IOWA LEGISLATURE

Child care grants, tax credits win bipartisan approval by Iowa House

Grace Rabe (left), 4, gets cups as she sets the table in 2019 while Tammy Cooper (center) prepares lunch for the childre
Grace Rabe (left), 4, gets cups as she sets the table in 2019 while Tammy Cooper (center) prepares lunch for the children she cares for in her in-home child care business in Iowa Falls. A bill advancing in the Iowa Legislature would allow in-home child care providers to increase the number of children they care for. (Jim Slosiarek/The Gazette)
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DES MOINES — The House approved a legislative package that aims to address a workforce shortage by increasing the access and affordability of child care through a combination of grants and tax credits.

The bills, passed with bipartisan support, are part of an effort the House began last year but was disrupted by COVID-19.

Child care access and affordability have become key factors in growing Iowa’s workforce and getting Iowans back to work. That was exacerbated by the pandemic, which lawmakers said has contributed to the loss of 81 child care centers in the state since March 2020.

A key piece of the package was House File 302 that lawmakers said would remove what is known as the “cliff effect.”

Rather than families immediately losing child care if their incomes exceed the ceiling, the bill would provide a state-funded off-ramp to gradually increase a family’s share of child care costs as household income rises.

About 25,000 Iowa children from low-income families receive child care assistance.

To qualify for CCA, parents must be working or going to school for 28 hours a week and have an income less than 145 percent of the federal poverty level, which is $31,494 for a family of three.

A slight increase in earnings could end the assistance, making a parent responsible for the full cost of child care.

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Advocates for HF 320, which was approved 90-4, say the current system can trap families in welfare dependency because they can’t afford to accept a better-paying job or get a raise or promotion with a pay increase.

$90 million

The state already spends $90 million on child care, Rep. Joel Fry, R-Osceola, told colleagues during debate on House File 292 that would increase the rates for providers who accept child care assistance up to the 50th percentile of the most recent Market Rate Survey and provide increases to quality child care programs.

It would increase funding for child care by $13.3 million and was approved, 90-4.

Tax credits

House File 370, approved 88-6, would create a child care tax credit equal to the amount of the federal employer-provided child care tax credit.

It addresses both Iowa’s workforce shortage and child care shortage.

It should help employers recruit and retain employees and help Iowans go back to work knowing they have access to affordable child care, Rep. Jane Bloomingdale, R-Northwood.

House File 230 would extend the phase out of the Child and Dependent Care Tax Credit and the Early Childhood Tax Credit, effectively making it a state tax credit of 30 percent of the federal credit for any taxpayer with a net income of $90,000 instead of the current cap of $45,000.

It was approved 93-1.

Help for providers

House File 260 will allow in-home child care providers who are registered with the state to increase capacity from six to seven or more children at any one time if some of the children are in school. It also would not require the provider register as a child development with the state. It passed 70-24.

House File 301 would provide education-based salary supplements or bonuses to low-paid early education providers working with children in Iowa.

The programs are intended to increase educational opportunities, increase compensation and increase the retention rate of these employees. It was approved, 92-2.

The bills now move to the Senate, which has companion bills.

Comments: (319) 398-8375; james.lynch@thegazette.com

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