NASHVILLE, Tenn. (WJHL) — Child care centers that participate in a Tennessee state reimbursement program for low and moderate-income parents just got a 20% increase — and parents in the program are having their co-pays waived for the rest of the year.

The head of an early childhood education advocacy group hailed the changes as a huge win for both parents and child care providers.

“That is a big, big deal,” Tennesseans for Quality Early Education (TQEE) CEO Blair Taylor told News Channel 11, referring to the reimbursement increase. “And they have not put a timeline on that — they’ve said ‘that’s done,'” she added, meaning that the rate increases are permanent.

Sonshine Children’s Academy in Elizabethton is one of many child care centers areawide that is impacted by the change.

“I’m glad that it finally increased because with the cost of living lately and inflation you really see a financial strain on families,” owner and director of Sonshine Children’s Academy Shelly Smith said.

Smith said it’s the first time in years the reimbursement rate has increased, and it’s sorely needed.

“I have ran a daycare in Washington County, and then I opened this one in Carter,” Smith said. “Honestly, in both counties, usually about half of your children are in these programs.”

The subsidies are available for any families making at or below 85% of the state’s median income. For a family of four, that upper limit is $68,652 per year. The amount of “co-pay” the family is responsible for increases the closer their income gets to that 85% mark.

Using toddler reimbursements (13 to 31 months), what that means for participating centers is this: weekly reimbursements have increased from about $170 to $205 for non “star-rated” centers. A “three-star” center now gets $246 weekly for a child in that age range, up from about $205 before the increase. (The totals are for “top tier” counties, which include Greene, Washington and Sullivan in Northeast Tennessee.)

Taylor said Tennessee’s Department of Human Services and other agencies have made great strides in the past couple of years in trying to address challenges to the childcare industry, including labor shortages and chronic underfunding. She said Monday’s announcement is “the most significant thing they’ve done.

“I really applaud them for making that bold move, because for the folks who are eligible, that payment assistance amount that goes to providers, with the extra 20% on it now it’s much more in line with the actual cost of care.”

The second part of Monday’s announcement was the waiving of co-pays from August 1 through the end of 2022. Taylor said many people whose incomes qualify them for the “Smart Steps” program.

A household of four earning 60% of the median income — $48,468 a year — currently pays $64 weekly out of pocket for one child or $112 for two. Even for one child, that family will save more than $1,300 through the end of the year thanks to the waiver.

“It’s an acknowledgment that costs are rising,” Taylor said of the shorter-term aid to families. “Housing costs, your utility costs are rising, your groceries, your gas — you’ve got all these things that are your basic household needs that you’ve got to be paying for … in the interim your child care costs could use a little relief.”

Taylor said the childcare shortage and the costs that many families decide on are too much, opting instead to scrape by on one income, which can have multiple negative impacts. She pointed to a 2019 TQEE survey of more than 2,300 parents that found “dramatic challenges across the board, across income groups on affordability, quality and access” to child care.

The impacts extended to the business sector.

“A big adverse impact on labor productivity, labor participation, lost earnings. We had an economist crunch the numbers — significant lost business revenues, a big adverse economic impact. You think of childcare as workforce of today and tomorrow, both.”

Lottie Ryans with First Tennessee Development District said the change marks another step toward filling job openings of all kinds and getting more Tennesseans back to work.

“What we saw is the list of people waiting to get child care is significant,” Ryans said. “We have a lot of businesses that don’t have an opportunity to fill all of their jobs because people can’t afford to go back to work or they can’t find childcare.”

Taylor said about 4,000 Tennessee childcare centers are either Department of Education or DHS certified, and quite a few of those participate in the Smart Steps program. But she’s afraid far fewer potentially eligible families are aware of the subsidy and how easy it is to apply if their income qualifies.

TQEE is involved with a state task force that is continuing to examine ways to improve access and participation.

“In a survey we’re doing right now, we’re asking the question, ‘are you aware that there is a payment assistance program,” Taylor said. “I would think a lot of people aren’t.”

Director of Sonshine Children’s Academy Shelly Smith said she expects this year’s rate increase to not only help families in a multitude of ways but daycares like her own as well.

“There’s more times than not child care facilities will say, ‘don’t worry about that difference, your children needs to be here they need to be somewhere safe,'” Smith said. “The parents that could pay that cost difference that not only helps them now, but the families that we dismiss that charge that helps us because that gives us more money to provide a better environment for the children.”