Johnson County partners hope to keep child care wage incentives

A Johnson County collaborative program — funded in part by federal pandemic aid granted by Iowa City and the county — that increases the wage of eligible child care workers by $2 per hour is planning for a future after the federal money runs out.

Greater Iowa City Inc. has hired a full-time employee who will lead efforts on a campaign to provide continuous funding for the program through engaging local businesses and other community stakeholders. The existing pandemic aid from the American Rescue Plan Act must be spent by the end of 2026.

The wage enhancement program started in 2023 through a child care solutions group that now includes staff from Johnson County, Iowa City, North Liberty, the University of Iowa, the Iowa City Community School District, United Way of Johnson and Washington counties, 4Cs of Johnson County, Community Foundation of Johnson County and Better Together 2030.

The effort is separate from a state pilot program called the Childcare Solutions Funds that involved seven communities and was funded with private donations and government matching grants. The state pilot program, which sought to attract and retain child care workers by increasing wages and improving benefits, created 275 new child care slots on those communities, a study released earlier this month found.

To support the size of the current program in Johnson County, which includes 120 full-time classroom teachers across 10 centers, the program will need about $500,000 annually. Between July and October, the program has cost about $186,000.

“My job is to make sure that something like this is sustainable, and I'm able to build the value of what we're doing to the local businesses around here and have them also contribute to the fund so that we can keep this going” said Greater Iowa City’s Community Program Development Manager Michael Chen.

Chen said employers such as the UI, Hills Bank, GreenState Credit Union and small businesses already have made financial contributions. The funds are being collected through the Community Foundation of Johnson County and qualify for tax deductions.

“I want to let them know that this isn't necessarily a donation or charity. It's an investment in the workforce,” said Chen about connecting with local employers.

Those involved in the program said they’d like to continue to expand — but with the current amount of funding, it’s not very feasible.

“We felt like the public and private investment in the wage enhancement was really important because child care centers have to operate on a very different business model than other businesses. … If a day care center raises prices, that is passed directly on to parents and parents are like, now I pay as much for day care as I make, so you can't really just pass on cost to parents,” said Laurie Nash, Johnson County youth and family services manager.

Programs report improved retention, morale

Amanda Rairden, director of Little Clippers Child Development center in Tiffin, said since the program began she has been able to add and retain four full-time staff members. Sixteen employees from Rairden’s center are part of the program.

“It makes your staff feel good, like they're appreciated, and that people see them as not just a babysitter but as someone who is in a quality profession that matters,” Rairden said.

Rairden said the program also has allowed her to hire more qualified candidates and minimize tuition rate increases for families. Even with the program, Rairden said she’s had to raise tuition the past two years, which she largely attributed to inflation.

“If you lose kids because you raise your rates too high, then you can't pay the wages of the staff. It's really a fine balance. … It's hard every time you raise rates, because you know it’s going to adversely affect your families,” Rairden said.

The average child care worker in Johnson County earns just over $11 per hour, yet the area is one of the most expensive in the state for child care. The average family spends over $2,000 a month for two children.

Nash said that the solutions group found that many centers in Johnson County could offer more child care openings but instead have long waiting lists because they don’t have enough staff to care for the children.

“This funding that we identified was intended to get individuals who wanted to work back into the workforce. … We determined that if we could get staff in the classroom, then the providers could fill those slots, and more folks could go back to work,” Nash said.

Child care centers must adhere to state staffing standards, which require one staff member per four infants — not just one staff member per 12 4-year-olds.

The participating programs provide care for 368 kids across the 10 centers.

Infant care, livable wages emerge as priorities for program

Initial funding for the wage enhancement program came from $1.5 million in combined pandemic relief funds from Johnson County and Iowa City. Of the participating centers, six are in Iowa City and four are elsewhere in the county.

Nash said participating centers had an hourly wage of between $11.56 and $15 an hour before the $2 per hour was added. Staff can opt out of the program, but Nash said no one has.

“We wanted to make sure that the centers were already trying to pay a living wage. You know, $11.56 is not a living wage. But we wanted to make sure that we weren't just taking a poverty wage and keeping it in poverty wage — we wanted to really have something to build upon,” Nash said.

In addition to the additional $2 per hour for employees, the program also pays for payroll taxes for the participating centers.

The group reviewed applications and gave priority to centers that provide infant care, as there is a lack of infant care providers in the county, Nash said.

In addition to staffing needs, infant care can be more expensive to provide due to the additional equipment needed, such as cribs or high chairs.

Child care assistance acceptance requirement

To be eligible for the program, all centers must serve ages up to 5, participate in the state’s optional quality rating scale or maintain accreditation from the National Association for the Education of Young Children, accept child care assistance and pay at least $11.56 an hour, the county’s recommended minimum wage.

While Nash said the feedback from the participating centers has been overwhelmingly positive, the requirement that a center accepts child care assistance has stood out as a potential barrier for center to participate.

The state-run program, which provides access to child care for low-income families, offers reimbursement for providers at a fixed rate across Iowa. However, at most providers in Johnson County, that doesn’t cover typical tuition rates — meaning some providers take a loss when accepting child care assistance.

“There is a cost difference — it doesn't cover pretty significant amount that comes in versus taking a child without child care assistance. But with that and the other incentives that the county has rolled out, it's a lot easier for me to want to accept more child care assistance,” said Rairden.

The program requires that each center accept up to 20 percent of its children using child care assistance. Additionally, no more than half those using child care assistance can be the center’s own staff.

Nash said there’s been conversations on whether that cap should be lowered.

“We can't control how much child care assistance reimburses. With a big gap in what they reimburse, we don't want centers to go under and not be able to operate, because that gap is so big. In Johnson County, the gap is bigger than almost anywhere else in the state,” Nash said.

Each center doesn’t need to have the full 20 percent of children enrolled through child care assistance if there are not enough applicants. But Nash said if they don’t, they have to prove their enrollment process still is equitable. Nash said all participating programs have children enrolled through child care assistance.

While the gap in reimbursement for child care assistance is a concern, the requirement also opens up spots for families using it that can have a difficult time finding a provider.

“There are a lot of barriers to families with child care assistance on even getting on a waiting list. A lot of places have a registration fee and low-income families just don't have money to pay five different child care centers to get on their waiting list. … Part of our goal was to increase access to the general public for child care assistance,” Nash said.

Comments: megan.woolard@thegazette.com