Could pods be a solution to the childcare crisis? State rules need to change
Attempting to address the lack of affordable childcare, an issue vexing the rest of Minnesota, Stevens County did something creative. According to the Star Tribune, last year:
The county took $1.28 million of its $2 million in federal COVID relief money to build six child-care “pods” — a nearly 6,000-square-foot building of six rowhouses with capacity for 84 child-care spots. The long, thin houses look like suburban starter homes, with spacious living rooms serving as play areas and learning centers.
Childcare pods offer a unique blend of in-home/or Family Childcare (FCCs) and center-based childcare. Unlike FCCs, pods can have more than 14 children. However, unlike centers, in pods, individually licensed family childcare providers run separate programs, each taking care of only up to 14 children. These providers come together and share certain services, costs, and space, hence the term “pod”. This offers greater economies of scale compared to individual FCCs.
Could pods be the solution?
Generally, large daycare centers need large volumes of children to stay profitable. In rural areas, however, populations are more sparse, making centers financially challenging to operate. Often, this leaves FCCs providers as the major source of childcare in Greater Minnesota.
Unfortunately, in recent years, in-home providers have been leaving the industry, creating childcare deserts. According to the Star Tribune, for example, Stevens County lost 220 childcare spaces in the last decade. For that reason, childcare pods could be especially beneficial in Greater Minnesota.
Fortunately, Minnesota statute allows alternative FCC licenses that make childcare pods possible. However, such arrangements do face some restrictions that could be prohibitive. Currently, state law can only approve up to four individual FCC licenses to operate under one roof.
Moreover, only the following can apply for such licenses:
- Employers
- Religious organizations or churches
- Community collaborative childcare providers: These are defined as providers “participating in a cooperative agreement with a community action agency.”
- “Not-for-profit agency that provides childcare in a dwelling located on a residential lot and the license holder maintains two or more contracts with community employers or other community organizations to provide childcare services”
- Family childcare located in a commercial space
State law also requires that each license operates as a distinct program, which limits the extent to which childcare providers in pods can share costs (such as staff) to reduce overhead.
State law needs to change
So, while childcare pods could offer a potential solution to the childcare crisis, state law needs to change to allow maximum impact. For instance, lawmakers can change licensing laws to allow pods in residential settings as well.
In 2021, the legislature created an Alternative Child Care Licensing Models Project, headed by the Department of Human Services (DHS) “to make recommendations related to child care models that are not currently allowed under state statutes.” After multiple hearings with numerous stakeholders, including providers, the DHS published a report, which among other things, recommended that Minnesota should adopt the Umbrella model.
This model, for one, would
allow one individual license holder or owner to oversee or manage multiple family child care programs. Under this model, FCC programs could share the time and resource burden of licensing and operations, as well as facility space, when appropriate.
Unlike under current law, the umbrella model would allow pods in both commercial and residential spaces.
The report also recommended creating a license for mid-sized family childcare providers, also known as small centers. Currently, state law limits family childcare providers to 12 children. Providers can add two more children if they hire an additional staff. However, as per the DHS report, hiring one more worker to add just two children is costly for providers.
Creating a medium size license would allow in-home providers to expand without subjecting them to the stringent rules that centers have to follow. North Dakota, for instance, provides a group license that allows providers to serve up to 30 children either in or out of the home. The same can be done in Minnesota.
More spending is no panacea, it’s time to be innovative
After spending over $1 billion on childcare in the 2023 legislative session, Minnesota’s childcare problems are far from over. More spending on childcare, therefore, likely won’t do much but would wreak further havoc on the state budget.
Minnesotans need an innovative solution. If lawmakers can remove hindrances for providers and other private entities to come together, childcare pods could be that solution.