- Policy Resources
- News & Analysis
- Your State
PSN on September 25, 2006 - 8:38am
In state elections across the country, how to create quality, affordable child care has become a potent campaign issue.
Just this month in Wisconsin, Governor Jim Doyle made a proposed $3000 per child tax deduction for child care expenses a centerpiece of his reelection campaign. In Wyoming, Governor Dave Freudenthal touts legislation he signed this year to regulate and subsidize child care centers as a key part of attracting new workers to the state. In South Carolina, debate over regulation of large private child care providers has become a large political issue.
Additionally, two states are taking child care issues to the ballot box:
- The Arizona First Things First ballot initiative would dedicate major new funding for early education.
- Massachusetts has a ballot initiative this November to improve working conditions for child care workers under the state's subsidized child care program by allowing them to bargain collectively.
For parents who work, peace of mind is knowing their children are in quality child care. Especially for single mothers, 79% of whom are in the workforce, such programs can be an economic lifeline. And as studies continue to confirm the long-term economic gains for communities with strong child care systems, many business leaders are becoming key proponents for strengthening child care and early education systems in the states.
Back in July, the Dispatch profiled innovations in state preschool programs, so this issue highlights the ways states are encouraging quality, affordable child care for younger children. These include creating and reforming state tax child care tax credits, expanding direct subsidies for lower-income children, encouraging the creation of quality child care centers, and improving the working conditions of workers in the child care industry.
State Child Care Tax Credits
The federal government provides a Child and Dependent Care Credit that is based on a complicated formula that, because it is an offset against income taxes paid, is not available to the 58 million lower-income households who do not pay income tax. Many state programs suffer similar problems.
As an example, Gov. Doyle's proposal for a general tax deduction for child care expenses, while it will no doubt be helpful for many families, is not the best approach, since the announcement indicates it will not be refundable and will therefore give more financial help to better off families than to lower-income families who will receive little or no help at all.
Twenty-seven states currently have child tax credits or deductions, often tied to the federal tax credit in some way, such as using its calculation of eligible child care expenses and/or offering a credit as a percentage of the federal credit for which a person qualifies. As the National Womens Law Center explains in a recent report, only nine states have child care credits that are fully refundable and therefore available to all families regardless of how much income tax they pay.
The most generous child care tax credit is in New York, which extends a credit of $2,310 for families. This is more generous than the federal credit with the credit fully refundable for low-income families, a best practice for states considering creating or reforming their state child care tax credits.
Extending Child Care Subsidies
The flip side of tax deductions that help too few lower-income families are direct subsidies for child care that help poor families, but are often so restricted that families lose help once they get a job that pays even a bit more than a poverty wage. And federal block grants, including the Child Care Development Fund and TANF, have not been keeping pace with inflation, so states have cut child care aid in recent years and limited eligibility.
Under federal law, states are allowed to extend child care aid to families making up to 85% of their state's median income, but most states cut off child care subsidies at lower levels, some as low as 37% of state median incomes. This range of support in the states translates into a family of three in 2005 being eligible for child care subsidies at an annual income of $46,245 in Alaska but only up to $17,784 in Missouri. This can leave many lower-income families too poor to benefit from income tax credits but with too much income to qualify for direct child care subsidies -- a glaring hole in the system in many states.
Adding to the problem is that in too many states, even families that are eligible for child care subsidies face long waiting lists -- 280,000 children waiting for child care in California alone in 2005. States also need to make sure that copayments are not too burdensome on working families.
With so much focus in the welfare debate on getting former recipients into the workplace, as we discussed last week, helping all working families afford decent child care has to be a focus to the close the holes in the system. As studies show, families are far less likely to end up back on the welfare rolls if child care help is readily available when they enter the workforce.
Encouraging Creation of Quality Child Care Centers
Beyond cost, a serious problem for many families is finding quality child care centers. States have been taking action to promote better regulation of child care centers and developing programs to expand the choices for parents.
Part of the energy for these programs comes from the recognition that child care as an industry is becoming an increasingly important component of regional economic development, both for those in child care itself and as a supporting industry for other businesses that need quality child care available to attract and retain good employees. Many advocates point to the US military, which has created a model child care system for the 200,000 children of its members, a system that has been cited as demonstrating the advantages to all employers of having quality child to build employee morale and loyalty.
One oft-cited model is North Carolina's Smart Start program, which uses public-private partnerships to promote the availability of quality child care facilities, the model for Wyoming's new child care law. In other cases, state governments themselves can take a stronger role in directly contracting with providers to create new facilities, an especially needed approach to provide more options for children with special needs. Advocates are also increasingly arguing for integrating more sophisticated early education into child care programs to maximize the results down-the-line.
States are also recognizing that a key to quality child care is making sure work conditions of the child care workers themselves are improved, thereby decreasing employee turnover and encouraging long-term training and skill development. New York and Washington State this year enacted reforms to allow day care workers to form labor unions with collective bargaining rights, following the lead of Illinois Governor Rod Blagojevich who signed an executive order last year to allow 47,000 day care workers in that state the freedom to form unions to advocate for better conditions in the child care industry. (See this Dispatch for more).
The bottom-line is that progressives should be making support for quality affordable child care a core part of their agenda for valuing families -- and challenging rightwing "family values" politicians to either support those programs or stop hypocritically posing as friends of working families.
Investments in quality child care also need to be framed as long-term investments in society and the economy, since studies show children in high quality child care display greater language ability and math skills, develop better social skills with peers and teachers, all of which have impacts on a child's education throughout their career. Similarly, investing in quality child care has been shown to improve later behavior in school and decrease adult crime rates, leading to lowered costs for states and safer communities.
All of this is increasingly making promoting affordable quality child care a key issue for progressives in reaching out to working families.