Compensation Task Force Members, thank you for the opportunity to testify. My name is Danielle Hamer, and I am a policy associate at DC Fiscal Policy Institute (DCFPI). DCFPI is a nonprofit organization that promotes budget choices to address DC’s racial and economic inequities through independent research and policy recommendations. DCFPI is a member of Under 3 DC, a coalition committed to securing a strong start for every infant and toddler in DC. My testimony focuses on health care benefits as a crucial part of “parity,” potential effects on workers’ eligibility for public benefits, and the next steps that the District should take to secure equitable wages for DC’s early educators.
Health Care is a Crucial Component of Fair Compensation for Early Educators
Early educators help lay the groundwork for a young child’s development and academic success, preparing them for pre-K and beyond. As outlined in the Birth-to-Three for All DC law, parity for these early educators means compensation equivalent to the average base salary and fringe benefits of an elementary school teacher employed by District of Columbia Public Schools (DCPS) with the equivalent role, credentials, and experience. Benefits include health care, paid time off, and retirement. To fulfill the promise made in the legislation, this body’s final recommendations for a parity program should, at minimum, include a comparable salary scale to DCPS teachers and health care benefits, and then work towards incorporating the remaining fringe benefits into the program. Higher pay and affordable health care work hand in hand to fairly compensate early educators.
Excluding health care benefits as part of the compensation program would not only violate the specific mandate of the Birth-to-Three law, but it could cause some workers to be worse off in the end if their total wage increase 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. The proposed base salary levels for all assistant teachers ($39,500) and lead teachers ($48,200) are higher than the Medicaid income threshold for single workers without children ($27,000) and single workers with one child ($37,700); other workers could lose eligibility depending on their family size and credentials.
Whereas DCPS provides health care coverage directly and uniformly to teachers, some early education providers cannot afford to provide health care coverage to their employees. There is a mix of experiences across the sector, with some workers having employer-provided insurance, Medicaid, or subsidized insurance through the marketplace. The task force should assess mechanisms available for ensuring all early educators have affordable health care coverage, including a direct grant to employers to help offset the cost of insurance or potentially a direct subsidy to the employee through the marketplace. DCFPI can appreciate that the task force has a strong desire for “simplicity” when designing the compensation mechanism, but that desire cannot be stronger than the charge of ensuring full parity, which includes affordable health care.
Also, as the task force considers the initial year stipend program, they should take into consideration which frequency of payment (such as a one-time lump sum or monthly payments) will lead to fewer health care coverage disruptions for these workers through the Medicaid program and marketplace, particularly if there is not a plan in place to meet the full definition of parity in the first year of the program. And, the task force should set aside funding to provide counseling to these workers to help them better understand what health care disruptions they’ll face, and what options are available, during this transition year.
SNAP Design and Recent DC Earned Income Tax Credit Expansion Should Leave Most Workers Receiving Higher Compensation Better Off
Higher wages for early educators could also cause some workers who are currently receiving food assistance through the Supplemental Nutrition Assistance Program (SNAP) to see reduced benefits or be cut off from the program. Unlike Medicaid where the benefit cliff is substantial, SNAP is designed more like a curb than a cliff: for every additional dollar a SNAP recipient earns, their benefits decline gradually, by only 24 to 36 cents. This means that for most SNAP households, the program continues to serve as an income support—making it easier for families to afford food—as they earn more and gain financial stability. Most workers should be better off under the proposed salary increases given this dynamic, particularly since the median wage for this workforce ($31,950) is above the SNAP income eligibility for a family of three ($28,548).
Similarly, the Earned Income Tax Credit (EITC) is more like a curb once a worker earns above $20,000, with the EITC value decreasing by about 21 cents for every new dollar earned until they are no longer eligible. For the median worker currently earning $31,950 and living in DC, there is no scenario in which the wage increase to the proposed base salary for an assistant teacher and teacher at any credential level fails to be larger than income lost from the EITC program. And for those who see a declining EITC value due to the phase out design, DC’s recent substantial expansion of its EITC from 40 percent to 70 percent next year (and to 100 percent by 2026) will serve as an additional complementary buffer. Moreover, those working part-time with incomes below $20,000 are more likely to see the biggest net gain from higher wages and the expanded DC EITC since the value of the credit is largest below that income.
Compensation Legislation Should Prioritize Subsidy Providers to Ensure Equitable Outcomes and Sector Stability
DCFPI supports the proposal to distribute stipends to all teachers and assistant teachers in the early care workforce in fiscal year 2022 before lawmakers establish and implement the compensation plan. In the development of the long-term compensation proposal, the task force should ensure the design of a system that prioritizes child care providers serving subsidized children. Without such guardrails, providers may have little incentive to serve children whose care is subsidized because their families have low incomes. Because of stark racial and ethnic disparities in income and poverty in DC, Black and brown children are more likely eligible for subsidized care.
For example, the task force could consider a tiered approach in which the level of support child care providers receive is commensurate with the number or share of subsidized children they serve. Or, the task force could allow all providers access to compensation funds, but only if they serve a certain number of subsidized children. The task force also might consider prioritizing providers that are in the subsidy program for compensation funds in the first year of the program now and expanding over time to reach all licensed providers. Ultimately, whatever mechanism the task force and legislators choose, it must ensure better quality and capacity of the District’s child care subsidy program so that the predominantly Black and brown children whose families struggle to get by aren’t shortchanged.
Continued Community Oversight is Critical for Equitable Implementation
To ensure the task force recommendations are carried out with sufficient monitoring and assessment, community oversight is necessary after lawmakers pass and draft the compensation legislation. DCFPI encourages the DC Council to include a mandate that secures a community oversight body to oversee the long-term compensation program.
 Center on Budget and Policy Priorities, “Policy Basics: The Supplemental Nutrition Assistance Program (SNAP),” June 2019.
 Maryland and Virginia also have state EITCs, but they are lower than DC’s expansion at 45 percent and 20 percent respectively.