Affordable, Accessible Child Care

Iowa faces a child care crisis in both urban and rural areas. While it directly impacts families with small kids, it’s also a drag on Iowa’s economy and a huge barrier in recruiting and building a skilled workforce. 

• The average cost of child care for two kids under five years old ranges from $859 to $1,315 per month, which can top $15,000 annually.

• Compared to the median income of Iowa, families spend anywhere between 20% to 24% of their income on child care costs, which is often more than housing costs.

• Iowa ranks as one of the top states in the U.S. where both parents are working and have children under six years old.

• In just five years, the cost of a child in a licensed child care facility rose 28% and in-home care costs rose by 14%. (Iowa Child Care Resource & Referral)

• According to the non-profit Iowa Women’s Foundation, Iowa is short 359,000 child care slots for kids under 12.

• According to the Iowa Child Care Resource & Referral, Iowa has lost 40% of child care businesses and lost 6% of its total child care spaces since 2012.

•  An analysis of Iowa census data found 23% of Iowans live in a child care desert and it’s higher in rural areas at 35%. (Center for American Progress)

Grants to Expand or Open New Licensed Child Care Facility

House Democrats recognize the need to encourage new child care options in the variety of child care deserts across the state. The Child Care Center and Child Development Home Grant Fund would provide startup or expansion assistance to daycare providers to offset the costs of establishing a new licensed child care center. These startup costs include supplies, infrastructure, and registration of the facility. The grants would be limited to $50,000 each. In an effort to help more working families, facilities that accept grants must also take at least 20% of children who receive CCA.

Partner with Small Business to Expand Child Care

With Iowa’s shortage of child care options, we will encourage more small businesses to provide child care benefits to their employees through tax credits. The benefits include building or fixing an existing structure at or near the small business or operating or leasing a building to operate a child care center for their employees. The business must have less than 20 people and income less than $4 million annually.

Expand Child Care Assistance

There are about 25,000 children a month in Iowa who receive assistance from the child care assistance (CCA) program. CCA is available to families with income less than 145% of the federal poverty level (FPL), which is $30,132 for a family of three in Iowa. Parents must be working, going to school, or in a job training program for at least 28 hours per week to qualify. Our plan would expand CCA to include another 7,300 children by raising eligibility to 200% FPL. ($39 million)

Our bill will also ease the transition for families off assistance as their income increases by expanding CCA Plus. While the Governor recommended expanding CCA plus to just 143 kids, our plan will serve an additional 1,585 children. ($6 million)

Expand Child Care & Dependent Care Tax Credit

The Iowa Child and Dependent Care tax credit provides child care relief for Iowa families with children younger than 13 years old or disabled dependents. The credit is based off of the federal Child and Dependent Care Tax Credit and is worth 30-75% of the federal credit, depending on the income of the family. Currently, the credit is only available for families with an income under $45,000 and, even for those who qualify, it still falls well short of the actual cost of child care. Once a family makes $1 more than that $45,000 cap, they lose all child care assistance, which is called the “child care cliff.”

Our plan will provide twice as much total tax relief to lower income Iowans by making state’s credit 100% of the federal credit. The bill will eliminate the cliff effect by expanding the credit to more families and phasing out the credit as family income rises up to $250,000. These changes would make the state even more attractive to growing families by providing one of the most competitive Child and Dependent Care Tax Credits in the county. ($15 million)

HF 771, which passed the House during the 2019 session and was supported by the Governor, would extend the income threshold from up to $45,000 to families making up to $90,000. The cliff effect would still impact any family that makes even a dollar more than $90,000 annually. The bill provided no additional child care expense relief for families making less than $45,000 annually.