By Lindsay VanHulle of Crain’s Detroit Business
Five years ago, John Wilson formed a private family foundation and set out to help lift people out of poverty in Mason County.
Wilson’s foundation, Pennies from Heaven, helped organize an employer resource network serving 12 companies and about 20 percent of the local workforce. Such networks are cropping up around the state as tools for employers to pool resources and tackle barriers that keep people from holding down a job, from transportation to housing to child care.
The foundation also invested about $300,000, in Wilson’s estimation, to open Oaktree Academy, a nonprofit child care center housed inside a former school in Ludington, and another $100,000 annually to operate it.
The Grand Rapids Area Chamber of Commerce and Talent 2025, a West Michigan-based business coalition focused on finding and developing talent, on Monday hosted a panel discussion with state lawmakers, researchers and Wilson about how to get business leaders engaged in helping working families find child care.
“We need to start thinking about different solutions,” said Wilson, CEO of Western Land Services Inc., an oil and gas leasing company in Ludington.
Wilson is an example of a business leader attempting to move the needle on helping Michigan families access affordable child care — something that eludes many families in the state, due to availability or cost.
Full-time care for an infant in Michigan can cost close to $10,000 per year on average, based on estimates from the Economic Policy Institute. The Michigan Association of United Ways found in a recent report highlighting barriers faced by the state’s working poor that bare-minimum child care for an infant and a preschooler cost $1,108 per month in 2015.
In Detroit, Dan Gilbert’s family of companies is looking at expanding a successful child care center inside the One Campus Martius building — home to Quicken Loans Inc. employees — to other developments it owns around the city. In Lansing, Jackson National Life Insurance Co. has operated an onsite child care center for 17 years. In Ottawa and Allegan counties, private foundations and businesses have donated more than $1 million toward scholarships for families to offset child care tuition.
The private sector increasingly views the issue as a way to attract and keep talented employees. But it’s also an expensive undertaking, one that neither business nor government can solve alone.
The state spends about $160 million a year to serve close to 30,000 children, said Michelle Richard, a vice president at Lansing-based Public Sector Consultants, “which sounds great — except that 15 years ago, we served three times as many children.”
Michigan has some of the tightest limits in the country on who can qualify for subsidies, and ranks near the bottom of states for both income eligibility for families and the amount it reimburses daycare providers for the care they give.
The state will use $5.5 million in federal funds this fiscal year to increase income eligibility for families earning child care subsidies from 125 percent of the federal poverty level to 130 percent, according to the nonpartisan House Fiscal Agency.
Lawmakers also budgeted another $19.4 million in both state and federal funds to slightly boost reimbursement rates to child care providers.
Even so, those rates are still less than what families pay in tuition, Richard said.
Sen. Goeff Hansen, R-Hart and chairman of the state Senate’s K-12, school aid and education appropriations subcommittee, said he wanted to give higher rate increases to higher-rated child care providers in order to incentivize other caregivers to improve quality and give children more educational opportunities.
Throwing more money at a problem won’t solve the problem by itself, said state Rep. Rob VerHeulen, R-Walker. Policymakers need to also look at using taxpayer dollars to achieve better outcomes.
“We do need to expand eligibility, increase reimbursement rates and streamline regulations,” VerHeulen said, “but let’s try to do it in a smart way so we’re getting the maximum bang for every dollar.”
Hansen asked whether there’s a role for business leaders to play in forming public-private partnerships around child care. Reimbursing providers at higher rates costs millions of dollars and only hikes rates by a small amount, Hansen said. He asked whether businesses that invest in child care could be given some kind of tax credit as an incentive to make an investment of their own.
“This benefits all businesses. If your employee comes to work every single day, that’s a huge plus. If they don’t have to worry about having quality child care … that’s a big plus,” said Hansen, adding: “(Let’s) start talking about breaking down some of these silos that we always have between government and business.”
Wilson, whose family foundation has been active in child care in Mason County, said his region views child care as a “ministry.” The region encourages businesses and organizations to share resources and is trying to bring churches into the equation, he said.
Business leaders bring an evidence-backed, free-market approach to making decisions “not necessarily (done) by the people in Lansing,” said state Sen. Peter MacGregor, R-Rockford.
“We need their ideas, we need their thoughts,” MacGregor said, “because that’s how we’re going to come up with good policy.”