Governor, legislature float fixes for child care crisis

Dana Carroll: Child care providers can't keep up with higher wages and benefits outside their industry.

Jennifer Crouch: Local business and education leaders are coming together to find solutions to this workforce issue.

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Tax Credits Explained

Brian Schmidt, executive director of the child advocacy group Kids Win Missouri, offered an explanation of the tax credit proposal currently wending its way through the legislature via House Bill 870.

Child Care Contribution Tax Credit
The bill proposes a tax credit for corporations, organizations, individuals and partnerships for up to 75% of a verified contribution to a licensed child care facility, to be capped at $200,000 per taxpayer. The overall program is capped at $20 million per calendar year.

Schmidt said the tax credit would allow employers to increase their contributions at no additional cost.

“If you gave $10,000 last year, you might give $40,000 this year and quadruple your impact,” he said.

Employer-Provided Child Care Assistance Tax Credit
This tax credit would pay for up to 30% of eligible child care assistance expenditures made by employers.

The credit is capped at $200,000 per taxpayer with an overall program cap of $20 million per calendar year.

A business could develop a partnership with a local provider to guarantee a certain number of slots for its employees, for instance. A combination of a state tax credit, a federal employer-provided tax credit and employee contributions would reduce the cost paid by families.

Additionally, a business could open a child care facility on its premises and claim a state and federal tax credit. The remainder of child care expenses could be deducted on the business’ state and federal taxes.

Child Care Providers Tax Credit
A tax credit for providers would allow eligible payroll tax withholdings for employers who work at least 10 hours per work for at least three months. Schmidt said the measure would give a tax credit equal to the withholding that child care providers collect and remit to the state. Additionally, up to 30% of eligible capital improvements to a facility could be deducted. This program, too, is capped at $200,000 per taxpayer with a program cap of $20 million per calendar year.

Schmidt said child care is a challenge for the entire state, and it’s not unique to Missouri.

He said the proposed tax credits are a great opportunity.

“It’s probably the largest historic investment in early child care ever in Missouri,” he said.

The Missouri House of Representatives is considering tax credits designed to increase access to affordable child care as leaders in business and education signal that workforce needs make the situation a crisis.

Rep. Brenda Shields, R-St. Joseph, introduced the measure. House Bill 870 proposes three child care tax credits, first introduced in Gov. Mike Parson’s State of the State speech in January:

• A tax credit for businesses that pay for a portion of employees’ child care costs.
• A tax credit for employers that offer child care to employees either on site or through a contract with an off-site provider.
• A tax credit for child care providers to make capital improvements to acquire or improve facilities and to provide a tax credit equal to the withholding tax that providers collect and remit to the state.

The Missouri Chamber of Commerce and Industry supports the legislative package.

“Almost 80% of business owners in Missouri say the cost and availability of child care is making it harder for them to recruit and retain employees,” said Kara Corches, the Missouri chamber’s vice president of governmental affairs, in a release from the chamber.

A 2021 report from the U.S. Chamber of Commerce estimated Missouri loses more than $1.3 billion annually through accessibility, quality and cost-related hurdles related to child care.

Nationally, Bank of America data noted 7% fewer customers made child care payments at the end of 2022 as compared to the start of 2020, despite a 2% increase in U.S. jobs since that time, according to Labor Department data cited in a Wall Street Journal report.

The report also found 380,000 Americans ages 25-54 who were employed before the pandemic in mostly restaurant and retail sectors were jobless last year, and bank economists cite lack of good, affordable child care as a factor.

The Federal Reserve Bank of St. Louis reported in late 2022 that in households where both adults are employed full-time, child care takes up 10% of income; for single-income homes, child care takes up 32% of income.

Nothing new
Dana Carroll, vice president of early childhood and family development with Community Partnership of the Ozarks Inc., said the struggle for adequate child care in Missouri has been going on for a long time.

“Prior to COVID, we were already struggling, and we have for many years,” she said. “It costs more to provide the care than what providers think they can charge because families can’t afford any more than that.”

Competing employers offer plenteous jobs and higher wages – Carroll cited the Amazon fulfillment center as one of several examples – and child care can’t keep up, she said. That’s true beyond the Springfield area, she added.

“It’s not just a southwest Missouri issue; it’s a statewide issue,” she said.

Here, the problem is complicated by the loss of providers over the last two or three years, including two 100-plus-spot centers: University Child Care Center and Little Angels Learning Academy, according to Carroll.

“We haven’t seen that many new providers spring up,” she said. “It’s a constant struggle, not being able to recruit or retain staff.”

She added that licenses that remain open have shut down classrooms due to staffing shortages.

“They may be licensed for 100 kids, but they’re only serving 68 kids because they don’t have the staff to open up rooms,” she said. “That continues to be a struggle as well.”

A workforce problem
Carroll said many that could be in the workforce are unable to because they can’t find child care.

Jennifer Crouch, director of early childhood education at Ozarks Technical Community College, co-chairs with colleague Faith Swickard the Early Care and Education Collaborative’s Workforce Development Committee, which is working to find solutions to the problem. She agreed with Carroll: The child care crisis is a workforce development issue for the community.

“Businesses are finding child care an issue as they’re trying to recruit and retain employees,” Crouch said. “The situation is not going to get better until we can find a way to pay competitive wages for the child care workforce. That’s really the issue.”

U.S. Bureau of Labor Statistics data puts the 2021 mean pay for Missouri child care workers at $25,810 and $12.41 per hour – lower than the national hourly average of $13.22.

Crouch said most child care workers throughout the nation work for minimum wage or slightly more with no benefits. However, she said any attempt to raise wages for child care providers is likely to push the cost of care beyond what many families are able to pay.

The problem extends to families, according to Liz Hahn, executive director of Lighthouse Child and Family Development Center and a member of the committee.

“We have a lot of parents that reach out to us looking for child care,” she said. “They’re desperate. They’ve called everyone they can think of, even places they may not necessarily want to send their child, and they’re out of places to call.”

Lighthouse participates in the state subsidy program for families in need of assistance. Participating facilities are dwindling since the pandemic, Hahn said, and Lighthouse is one of the few that remain.

She noted that her facility is one that has more space available for kids than staff to care for them. Things are getting better, and a classroom will soon reopen within Lighthouse’s Messiah Lutheran Church – currently its only location.

Amber Boone is lead teacher for 2-year-olds at Lighthouse. She understands the child care problem from another side, however, as the mom who had a hard time finding placement for her 4-year-old with special needs.

As she talks about her experiences, Boone performs assessments of the children in her classroom. She tracks milestones – physical, social and emotional – and makes it fun, as children thread giant beads and draw straight lines.

A half-dozen children play under the watchful eye of Boone and another teacher. Those are the lucky ones. They have a spot where they are safe, they are entertained and a qualified person – Boone is working toward a bachelor’s in child and family development – pays attention to their growth and progress.

This is the desire of many parents in the community, but for many the need is going unmet.

Businesses seek solutions
Krisi Schell, executive vice president of human resources for SRC Holdings Corp., is a member of the child care workforce development committee. Schell said SRC has been looking at the child care problem for years.

“When we look to the future of the workforce, we have openings, and we know that long term, we’ve got a lot of growth planned,” Schell said. “We’re going to continue to need people to help us attain that growth.”

Schell said there are people now who aren’t able to work because of child care constraints: Either they can’t find appropriate child care, or they can’t afford the options they do find.

For SRC, the solution might be partnering with a child care facility that isn’t at capacity, or it might be looking at a consortium with other employers, she said. There’s always the potential that SRC could provide its own child care, but it makes sense to explore existing providers first, she said.

She added that child care is a crucial need for any business that wants a diverse workforce, as women in particular are often the ones left out.

“As employers, we’re going to have to rethink things in order to make sure that we’re attracting and retaining the people we need right now and on into the future,” she said. “We’re going to have to do things differently.”

Some hope
Crouch said she is excited that the governor and the legislature appear to be supportive of early childhood.

“For the first time in my over-20-year career, it’s something that’s being talked about a lot more by everyone,” she said. “There’s more awareness now, and I’m seeing some steps in the right direction.”

She added that she doesn’t think the proposed tax credits alone will solve the problem, but that’s where the child care workforce committee comes into play. She noted many solutions are on the table.

Carroll, too, said she puts a lot of faith in the work the committee is doing.

“I’m an eternal optimist. I will always say that things are going to get better,” Carroll said.

She takes heart from the local effort to problem-solve and from the involvement of the governor and legislature. She added that she knows solutions will come, because they must.

“It’s not only a future workforce problem, but it’s a current workforce problem,” Carroll said. “We have to figure out something so that we can get people to work.”