Mayor Carter is right

St. Paul has no money for childcare.

A ballot measure creating a childcare subsidy program for all low-income children in St. Paul failed to pass in the 2024 election, preventing what could have been a battle between Mayor Melvin Carter and the St. Paul City Council if it had passed. In a letter Carter sent to the council before the November 2024 election, he announced that city staff would not implement the program if it’s approved by voters, as the city has neither the staff nor the infrastructure to take on such a program and that the city council cannot compel the administration to implement it — or administer it themselves.  

Whether the mayor can legally bypass a ballot measure approved by voters is outside the scope of economics. However, looking at the St. Paul city budget and research on universal childcare programs, the mayor is right. St. Paul lacks the money and infrastructure for a good universal childcare program. The city’s half-baked ballot proposal, if passed, would more than likely have created problems for the city budget and low-income children.  

The city budget is already flashing red  

According to the U.S. Census Bureau, 5,175 kids under age five were living in poverty in St. Paul in 2023. Before accounting for administrative costs, the city would need $15.5 million ($3,000 per child) to $41 million ($8,000 per child) just to cover the children below the poverty line. An additional 5,000 kids in St. Paul live between 100 and 185 percent of the poverty line, so the total cost of the program in this case would double. Still, these numbers don’t approach the total cost of childcare, which for infants can be as high as $22,000 per year.  

Of course, other state and federal programs, such as Head Start, also cover some children in St. Paul. And to their credit, city council members pushing for the program acknowledge that St. Paul cannot fund every child. But even if the city were to create a modest program covering a fraction of eligible children, it would likely need tens of millions of dollars given the high cost of childcare.  

Carter’s 2025 budget proposal already calls for a 7.9 percent increase in St. Paul’s property tax levy — a $132 tax hike for the median household. Adding the total cost of the childcare program would mean an even higher property tax hike. Since commercial property values continue to decline, taxes will also likely have to be raised further in the near future — this on top of a one percent increase to the local option sales tax, which was needed to pay for roads, and a double-digit property tax hike enacted in 2023.  

Creating a multimillion-dollar 10-year spending obligation given all these budget issues would be a disaster.  

It could be bad for children  

Universal childcare programs have been associated with negative outcomes among kids in some areas where they have been tried. This is due to poor quality control and the fact that these programs tend to push more parents into the labor force, subjecting some children to low-quality care arrangements.  

For example, when Quebec offered cheap childcare to all parents, it encouraged more mothers to enter the workforce. According to 2005 data from the National Bureau of Economic Research, however, the program also worsened behavioral and health outcomes in children and led to “more hostile, less consistent parenting, worse parental health, and lower-quality parental relationships.” These effects persisted to school ages and beyond. In 2019, the American Economic Journal: Economic Policy found that “cohorts with increased childcare access had worse health, lower life satisfaction, and higher crime rates later in life.”  

Similar outcomes have been seen in programs such as Head Start. For example, a 2010 Head Start Impact Study final report from the U.S. Department of Health and Human Services found that cognitive gains among children enrolled in pre-K faded by the time they enrolled in first grade. Some kids even experienced negative cognitive, social-emotional, and health outcomes.  

For St. Paul, quality issues associated with publicly run programs could be mitigated if most of the funding is dedicated to high-quality private childcare providers. That, however, was far from guaranteed to happen.  

Consider the following: The annual cost of childcare at licensed daycare centers ranges from $17,000 for preschoolers to over $22,000 for infants in the Twin Cities Metro. At $3,000 to $8,000 allocated per child, St. Paul would be paying for only a fraction of the total cost of care. To recoup their expenses, daycares would have to enroll in multiple assistance programs. Publicly funded programs, however, often drown providers in paperwork and are notorious for making late payments. It is doubtful that private providers would be eager to sign up for the program or even create new slots, like the ballot language promised.  

Disadvantaged families would also have had trouble navigating the numerous overlapping local and state programs. Family childcare providers, while more affordable than centers, also cost significantly more than the subsidy would cover, leading to the same issues. Realistically speaking, this leaves public schools as the most viable option.  

The St. Paul teachers’ union urged voters to say “no” to the ballot measure, arguing that public funds should go to public programs, not private companies. If the ballot measure had gone through, there was likely going to be a major push from the union to allocate all funding to public schools — an arrangement that would ultimately have subjected low-income children to subpar learning environments associated with other publicly run programs. 

A poor fit  

Childcare programs that boast long-lasting significant positive effects on poor children share certain characteristics: They are small, targeted to disadvantaged groups, have high costs, and offer out-of-school services.  

The Perry School project, which ran from 1962 to 1967 in Michigan, is one of the most successful and often-cited programs. The program only targeted African American children at risk of failing school, enrolled 58 children, cost $21,800 per child, and provided other after-school programs, such as home visits. 

Other cities have had some positive impacts with bigger programs. But again, these programs have been carefully controlled for quality and are associated with enormous costs. Boston, for example, spent $13,000 (in 2020 dollars) per year for a full day of pre-K at the inception of its program in 1995.  

St. Paul’s failed ballot proposal promised just a fraction of the needed money. Moreover, the city has no prior experience or expertise in administering early childhood programs, placing the city’s ability to ensure high quality further into question. Public schools (assuming they were left in charge of the program) would have had to develop the infrastructure needed for much younger kids from scratch.  

From Quebec to Tennessee, research evidence strongly suggests that when it comes to childcare, something isn’t always better than nothing. Voters did taxpayers and St. Paul’s low-income children a service by rejecting the ballot proposal. St. Paul has neither the money nor the infrastructure for the kind of childcare program that research agrees pays dividends for the disadvantaged. Implementing a half-baked proposal would only potentially expose low-income children to poor care environments, leaving them more disadvantaged and further behind.