UPDATE/CORRECTION 3/8/23 ~ This is why it’s good to have partnerships with other organizations that support children and families. FCCAM received clarification around the wage program becoming Law under LD 1995, not LD 1652. Also credentials and articulation agreements language not included in the budget language. We have corrected information in this post.
With the ending of the ARPA Grant payments (includes transition payments) providers have raised questions about the $200 payment continuing and the need to be registered. Through this post FCCAM is hoping to provide some information that will provide some answers. FCCAM is not rendering legal or tax advice, just general information. If you require more specific assistance, please consult a legal or tax preparation professional.
Let’s start with the letter some providers received telling them they have to sign up for the program. Just as providers had the option with the ARPA Grant funds, we do not know if you “have to take” the money. We do know that to receive the wage supplement you do need to register. Information on that follows later in the post.
This is a state program and not tied to federal funds. It is now part of the annual budgeting, so this wage supplement should be ongoing. The $200 amount may change when the tiers are established. The tiers are required to consider experience, and education.
Providers have again expressed concerns about the tax impact if they take the wage supplement. Tom Copeland advocated to take funding like this using an example something like: If someone offered you $100 if you would give $30 to someone else would you take it pocketing $70? The supplement is money coming to you that you would not normally have. At 30% for taxes you pocket around $140. $140 per month for a year is $1680. That’s money you can put away for your children in something like the Maine’s NextGen 529 accounts, or for your retirement (Simple IRA plans), spend on special projects for your business, pay off personal credit cards/loans or just have fun with. Unlike the ARPA the wage supplement has no strings attached about how the money is used and accounted for.
While you might not want to think about retirement that is a great business practice for self-employed small business owners. It’s important to also understand how your retirement is impacted by the Social Security taxes you pay figured off your net earnings from self-employment. Many providers are expecting it to be figured off their total income before business deductions. FCCAM posted previously on how Social Security works: Your Social Security Benefit: How It’s Figured.
A basic review of how federal tax brackets work. Tax brackets divide your income into levels that are taxed at different rates. The Internal Revenue Service (IRS) updates federal tax rates, allowances, and thresholds every year. There are seven federal tax brackets for tax year 2022: 10%, 12%, 22%, 24%, 32%, 35% and 37%. The rates stayed the same, but the income thresholds for all tax brackets increased in 2022 to reflect the rise in inflation. These rates apply to taxable income, which is your gross income after you’ve subtracted the standard deduction or allowable itemized deductions.
Being in one tax bracket doesn’t mean all of your income is taxed at that rate, every bracket is taxed at its own rate. Your standard deduction is determined by your filing status and stays the same regardless of your income. Example: Married, filing jointly with a gross income of $80,000 in 2022. Subtracting the standard deduction of $25,900. Taxable income for 2022 would be $54,100. That puts you in the 12% tax bracket. To calculate your tax bill you’ll pay 10% on the first $20,500 of your income and 12% on the remaining.
Wage Supplement Program
In April 2022, Governor Mills signed the supplemental budget (LD 1995) which included more than $12 million in ongoing state General Fund dollars to increase pay for early childhood educators who are providing direct care. Now Maine has “The Maine Early Childhood Workforce Salary Supplement Program“. The program is open to all child care providers and early childhood educators who provide direct services to children in licensed child care facilities or licensed family child care.
The budget also included $200,000 to support CTE early childhood education program.
Background ~ LD 1652 was important in building support for strengthening the child care workforce in Maine and providing quality programs for families to access. While LD 1652 received strong support through the legislative process, with the Governor writing the wage stipend program into the budget LD 1652 just went away. Language from LD 1652 around credentials and articulation agreements were not included in the budget language.
§3737-A. Early childhood educator workforce salary supplements
“The department shall develop and implement a system to provide salary supplements to child care providers and early childhood educators who provide direct services to children in a child care facility licensed under section 8301‑A, subsection 2 or who are family child care providers licensed under section 8301‑A, subsection 3. Any salary supplement funding provided by the department under this section to a child care facility or family child care provider must be paid by that child care facility or family child care provider in order to increase wages for any child care provider or early childhood educator who provides direct services to children. [PL 2021, c. 635, Pt. RR, §1 (NEW).]”
To be clear family child care providers qualify for this wage supplement and need to count themselves when registering.
The monthly supplement will eventually be based on each individual provider’s level of education and experience. The agreed to language asked for the structure to be tiered. Currently anyone registered with the program who is providing direct care to children is receiving $200 per month.
“Until June 30, 2023, a child care facility or family child care provider shall distribute salary supplements received under this section in the same amount to any child care provider or early childhood educator who provides direct services to children employed by the facility or provider. Beginning July 1, 2023, the department shall establish by rule and shall implement a tiered system for salary supplements under this section. The rules must provide, at a minimum, 3 tiers based on the education and experience levels of child care providers and early childhood educators. The 2nd tier must provide a salary supplement that is at least 50% greater than the first tier and the 3rd tier must provide a salary supplement that is at least 50% greater than the 2nd tier. Rules adopted under this section are routine technical rules pursuant to Title 5, chapter 375, subchapter 2‑A. [PL 2021, c. 635, Pt. RR, §1 (NEW).]”
The Early Childhood Educator Workforce Salary Supplement Program is administered by Maine’s Department of Health and Human Services (DHHS) through the Office of Child and Family Services (OCFS). The Wage Supplement Program began paying registered providers for direct care provided in September 2022.
- Providers who have previously received ARPA Child Care Stabilization grant payments received an email with a link and an access code to their personal registration form.
- Providers who did NOT receive ARPA Child Care Stabilization grant payments need to register for the wage supplement program.
- Providers must have a valid Vendor Code with OCFS to register.
- For information on Vendor Codes contact Vickie Bussey at (207) 624-7909 or Vickie.Bussey@maine.gov
- Providers will need to fill out the information for their program using this registration link:
https://apps.web.maine.gov/online/childcare_grants/provider/login. Upon submitting the program information, providers will receive an access code via email that will allow them to gain entrance to the Early Childhood Educator Workforce Salary Supplement Program.
- Once providers are registered with the program, following their first payment, the monthly payments become automatic.
The following link is to a webinar containing guidance and detailed instructions for how to complete the registration: https://video.maine.edu/media/Early+Childhood+Educator+Workforce+Salary+Supplement+Pro
For questions or more information about the Wage Supplement Program, please contact ECEWageProgram.DHHS@Maine.gov
Early Childhood Educator Workforce Salary Supplement Program Contacts:
Diane Nicholson, Early Care & Education Specialist
Tel: (207) 624-7996
Crystal Arbour, Child Care Program Manager
Tel: (207) 626-8683