DC Council Must Protect HealthCare4ChildCare

Testimony of Anne Gunderson at the Committee of the Whole Fiscal Year 2025 Budget Hearing for the DC Health Benefits Exchange

Chairperson Henderson, members of the committee, thank you for the opportunity to testify. My name is Anne Gunderson, and I am a Senior Policy Analyst at the DC Fiscal Policy Institute (DCFPI) and a member of the Under 3 DC Coalition (U3DC). DCFPI is a non-profit organization that shapes racially-just tax, budget, and policy decisions by centering Black and brown communities in our research and analysis, community partnerships, and advocacy efforts to advance an antiracist, equitable future.

DCFPI is deeply disappointed that the mayor eliminated the Pay Equity Fund (PEF) in her fiscal year (FY) 2025 budget, including the HealthCare4ChildCare program (HC4CC)—a decision that will harm thousands of Black and brown early educators. HC4CC makes free or low-cost health care coverage available to child care workers who live in the District and non-District child care workers whose employers purchase coverage through the DC Health Benefit Exchange (DCHBX). To date, over 1,200 and their families have benefited from HC4CC, many of whom are receiving employment-based healthcare for the first time.[1]

The DC Council should restore all funding for the PEF, including funding for HC4CC, and explore progressive revenue sources for future years to keep up with the growth of the program.

HealthCare4ChildCare Needs to be Protected

Health insurance is a critical component of compensation for early educators, as envisioned in the Birth-to-Three for All DC Law. The PEF law allows the Office of the State Superintendent of Education (OSSE) to use excess PEF dollars available (i.e., dollars available after OSSE distributes payments to child development facilities to pay for HC4CC.[2] Of the $70.5 million annual appropriation and any carryover funding available, $18 million is typically set aside for HC4CC.

Much has been said about the severe salary cuts educators will face if the budget eliminates the PEF, but losing HC4CC will be just as devastating, especially for those educators who are gaining access to healthcare for the first time through this program. If the Council restores funding for the PEF, it is critical that it includes the cost of restoring HC4CC. DCFPI has long advocated that DC must offer pay parity alongside affordable health care coverage because the higher pay could cause some workers with low wages to be worse off if their total wage increase in the compensation program fails to outstrip any increased cost in health care coverage that they face due to higher wages. Higher costs could be a result of losing Medicaid eligibility or facing a higher premium through employer-sponsored insurance or through the marketplace.[3]

DCHBX has been working diligently with community-based organizations to build trust with and educate child development facilities ( on the value that HC4CC offers and to solicit feedback on program design. As DCHBX implements improvements and outreach continues, more facilities are likely to utilize HC4CC, especially as the child care industry recovers and enrollment and staffing levels increase; this would increase HC4CC expenditures. The cost of health care increases annually, which will also drive up HC4CC expenditures over time. The current $18 million allocation for HC4CC is adequate to absorb these growing costs, and it is important to maintain adequate funding to ensure that this benefit remains available to all early educators.

Losing funding for the PEF would devastate educators who took DC leaders by their word that this program would provide professional wages and affordable healthcare in the long-term. DC cannot cut its way to prosperity. DCFPI is asking the Council to restore all funding to the PEF and HC4CC to save the District’s early childhood system. DCFPI appreciates the Councilmembers who have spoken in defense of the PEF since the release of the mayor’s budget.

Thank you for the opportunity to testify. I am happy to take questions.

[1] DC Health Benefit Exchange, Fiscal Year 2025 Budget Oversight Pre-Hearing Questions, April 2024.

[2] DC Law 24-492, Fiscal Year 2023 Budget Support Act, page 54.

[3] Danielle Hamer, DC Fiscal Policy Institute, Testimony at the Budget Oversight Hearing for the Office of the State Superintendent, March 2022.