DC Council Should Restore Funding for the Pay Equity Fund, Early Learning Programs

Testimony of Anne Gunderson at the Committee of the Whole Fiscal Year 2025 Budget Oversight Hearing

Chairman Mendelson, 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.

I want to start by thanking you for rejecting the Chief Financial Officer’s (CFO) demands to repay the Fiscal Stabilization Reserve earlier than what’s required in law, and for reallocating the funding to help restore the Pay Equity Fund (PEF) in the Committee of the Whole’s (COW) budget report. It’s clear that the DC Council understands the value and importance of this program. While restoring that funding is an important first step, DCFPI encourages the Council to:

  • Ensure there will be no pay cuts or loss of benefits for early childhood educators by restoring the full $290.2 million that the Mayor eliminated from the PEF and HealthCare4ChildCare (HC4CC), adding funds to implement PEF at current service levels, and restoring the authorizing language supporting the PEF;
  • Pursue progressive revenue strategies to make DC’s tax code more equitable and raise the collective resources DC needs to fund programs and services, including the PEF;[1]
  • Encourage OSSE to collect more robust data from child care homes and centers participating in the PEF to help make improvements to the funding formula that ensure that all programs are receiving adequate funding to meet the minimum salary requirements; and,
  • Restore funding to other early learning programs, like the $10 million cut to the child care subsidy program and the $2.3 million cut to the Pre-K Enhancement and Expansion Program (PKEEP).

DC lawmakers should keep its promise to early educators rather than asking those who do the most work and are paid the least to absorb yet another cut, especially when there is enough wealth in the District to support a robust early childhood system.

The Council Should Restore All Funding for the Early Childhood Educator Pay Equity Fund

Educators are the foundation of DC’s early learning system, shaping the most formative years of infants’ and toddlers’ mental, emotional, and social development. Paying early childhood educators livable and professional salaries is one step needed to boost teacher satisfaction, retention, and quality care, thereby improving DC’s early learning system. Over 4,000 early childhood educators, most of whom are long underpaid Black and brown women, have received boosted income since the launch of the PEF, and over 1,000 educators and their families have been covered by HC4CC.[2]

Thank you for rejecting the mayor’s proposed elimination of the PEF and restoring $217.9 million across the financial plan While restoring these funds will prevent elimination of the program and is a strong step in the right direction, this funding amount is only three-quarters of what the Mayor cut ($290.2 million across the plan) and falls approximately $37.5 million per year short of the current cost of the program. This funding gap would force significant changes to the PEF that would likely include life-altering pay cuts and/or a reduction in HC4CC benefits.

The Office of the State Superintendent of Education (OSSE) recently paused new entries into the program due to funding limitations. This suggests that there will not be any carryover dollars to leverage in FY 2025 and that level funding will be insufficient to maintain or grow the program. Based on OSSE’s estimates of what it will cost to implement the PEF in quarter three of fiscal year 2024, the program’s projected annual cost is $87 million. This estimate includes the supplement aimed at fixing flaws in the formula grant; when including a slight increase in projected credential attainment by early educators, DCFPI estimates the PEF will need $90.5 million in FY 2025, or about $37.5 million more than the funding that is available in COW’s budget report. Additionally, the costs of the program are projected to continue to increase over time to increase salaries annually to maintain parity with DC Public School teachers.

DC Council should ensure its budget includes no pay cuts or loss of benefits for early childhood educators. DCFPI urges the Council to explore progressive revenue raisers, like a capital gains tax and increased property taxes on multi-million dollar homes, to keep your promises to educators and adequately fund the Pay Equity Fund.[3]

Beyond restoring the funds for the PEF, Council will also need to restore the authorizing language. This is an opportunity to better shape the law and expand the reporting requirements and data collection that OSSE must conduct. As the Task Force crafts improvements to the funding formula to advance implementation, its members will need more detailed information about how participating facilities are utilizing their awards—such as, what share facilities spent on eligible educators’ salaries and what share they spent on other expenses. This information can inform what improvements are needed to ensure all programs are receiving adequate funding to meet the minimum salary requirements.

This District’s Early Learning System Cannot Afford Any More Cuts

The Mayor’s budget also cut $10 million in funding for the child care subsidy program, which offers support to parents with the lowest incomes to afford child care, and $2.3 million for PKEEP, which supports community-based pre-k. In the District, these programs are avenues for predominately Black and brown parents to give their children a jumpstart on their education and to have a safe and supportive environment to place their children while they work or pursue an education.

These cuts further deteriorate OSSE’s ability to offer high-quality, low-cost child care and undermine the agency’s effort to make program improvements that would increase utilization and expand access to subsidy to all District families, as laid out in the Birth-to-Three for All DC Act. DC already cut the subsidy program in the FY 2024 budget and another $10 million cut could put at risk vouchers for families once OSSE implements solutions to address utilization. Therefore, the Council should work to restore funding for the child care subsidy program and PKEEP to ensure as many District parents can access this resource as possible.

The elimination of the Pay Equity Fund has gotten the lion’s share of attention during this budget cycle, but the PEF is just one part of the larger early childhood system. The same child care providers who would bear the brunt of the cuts to the PEF are the same providers who will also shoulder the cuts to subsidy and PKEEP.

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

[1] DC Fiscal Policy Institute, The District Can Raise Critically Needed Revenue by Taxing Wealth, February 2024.

[2] DC Office of the State Superintendent of Education, Responses to Fiscal Year 2023 Performance Oversight Questions, February 2024; DC Health Benefit Exchange, Fiscal Year 2025 Budget Oversight Pre-Hearing Questions, April 2024.

[3] Just Recovery DC Coalition, All in for DC’s Tax Policy Platform, March 2024.