Testimony of UFT Director of Child Care Policy Jeremy Hoffman before the New York City Council Committee on General Welfare

Good afternoon Chairman Levin and the members of the General Welfare Committee. My name is Jeremy Hoffman, and I am the Director of Child Care Policy at the United Federation of Teachers (UFT). On behalf of our union’s more than 200,000 members, including roughly 20,000 home-based, family child care providers, I want to thank you for this opportunity to offer testimony on EarlyLearnNYC, the city’s contracted child care system.

First, I would like to thank the New York City Council for its fierce advocacy fighting for the rights of children and families and for its leadership ensuring the necessary checks and balances to protect the interests of those in our city who have the smallest voice but the greatest need. We appreciate your oversight of EarlyLearnNYC and the agencies responsible for our children’s education and well-being.

As you know, the UFT’s members include New York City’s public school teachers, paraprofessionals, guidance counselors, psychologists, secretaries and many other school staffers, all of whom play critical roles in educating our students. Our union is therefore deeply invested in closing the achievement gap and attaining educational equity for all students.

Our union began organizing New York City’s home-based family child care providers in 2005 because we saw these workers as early childhood educators who play a critical role in laying the foundation for later learning and closing the achievement gap. We represent all home-based family child care providers in the city who serve children whose care is subsidized and we bargain on the providers’ behalf with the state of New York. Recently, we incorporated a number of rights and protections for Family Child Care Network-affiliated providers into our state agreement, which we think strengthens the child care system in our city. Of particular note are the provisions mandating that providers are paid at the market rate and that the networks sign a written affiliation agreement with each provider explicitly detailing network policies and pay rates.

While child care in our city is often referred to as a singular "child care system," in fact nothing could be farther from the truth. The reality is that we have a multiplicity of programs with overlapping funding streams, varying program eligibility standards and varying program requirements. The services are a veritable patchwork of programs.

EarlyLearnNYC, the focus of today’s hearing, while only one component of the city’s child care system, is by far the most problematic. Two years into EarlyLearnNYC, family child care providers are struggling and continue to experience numerous problems with the EarlyLearn Family Child Care Networks.

EarlyLearnNYC is the city’s contracted child care system and includes many but certainly not all child care centers in the five boroughs, as well as their now-aligned Family Child Care Networks. Family Child Care Networks are entities that have direct contracts with the city; individual family child care providers affiliate with these entities as independent contractors. The networks provide contract administration, including payment, and ensure compliance with the city’s EarlyLearn requirements and both the city and state funding requirements. Network-affiliated providers are also mandated to follow all state regulations and are subject to annual inspections by the city Department of Health and Mental Hygiene.

EarlyLearnNYC changed the way that parents who are not receiving public assistance administered by the NYC Human Resources Administration (HRA) receive their child care subsidy. Pre-EarlyLearn income-eligible parents often received a child care voucher from Administration for Children’s Services (ACS) and could choose the child care services that best fit their need. EarlyLearnNYC eliminated most ACS vouchers and instead required many parents to seek their child care services through an EarlyLearnNYC child care center or Family Child Care Network.

EarlyLearnNYC does not include those child care centers that do not have an EarlyLearn contract with the city, the four Family Child Care Networks which the city has been designating funds to since 2012, or the independent family care providers who are not affiliated with a network. Many parents who have been awarded a child care subsidy as part of their public assistance, what is often referred to as an HRA voucher or CASH assistance voucher, choose to use that subsidy with either a non-Early Learn center or a non-network-affiliated family child care provider as is their right under federal law.

EarlyLearnNYC contractors run the gamut and have a wide spectrum of practices, requirements, pay scales, financial resources and administrative infrastructure. But regardless of what type of entity the EarlyLearn contractor is, the finances of EarlyLearn child care centers and their Family Child Care Networks are interwoven.

The specific EarlyLearnNYC problems, many of which I have spoken to this committee about in the past, include:

1. Providers paid less than the "market rate." Federal law requires that the state bi-annually calculates the "market rate" which determines what family child care providers who serve subsidized children should be paid. However, most family child care providers are currently paid less than the market rate despite the fact that the networks are mostly paid a rate per child that is higher than the market rate. Networks reduce the amount that they pay their affiliated providers either by having a base rate lower than the market rate, and/or charging various different types of administrative fees. Over the last year we have seen a number of networks increase the administrative fees that they take out of the providers’ already paltry pay.

2. Erratic payment to providers. Many networks delay payments to their providers. These payment delays can range from a day or two to weeks. Recently, one network in particular did not pay its affiliated providers for six weeks! This is simply outrageous.

3. Lack of sufficient written affiliation agreement. Family child care providers, as I mentioned before, are not employees of the networks but rather independent contractors. The terms of this agreement should be delineated in a written affiliation agreement or contract. However, many networks do not give their affiliated providers a copy of this agreement before or after signing. Rather, when they affiliated, family child care providers were sometimes handed an agreement to sign on the spot. They were not allowed to take it home to review and after signing it they were not given a copy. I have spoken with providers who have struggled with their networks just to get a copy of it. Many of these agreements lack such basic and critical information as their rate of pay or the disclosure of fees.

4. Food program. Network-affiliated providers participate in a federal program called the Child and Adult Food Program (CACFP) that reimburses providers for food that they serve which meets certain nutrition standards. The money flows from the U.S. Department of Agriculture to the New York State Department of Health and then to a CACFP food sponsoring organization that, in turn, administers the program and pays the individual family child care provider. There are a number of different CACFP sponsors in the city. Under federal rules providers have the right to choose their CACFP sponsor. Unfortunately, many EarlyLearn networks require that providers participate in their food program.  These food checks are supposed to be kept separate — they have different tax implications for the provider. Some networks inappropriately withhold the food check from the their affiliated providers as a form of punishment for violating a network-imposed rule.

5. Shifting of cost burdens to the provider. Over the last year we have seen a number of networks require that their affiliated family child care providers indemnify the network in their insurance policies. This results in a higher premium for the provider. It is outrageous for a network, which is already underpaying their affiliated providers and already charging administrative fees to then free ride on the provider’s insurance policies, requiring that their lowest-paid workers pay their insurance cost.

6. Favoritism. Many providers report that the networks assign children to providers as a way to reward those providers who they personally like or to punish those providers who raise concerns. Even when a network-affiliated provider who has room for an additional child recruits a family who has been awarded a child care subsidy from ACS and then refers them to a network, that child often is assigned by the network to a different provider, despite the parents’ preference. 

Many of these problems suggest a continuing lack of financial stability in the child care system. Since the finances of what used to be two distinct entities is now interwoven, any financial instability of the EarlyLearn center — whether due to underenrollment of their centers, the shifting of costs to the centers from the city, or an insufficient center rate, as many contend — puts downward pressure on the pay of their affiliated family child care providers. In short, some of the city’s EarlyLearn contractors are balancing their budgets on the backs of their lowest-paid workers, the family child care providers. Furthermore, the inability of the city to ensure that providers are at least paid on time and do not go six weeks without pay suggests that the city lacks the tools and authority in their contracts, inherited from the Bloomberg administration, to ensure the most basic of rights; that workers are paid for their labor.

Moving forward, we think that the city’s child care system would be improved by:

1. The city and the EarlyLearnNYC contractors honoring the Family Child Care Network-affiliated provider rights that are included in the UFT’s agreement with the state. During our negotiations with the state for the agreement which covers the city’s family child care providers we included a number of protections for network-affiliated providers. Respecting these rights will go a long way to improving the delivery of child care services in our city. These include:

• Network providers must be paid the market rate.
• Networks must sign a written affiliation agreement with each provider who shows how much they are paid and clearly outlines any network policies.
• Networks are prohibited from withholding a provider’s food reimbursement checks or a provider’s paycheck for unpaid family shares.
• Networks cannot remove children from providers’ care as a form of punishment.
• Network pay stubs must be itemized.
• Networks cannot restrict the number of children cared for in a provider’s home beyond what the state allows.
• Networks must provide all required forms at no cost to providers and allow providers to purchase any required materials from whomever they choose.
• Networks are prohibited from making providers refer their private-pay parents to the networks or from charging a fee for private-pay children or the providers’ own children.
• Providers are allowed to break their affiliation agreement if their network requires that they keep slots vacant for future placement by the network.
• Networks may not require any changes to the child care site beyond those required by the state.
• Networks cannot require providers to engage in any fundraising activity.
• Networks are encouraged to use a model affiliation agreement which was developed during negotiations and is attached to the contract.

2. Ensure that ACS has all the accountability tools it needs in the EarlyLearn contracts. Having a network go six weeks without paying its providers is simply unacceptable. ACS understood the gravity of the issue and worked hard to try to resolve it. Yet, it still took six weeks for the providers to be paid. The EarlyLearn contracts should be reviewed in order to ensure that the city has all the tools that it needs to ensure that providers are paid in a timely fashion. Withholding pay to some of the lowest-paid workers in the early education field simply should not be allowed to occur.

3. Respect the rights of parents to choose their child care. The city’s shift away from ACS vouchers to requiring that some parents access their child care only through the EarlyLearn system makes many providers feel like they are being forced to affiliate with Family Child Care Networks. The myriad of practices of our city’s Family Child Care Networks and the underpayment and erratic payment of some of them is making it harder and harder for family child care providers to make ends meet. The city should respect the rights of parents to choose their child care, regardless of a provider’s network affiliation.

4. Financial Stress Test for Networks – The erratic payment schedules of some networks and significantly delayed payments for providers suggest that some EarlyLearn Family Child Care Networks lack the financial resources to cover their financial obligations from payroll to payroll. The city should develop a financial stress test to ensure that each individual Family Child Care Network can actually at least meet payroll and not contract with those entities who are unable to.

Education equity is a core value that we share with Mayor de Blasio and is why the UFT so strongly supported his pre-K expansion.  We are delighted that the Mayor’s focus does not end with Pre-K but rather includes child care and that the city is looking anew at the its complicated child care system. Just like pre-K is critical to laying the foundation for later learning, so is child care which works with children as young as 6 months old and often cares for students up through age 12 after the school day ends. But unlike in past years, Mayor de Blasio and his team are seeking input from a broad array of stakeholders, advocates and experts. We are delighted to have been included in his Early Education and Care Task Force.

Thank you for allowing us this opportunity to share our thoughts on how to improve the city’s EarlyLearnNYC system and ensure educational equity for all of our city’s children.