Comptroller Stringer Proposes Landmark “NYC Under 3” Plan to Expand Affordable Child Care Access to New York City Working Families

“NYC Under 3” would be the single largest local investment in child care in the United States with sweeping initiatives to improve affordability, accessibility and quality

As price of infant care soars over $21,000 a year, Comptroller’s proposal would slash child care costs for up to 70,000 working families

Comptroller’s plan more than triples the number of infants and toddlers in City-backed care

   As child care costs continue to soar for working families, New York City Comptroller Scott M. Stringer introduced a sweeping new plan – “NYC Under 3” – which would slash child care expenses for up to 70,000 New York City families, extend child care assistance to families making up to $100,000 a year, and more than triple the number of children in City-backed care, benefiting an estimated 84,000 children, including 34,000 children who are not currently in paid care.

This first-in-the-nation proposal would transform access to affordable child care for New York City families with young children, revolutionizing an unequal system that disproportionately bars low-income families from the long-term economic benefits of care. It is estimated that when fully implemented, NYC Under 3 would help more than 70,000 families afford child care, more than triple the number of infants and toddlers in City-backed care and enable approximately 20,000 parents – largely mothers – to enter the workforce, boosting earnings for struggling families by some $540 million a year. Comptroller Stringer’s plan expands the number of NYC families eligible for publicly supported child care through a modest payroll tax which would exempt small businesses in legislation to be introduced by New York State Senators Jessica Ramos and Brad Hoylman, and Assemblymember Latrice Walker.

“Quality, affordable child care must be a fundamental right for every family, not just a privileged few, so every child in this city has a bright future,” said New York City Comptroller Scott M. Stringer. “Government has ignored the crisis in child care for too long and we must act now. New York City should drive a child care revolution, put working families first and establish a model for the nation to follow. NYC Under 3 is a down payment on future generations and would benefit children, parents, and the local economy by increasing job stability and economic security. Expanding affordable child care to thousands of young children in New York City is both a critically necessary investment in our future and an economic justice imperative.”

Comptroller Stringer’s analysis found child care is out of reach for many NYC families in terms of both cost and access.

• A spot in a child care center for an infant costs roughly $21,000, over three times as much as in-state tuition at The City University of New York, or 125 percent of median rent citywide. Yet, only one in seven children in families who are income-eligible for financial assistance now is currently in subsidized care.
• There is currently only capacity for 6 percent of NYC infants in licensed child care centers across the five boroughs. Even counting home-based care, another popular option for families, only 22 percent of infants can currently be accommodated in a licensed facility.
• Many communities have become “child care deserts” with room for only a small percentage of neighborhood children. Child care centers are concentrated in more affluent sections of the city.
• In the 10 communities with the most limited capacity, there are more than ten times as many infants as licensed child care spaces. Capacity is most limited in Tottenville/Great Kills, Bushwick, and in Sunnyside/Woodside, where providers can accommodate fewer than 5 percent of children under two:

• Child care providers are an overwhelmingly women-led, low-wage workforce. In New York City, 93 percent of child care workers are women, and one in four (25 percent) live in poverty.
• At 28, a new mother making $30,000 a year—about half the median income of NYC families—will lose an estimated $275,000 over the course of her lifetime in wages, retirement assets, and benefits if she leaves the workforce to provide care just until her child turns three, according to a tool developed by the Center for American Progress.
• The U.S. ranks 34th out of 36 major countries in public spending on child care and early education, ahead of only Ireland and Turkey.

The lack of affordable child care has far-reaching impacts.

The ages of 0 – 3 are a critical time for children when 80 percent of brain development occurs and, too often, opportunity gaps set in for life. Indeed, researchers have estimated that society can reap an economic return of over $8 for every $1 spent on high-quality early childhood education. When families are unable to access affordable child care, parents, guardians, children, and whole communities suffer, as do businesses. Lack of quality child care breeds job instability for parents, harms child development, and likely drives families out of the city. Moreover, as children in low-income families are most affected by exorbitant costs and dismal capacity in child care centers citywide, the social costs accrue to their families and communities overtime, perpetuating a cycle of inequality.

A broad expansion of child care access to working NYC families will benefit children, parents, and the local economy by increasing workforce participation and economic security.

The economic benefits of expanding access to child care are substantial, for families as well as the city’s economy. Families will not only be able to use the dollars saved through the program to meet other basic needs and build savings, NYC Under 3 would, when fully phased in, also enable an estimated 20,000 parents, largely mothers, to join or reenter the workforce, potentially fostering the highest female labor force participation New York City has ever seen and helping businesses retain workers. The economic and social impact of this workforce shift would be seismic, injecting an estimated $540 million in new annual earnings into the local economy, according to a new analysis by the Comptroller’s Office.

Comptroller Stringer is proposing a comprehensive plan to create a robust and equitable child care system, with recommendations to address the related goals of affordability, accessibility, and quality:

1. Affordability: Lower families’ contributions toward child care and extend child care assistance to working families with income up to 400 percent of poverty, or about $100,000 a year for a family of four.Under the Comptroller’s proposal, families’ contributions toward the cost of care would be based on a sliding scale, ranging from zero percent for lower income families to 8 percent of family income for families up to 200 percent of poverty, and topping out at 12 percent for families up to 400 percent of poverty. When fully phased in, NYC Under 3 would double income eligibility for child care assistance from 200 percent of poverty to 400 percent of poverty ($103,000 for a family of four). This is expected to more than triple the number of children in City-backed care, benefiting an estimated 84,000 children, including 34,000 children who are not currently in paid care.With NYC Under 3, NYC families would see their out-of-pocket expenses for child care dramatically decrease. A family of four with one child under three and income at about 200 percent of poverty, or just over $50,000 annually, would pay a maximum of around $4,000 a year for child care, less than half of what that same family would pay today – if they had access to assistance:
2. Accessibility: Dedicate funding for child care start-up and expansion grants and make a capital commitment of $500 million over five years to construct and renovate child care facilities.To address child care capacity, Comptroller Stringer recommends providing start-up and expansion grants to child care providers poised to add seats for infants and toddlers. Grants would be competitive, with priority given to providers in neighborhoods with a significant income-eligible population and limited supply of child care. Additionally, the Comptroller proposes a $500 million capital commitment over five years. City-owned sites would be targeted first for development of new child care facilities.
3. Quality: Increase payments to providers and create a fund to expand access to early childhood education training, professional development, and scholarships.In year one of the proposal, the Comptroller calls for at least $50 million to raise reimbursement rates for providers currently serving infants and toddlers and for a cost estimation study, which would determine what reimbursement rates should be to support quality child care and pay living wages to child care workers. Funding would be dedicated each year to subsidize the cost of meeting training requirements, expand child care providers’ access to professional development and coaching, and support education scholarships.

A modest payroll tax will help fund NYC Under 3.

The Comptroller’s Office envisions the program will be phased in over a period of six years, with more funding going toward efforts to build the supply of quality care and set the conditions for expansion in the early years, with additional families receiving assistance as space becomes available. In year one, total spending would be about $180 million, with about 70 percent of funds dedicated to grants for child care providers, capital debt service, and the fund for training and quality improvement. When fully implemented, the total annual cost is estimated to be roughly $660 million.

To help pay for NYC Under 3, Senators Ramos and Hoylman and Assemblymember Walker plan to introduce legislation calling for a modest child care payroll tax on private employers in New York City with payrolls totaling $2.5 million or more, which would exempt roughly 95% of all businesses. The proposed payroll tax would be applied quarterly on a graduating scale. In contrast to a tax on the incomes of workers, businesses will be able to fully deduct state and local taxes on their federal tax returns.

Salary Parity for the Early Childhood Education Workforce.

Child care services should not be expanded until the City addresses the existing disparities in pay between teachers and support staff in community-based child care programs and their counterparts in DOE schools. Comptroller Stringer proposes that funding to increase compensation for community-based child care workers be included in the DOE Adopted Budget for Fiscal Year 2020, as recommended by the City Council. However, if salary parity remains unfunded, revenue from the child care payroll tax must go first to addressing these disparities.

To read Comptroller Stringer’s full report, click here.