Mayor Johnston on Childcare Costs in Denver
How much can the city really do to address childcare regulatory costs?
Last week, Mayor Johnston gave his State of the City speech looking ahead to a possible second term. As Paul Teske wrote shortly after the speech, the major focus was on affordability in Denver. Within the bucket of affordability one of the highlights was childcare costs in Denver.
I recently wrote a post here on childcare costs in Colorado which covered what I see as three of the major causes of high childcare costs including cost disease, regulation, and the demand side. So, I was happy to see the Mayor putting a spotlight on this issue that parents all around the city are dealing with.
Mayor Johnston did not go into great detail in his speech but laid out a framework for a task force and policy changes intended to address childcare costs. Some of this sounds good but I don’t know how optimistic I am that it will bring about the desired changes. Part of this has to do with how the Mayor discussed childcare regulations.
The Mayor rightly points out that regulations are one of the things making it more difficult for providers to enter the market. But the way he describes this is “red tape” leading to providers drowning in paperwork. His exact quote was, “cut the red tape so passionate educators can open and run a quality childcare business without drowning in paperwork.” Some work has shown that the fixed costs of compliance are significant. But I’m skeptical that direct compliance costs are the most costly part of the relevant regulations.
Even if the process of opening a daycare was streamlined (applications made easier, dealing with a single agency, etc.) such that “red tape” was cut, this wouldn’t mean constraints on child to staff ratios or other regulations suddenly became more flexible. I think a more serious look at regulations that goes beyond simplifying processes is warranted here. But I also don’t want to discount that even cutting paperwork would be an improvement.
My hope is that the task force looks into building some real flexibility into existing regulations. However, I am not even sure what they can achieve given that many of these regulations come from the state government. So, even if the Mayor’s plan was aimed at dramatic cuts in regulations, it’s not clear much could be done. Where there is room to create some regulatory flexibility at the city level, it should be pursued. And if that flexibility creates more options and allows for more entry without significant safety or other concerns that could be a major win toward the Mayor’s goals and may even encourage changes at the state level.
Another point on the topic of childcare in this speech was an idea for universal childcare in Denver. One version of this amounts to a subsidy for childcare along the lines of the city’s pre-K program. A subsidy will probably help people but will not directly address the supply problem the Mayor also pointed out. There is a large gap between how many daycare slots are available and how many children could fill those slots. Increasing demand while keeping supply constrained can just continue to push prices higher. But without specifics on what this would look like in Denver, I’ll save any further comments for when this comes out. It’s entirely possible there is a version of universal childcare that is a major help for Denver parents without creating a whole new set of problems.