Virginians, will make up an increasingly large percentage of future state budgets.

Upcoming Tax Changes and Spending Needs

Another reason lawmakers should be cautious about enacting additional tax cuts is that multiple recent tax cuts are still in the process of being implemented or phased in, thus their total impact on tax collections–and, by extension, the state budget–is still yet to be fully felt. Altogether, there is an additional $310 million annually in tax cuts that have not yet been reflected in tax collections—shrinking the general revenue fund by an additional five percent on top of the personal income tax rate reduction from 2023.

Lawmakers must also consider upcoming spending—both via enacted legislation and unmet needs—as they weigh additional tax cuts. Unfortunately, this task has been made more difficult for lawmakers in recent years due to the Justice Administration’s elimination of the six-year financial plan. Without having had a six-year plan for several years, lawmakers are being asked to make major revenue decisions without the aid of that critical information from the governor’s administration, resulting in major questions and concerns about fiscal responsibility and long-term budget sustainability.

Even without that information, we know large spending obligations are on the horizon given already-enacted legislation. A few examples include the expansion of the Hope Scholarship, expected to cost an additional $150- 200 million annually by FY 2027; the remainder of the Third Grade Success Act, which will cost approximately $100 million annually once fully implemented; and annual inflation-level cost increases for programs like PEIA, public employee salaries, and other ongoing annual costs.

Additionally, there are several critical needs that have not yet been able to see solutions get across the finish line due to the uncertainty around the tax cut triggers and revenue projections. Priorities like funding for child careEMS agencieschild welfare serviceshome health workersflood preparedness, and support staff in public schools are all widely popular across the political spectrum but have not been able to get passed due to the pressure to keep the state budget flat in order to prioritize tax cuts that primarily benefit the wealthy.

Just as cutting the income tax will push more of the cost of funding public services onto regular families, the costs of reduced public investment will also harm them. Flat budgets are functionally declining budgets that fail to account for the impact of inflation on goods and services. As such, flat budgets erode the quality and availability of public services that are integral to our society and our broader economy.

Read Kelly’sfull blog post.

Join the WVCBP and our partners at WV NOW in urging our lawmakers to invest in child care, not tax cuts!

Hope Scholarship Expansion Will Harm Public School System

The Hope Scholarship is a school voucher-style program that allows individual students to divert their state share of public school funding away from the public school system to be used instead for private school or homeschooling costs. It was recently announced that the program met state requirements to expand eligibility, which will significantly increase costs. A recent article, including insight from WVCBP executive director Kelly Allen, provides further details. Excerpt below::

The Hope Scholarship offers $4,921 for families who would like their children to be educated outside of the public school system. Currently, it’s only available to students entering kindergarten, but in 2026, it will be opened to all students in West Virginia.

State Treasurer Riley Moore says that as many as 40,000 private school or homeschooled students could use the Hope Scholarship when it opens to everyone. If half of that 40,000 decide to take the $5,000 scholarship, then that is a roughly $100 million of new expense for the state government—money that some argue should go to West Virginia’s public schools.

Kelly Allen of the West Virginia Center on Budget and Policy has been a vocal critic of the Hope Scholarship. Allen argues that the Hope Scholarship draws funding away from public schools, only aids a small subset of West Virginians, and has questionable education outcomes.

“Voucher programs like the Hope Scholarship don’t lead to better educational outcomes for the students who participate,” Allen said. “They go to families who are already in private school or who could already afford the cost of private school, and they really have a cost on our public schools where more than 90% of West Virginia students receive their education.” 

A brief written by the West Virginia Center on Budget and Policy raises concerns about the educational outcome of students under the Hope Scholarship. The brief says that students who have enrolled in similar programs to the Hope Scholarship in other states perform worse than students in public school. The brief criticizes that money from the Hope Scholarship can wind up in unaccredited schools as $1.7 million has so far.

With millions of dollars on the line as well as the future landscape of West Virginia education, the Hope Scholarship is likely to continue to be the subject of debate.

Read the full article.

Formerly Incarcerated People Can Help Fill Workforce Gaps

Formerly incarcerated people experience a myriad of obstacles during the reentry process. One prominent example is difficulty securing employment due to stigma attached to their criminal record. A recent article, featuring insight from the WVCBP, explores why formerly incarcerated people are deserving of second chances and how they can help address labor shortages in the state. Excerpt below:

“Second Chances for a Stronger Workforce” featured people who work or have worked in West Virginia’s prison system, including those who’ve been incarcerated. The goal was to highlight how job training programs in prison can help the formerly incarcerated find meaningful work and how employers’ fears of recidivism can limit those opportunities. 

Hon. Michael Aloi, a federal magistrate judge in the U.S. District Court of the Northern District of West Virginia was the keynote speaker at the event, which took place in Charleston, West Virginia. 

Judge Aloi told the audience he believes in second chances. He presides over the Northern District’s Drug Court Program. 

Drug courts are set up to help nonviolent offenders whose criminal behavior is directly tied to their alcohol or drug use. Participants can get their charges dismissed if they successfully complete a treatment program.

“Tell me, why is it that we should be doing anything in  government, anything that, courts or anywhere else that makes it harder to get a job? Why is that good for us?” Aloi said.

Aloi said 90 percent of those in the criminal justice system have experienced trauma. In West Virginia, about 60% of people sentenced to state prisons and local jails have substance use disorder. 

***

Charlotte Webb and her husband are both in recovery from substance use disorder. They are the founders of Charleston Property Restoration, a home construction company that hires the formerly incarcerated. Many are also in recovery from substance use disorder.

Webb said other employers tell her the biggest concern they have in hiring former prisoners is that they’ll return to criminal behaviors. 

“‘What will they do? If something happens, I’m going to be responsible. It’s a risk.’” I tell them the truth. Anybody you hire, there is a risk involved. You don’t know them. You don’t know what kind of job they’ll do,” said Webb. 

She said she’s had good experiences with those reentering the workforce after rehab or prison.

“They are so humble. They’re just, you know, so grateful for the opportunity and that they know that we’re trying to help them ameliorate the barriers,” said Webb.

Deb Harris is the lead transition agent for Jobs & Hope – WV, a state initiative to help inmates with substance use disorder gain work skills and find jobs once they’re released.  She says addiction recovery creates additional challenges.

“I mean, I think it’s hard enough to reenter from a facility, but when you pair that with having a substance use disorder, now you have to not only worry about housing, but you have to worry about your treatment and your mental health and getting connected to the recovery community and going to parole or probation and it just really adds to the list of troubles that you have when you already get out,” Harris said.

***

Members of the panel echoed Judge Aloi’s belief that West Virginia should be developing more policies to promote a second-chance workforce. 

“I think the state is starting to realize the only way out of this is through it,” said Harris. “So, we have to start putting some things in place that will be solutions, first of all, not create more consequences or setbacks for folks.” 

Harris’ suggestion may be a tough sell for West Virginia’s legislature.

The West Virginia Center on Budget and Policy, an independent policy research group, says that during the 2023 regular session, lawmakers introduced nearly 150 bills that create new criminal offenses or increased penalties for existing crimes. 

One that passed the Senate but failed in the House would have changed simple possession of some drugs from a misdemeanor to a felony offense. 

In its report, the Center on Budget and Policy noted that increased drug penalties have given West Virginia the highest incarceration rate in the nation.

The legislature also failed to expand transitional housing and did not take up bills that would have restored voting rights to people with felony convictions who are on probation or parole.

Read the full article.

Urge Governor Jim Justice to Fund Enrollment-based Reimbursements for Child Care Providers

The current system of reimbursing child care providers in West Virginia is based on the attendance of the child, not their enrollment. This approach often leaves providers at a financial disadvantage when children are absent due to illness or other reasons.

We urge Governor Jim Justice to call a special session that would focus on changing this reimbursement model.

According to the National Association for the Education of Young Children, stable funding based on enrollment rather than attendance can provide more predictable income for providers and support higher quality care. By adopting this approach, we can ensure that our child care providers continue offering their invaluable services without worrying about inconsistent finances.

Please join us in signing this petition and helping us advocate for a fairer reimbursement system for our West Virginia child care providers.

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