OVERVIEW

Iowa’s Child Care Assistance program has an income eligibility threshold that creates a huge disincentive for parents to advance toward jobs that pay a financially self-sufficient wage. This is called the “child care cliff effect,” because when parents’ wages meet this threshold, their public benefits sharply drop off before their family has become self-sufficient. Parents deciding whether to accept a job that pays just a little more per hour, or take on more hours per week, often find themselves facing a family budget dilemma: if they earn just slightly more, the pay increase does not come close to offsetting the loss in benefits. In some cases, the effect is so dramatic that the family goes from having some discretionary income to being unable to cover basic necessities.

Cliff Effect

OBJECTIVES


The current income eligibility threshold (145% of the federal poverty level; view chart on page 11) for Iowa’s Child Care Assistance program creates a steep drop-off of public benefits for families struggling to afford quality child care. This restriction makes it difficult for the state to encourage the workforce to develop the skills and experience necessary to meet employers’ demands for middle-skill jobs, because families can be worse off if they receive a raise that puts them over this threshold. Increasing the threshold or creating a tiered-exit for the program will have a fiscal impact. We need to quantify the “opportunity cost” to Iowa’s workforce to address the cliff effect.

FIRST-PHASE GOALS

RESULTS

1. Build key relationships to raise awareness of and alliances to address the child care cliff effect.

·        Included in Future Ready Iowa Alliance’s recommendations.

·        Expanded relationships with key statewide stakeholders and agencies.

·        Engaged business voices in the conversation.

·        Partnered with the Harkin Institute of Public Policy in research.

2. Measure changes in income levels and number of enrollees. Set goals.

·         Central Iowa Works

·         DMACC

·        Project Iowa

·        Researched these questions:

o   What is the capacity of these programs?

o   How many current enrollees?

o   What is their income at initial sign-up?

o   Has income increased?

3. Develop list of agencies that ask applicants level of education.

·        Completed

4. Set a goal for increasing the number of community service organizations that include educational level on their intake process.

·         SNAP, WIC, Section 8, Impact, Polk County, GA, FEC, Health

·         DMACC, DMARC, Evelyn K Davis Center, Promise Jobs

·         DHS, Child Care Assistance, Iowa Workforce Development

·        Primary Health Care – Centralized Intake, St. Vincent de Paul, Salvation Army, Central Iowa Works, 2-1-1

·        Completed

5. Distribute Bridges to Success flyer.

·        Completed

6. Set goal to increase the number of enrollees in educational training services (ELL, adult basic education, HSED).

·        Completed

7. Complete inventory of organizations offering employer-sponsored child care benefits.

·        Completed

8. Complete inventory of business policies and practices regarding child care for employees.

·        Completed

9. Identify best practices and return on
investment.

·        Completed

10. Explore future ideas to support high-quality child care, including flexible work schedules and tax credits for high-quality child care related benefits.

·        Completed

 

THE FAMILY'S SHARE

For a family with one infant and one preschooler just over the Child CareAssistance limit (146% of poverty), child care expenses equate to:

46%of houshold budget for in-home daycare.

62.7%of household budget for care at a center.

of household budget for care at an accredited center.

Source: Iowa Department of Human Services; Child Care Resource and Referral

SECOND-PHASE GOALS

RESULTS

1. Decrease the number of families in central Iowa affected by the child care cliff effect from 16,180 to 8,090.

1a. Collect and analyze data to update progress toward goal and work plan as needed.

1b. Continue working with the Iowa Department of Human Services (DHS) to enhance data collection on families impacted by the child care cliff effect.

·        Update Performance Measure 1 data to determine progress toward goal.

·        Set follow-up meetings with DHS to discuss data collection, results, and opportunities.

·        Work in partnership with the Harkin Institute’s research on the cliff effect.

·        Set data measures for how to measure progress with high school equivalency pathways. Define target measures.

2. Increase enrollees in job-skill training for middle-skill jobs.

·        Increase state participation in SNAP Employment & Training program to draw down federal funds for education and training support.

·        Track implementation of high school equivalency diploma legislation that increases pathways for educational attainment.

·        Promote the cliff effect issue with the Future Ready Iowa Task Force to incorporate as workforce issue.

3. Increase employer knowledge on the benefits of quality child care for their workforce and encourage participation in advocating for change or increasing access to child care benefits.

·        Meet with Association of Business and Industry leadership to discuss the cliff effect and partnership.

·        Present to the Iowa Business Council about incorporating the cliff effect issue in their advocacy agenda.

·        Develop effective messaging for employers to encourage child care benefits and/or facilities.

·        Recruit additional business leaders to carry the message that the cliff effect is a workforce issue.

·        Explore other federal options for child care benefits such as Flexible Spending Accounts/Health Savings Accounts.

4. Continue to increase overall awareness of the child care cliff effect.

·        Consider an awareness building event with national-level guest to elevate issue with legislators and traditional media.

·        Increase media placements on issue through sign-on letters, editorials, letters to the editor, and earned media; include voices of those with lived experience.

·        Develop messaging strategies related to most common opposition to solving the cliff effect; develop Myth/Fact piece.

·        Promote and implement poverty simulations to increase knowledge of financial insecurity.

5. Encourage and support legislation expanding the income eligibility threshold for the Child Care Assistance program and providing an increased reimbursement rate for providers.

·        Incorporate the cliff effect issue in Skills2Compete Coalition recommendations for legislative action.

·        Encourage majority legislators to introduce legislation to increase eligibility threshold, increase provider rate, and provide for a tiered-exit.

·        Lobby federal delegation for increases in funding the Child Care & Development Block Grants to the state.

 

THE CLIFF IN IOWA

3 out of 4 houses

3 out of 4 households in Iowa (75%) with children under age 6 have all parents working, which means child care is a necessity.

Source: U.S. Census Bureau,
ACS 5-year 
estimates 2000-2014

Iowa is among the worst—39th in the nation—for the amount of income a family can earn and still receive Child Care Assistance.

Source: National Women’s Law Center, Building Blocks: State Child Care Assistance Policies 2015

89%

The average cost of full-time child care in Iowa is 89% of the income of someone working full time at minimum wage.

Source: The Care Report, New America,
Sept. 2016

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