Bill would freeze child care reimbursement rates

Nebraska child care reimbursement rates would no longer be based on a market rate survey under a bill heard by the Appropriations Committee March 14.

Under LB464, introduced by Lincoln Sen. Kathy Campbell at the request of the governor, the state Department of Health and Human Services would no longer be required to set rates according to the market survey, which would continue to be conducted every other year as required by federal law.

Currently, rates must be set at a level between the 60th and 75th percentile of the market rate survey.

Campbell said she hoped the committee would consider a proposed amendment to the bill that would reinstate the requirement that reimbursement be tied to market rates in the next budget biennium. Quality care for at-risk children is important to the state, she said.

“In two years, we hope things are better and that we can get back on track,” Campbell said.

Todd Reckling, director of the division of children and family services for HHS, testified in support of the bill. Basing provider rates on the market rate will cost the state approximately $2.8 million per year in general funds over the current budget cycle, he said.

“By removing this language the department has greater flexibility in setting rates,” he said.

Reckling said other provider rates are being reduced by as much as 5 percent under the governor’s proposed budget. The choice to forego an increase for those providing care to approximately 19,000 of the state’s at-risk children was not made lightly, he said.

Jen Hernandez of the Nebraska Children and Families Foundation testified against the bill, saying failure to peg reimbursement rates to the market survey will decrease access to quality child care for individuals trying to transition off of welfare.

“This will result in fewer providers accepting this child care subsidy,” she said. “It will leave at-risk children eligible for care but with nowhere to go.”

A child is considered at-risk if his or her family is in poverty or if he or she was born at low birth weight, is learning English as a second language or a has a parent who is a teenager or has not completed high school, Hernandez said.

Aubrey Mancuso of Voices for Children Nebraska also testified in opposition, saying Nebraska’s reimbursement rates already are low. The federal government recommends setting provider rates at 75 percent of the market rate, she said, adding that HHS currently may set rates as low as 60 percent of the market rate.

Gale Henderson, owner of three Omaha child care centers, said the bill would create additional hardships for providers. Testifying against the bill, she said providers currently must wait 45 to 60 days for reimbursement from the state.

“We already operate at a disadvantage,” Henderson said. “But I’m invested in this community. I’m invested in these children.”

The committee took no immediate action on the bill.