The Cure for Care: A plan to cut childcare costs by 65%, support local businesses, and raise long term County revenues

Introduction

Howard County is recognized as one of the best places to live and raise children, but the rising cost of childcare is creating financial strain for too many parents—for some, $40,000 a year or more. According to Child Care Aware of America, the average annual cost of an infant in center-based childcare is $25,321. 

For a Maryland toddler in center-based childcare the annual cost is $22,594. Altogether, the annual cost for Maryland families paying for an infant and a 4-year-old in center-based childcare is a shocking $40,832—more than housing and college tuition for a year. In fact, these costs are among the highest in the nation and place a significant burden on working families strapped for cash who have to choose between paying for childcare or quitting their job—and promising career. 

This proposal outlines a plan to lower childcare costs for eligible middle class families by as much as 65% per year by adopting Michigan’s Tri-Share program model in Howard County as a pilot program.

II. The Concept

The Tri-Share model is simple. It is a childcare employee benefit program where a participating employer would cover 1/3rd of an eligible employee’s daycare bill; the County would pay 1/3rd of the daycare bill; and the employee would be responsible for the final 1/3rd of the daycare bill.

Howard County, through a designated administrator (think the Howard County Local Children’s Board or a reputable local nonprofit), would create a centralized program for participating families, employers, and licensed childcare centers and home daycares. 

The total cost of monthly tuition would be divided into thirds and billed between a participating employer, an eligible employee, and the county– with each party submitting their payments to the program administrator. The program administrator would then pay the participating childcare facility directly. 

What’s in it for me?

The Tri-Share model is a win-win-win idea with each stakeholder taking away clear benefits from the initiative. Tri-Share would:

• Benefit families by saving them money and raising household income: with quality and affordable childcare, families would save a significant amount of money; and families would have the flexibility for both parents to work and earn full-time salaries.
  

• Benefit employers by creating a stronger workforce: with quality and affordable childcare, fewer parents would need to quit their jobs to stay home with their kids; and employers who opt-in would instantly become more attractive from a recruitment and retention standpoint to talented employees with young families.
  

• Benefit taxpayers by raising revenue and creating a stronger economy: with quality and affordable childcare, families would have the flexibility for both parents to work and earn full-time salaries, leading them to contribute more to the local economy through income taxes and discretionary spending.
  

Public investment in childcare is a sound economic strategy. The “Motherhood Penalty” is a well documented phenomenon that forces working parents to choose between paying skyrocketing childcare costs and staying home with their children.

There’s solid research on the fiscal losses from parents (disproportionately women) leaving or cutting back work for child-care, strong evidence that wage growth slows after child-related career breaks, and credible precedents for child-care subsidies “paying for themselves” in higher tax receipts.

The Economic Impact of the Motherhood Penalty on the County

Consider this: for every 100 families making 300% of the Federal Poverty Line (or ~$93.6K for a family of 4) who avoid taking a break to care for their children– about $1.4 million in County revenue is preserved over an 18 year period (assuming 6 years out of the workforce to care for two children).

Take a look at the difference in total County revenues collected from FAMILY A where two earners at 300% FPL work without interruption for 18 years with an annual 3% wage growth, and FAMILY B where one parent exits the workforce for 6 years to raise two children. The exiting parent only receives a 1.5% annual bump in pay due to the “Motherhood Penalty.”

There are real-world studies capturing the economic damage caused by the “Motherhood Penalty.” Researchers in Quebec studied the economic impact of a public program offering universal low cost childcare access to working families. They found that low cost childcare access “induced nearly 70,000 more mothers to hold jobs than if no such program had existed –an increase of 3.8% in women employment… Quebec’s domestic income (GDP) was higher by about 1.7% ($5 billion) as a result.” The researchers also found the return on the public’s investment in childcare subsidies ultimately exceeded the public’s initial investment. They wrote “that the tax-transfer return the federal and Quebec governments get from the program significantly exceeds its cost.”

III. Proof of Concept

Quebec’s low-cost childcare program has operated since the late 90s. A more recent example of subsidized childcare– and the inspiration for this proposed pilot program– is Michigan’s Tri-Share program which has operated since March 2021. 

In 2024, Michigan commissioned a review of the program. Key takeaways include a 99% satisfaction rate among participating families. More than 71% of participating employees report that the program has improved employment retention. And nearly 65% of participating employers reported that they believed they were more competitive against other employers because they were able to offer the Tri-Share benefit. See excerpts below from the 2024 evaluation report:

IV. Bringing Tri-Share to Howard County

This plan proposes the creation of a pilot program, Cure for Care, composed of Howard County licensed childcare facilities and home daycares; participating Maryland employers (with priority given to Howard County based businesses); and eligible Howard County residents who are employees of participating employers.

Participant Eligibility

Employee:

• Household income within 200% - 400% of the Federal Poverty Line (FPL); this equates to $62,000 to $125,000 for a family of 4 (2 adults and 2 kids)

• Maintains employment– part time or full time– at an eligible participating employer

• Primary resident of Howard County

Childcare Provider:

• Childcare center or certified home daycare program

• Fully licensed and in good standing with the State

• Facility or home located in Howard County

• Child care providers are not allowed to increase rates for families because of their participation in the Cure for Care Program. This does not include when child care rates for all families increase for reasons not related to Cure for Care (based on annual tuition increase, cost of living, etc.)

Employer:

• Business located in the State of Maryland; preference given to businesses located in Howard County

Program Facilitator:

• To facilitate the program the entity must be a Howard County government agency; Howard County based quasi-government agency; or Howard County based nonprofit organization

Program Implementation

Once a program facilitator is selected, the County would embark on a recruitment effort among local businesses and childcare providers. 

As a pilot program, the County would be in control of how many childcare slots it is willing to sponsor (a commitment to pay 1/3rd of whatever the total monthly tuition cost is per individual childcare slot)-- thus capping its financial exposure in a predetermined fashion. The total number of slots available would then be divided among participating Cure for Care employers, who would in turn offer Cure for Care slots to their eligible employees.

Participating employers would be eligible to offer the program as a qualified business expense, and employees would not be taxed on the contributions received from the County and their employer as extra income.

Payments, participant eligibility, reporting, and technical assistance would be handled by the designated program facilitator.

V. Conclusion

Howard County is in the midst of a childcare affordability crisis that is dragging down the economic fortunes of middle class families. Arinze’s Cure for Care program seeks to provide relief to growing families that need childcare support from ages 0-4 years old.

Cure for Care targets families that earn too much for Federal and State childcare subsidies, but not enough to withstand the extreme financial pressures of having one or more small children in daycare full time. 

This multi-faceted program will also strengthen the labor market and improve County revenue collection by keeping dual income households in the workforce without interruption. It will also make Howard County employers more attractive to current and future employees who are less likely to change jobs while receiving employer sponsored childcare benefits through the Cure for Care program.

Howard County has the fiscal capacity, potential employer partnerships, and community will to make a Tri-Share style pilot work. Cure for Care will keep parents—especially mothers—connected to careers, support local businesses, and strengthen our early-childhood ecosystem, all while laying a data-driven path to scale to meet the needs of all families in need of childcare relief in Howard County.