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Affordable child care, housing remain inaccessible for many Iowans. What lawmakers plan to do about it
State lawmakers will continue to focus on workforce in 2024
Tom Barton
Jan. 2, 2024 5:30 am
DES MOINES — As Iowa’s workforce continues to be limited across all industry sectors, state lawmakers will continue to focus on workforce strategies in 2024, including child care, affordable housing and funding for tax incentives to attract and retain companies providing high-quality, high-paying jobs.
Child care
Child welfare advocates in the state point to the high cost, impact and inaccessibility of child care for middle class families as a key focus for legislators to address in 2024.
The latest annual Kids Count Report, released last summer by the Annie E. Casey Foundation, found that center-based child care costs Iowa families $10,437 annually, while home-based care costs $6,823 annually, averaging about 10 percent and 6 percent, respectively, of married couples’ income.
According to the report, 14 percent of Iowa children ages 5 and younger had a family member who quit, changed or refused a job due to issues with child care in 2020 to 2021.
To remove such barriers to employment, leaders of the Cedar Rapids Metro Economic Alliance and Greater Iowa City Inc. are seeking to boost child care worker wages and expand assistance benefits to people who might join the workforce but who can’t afford child care.
Iowa Workforce Development found that more than 53,000 women have left the workforce since 2020. That doesn’t include the number of women who are qualified for jobs but don’t seek them due to the inability to find or afford child care.
Iowa Gov. Kim Reynolds in May signed into law legislation that expands eligibility for state child care assistance and child care provider reimbursement rates, while also increasing work requirements for parents of children who qualify for assistance. She declined to be interviewed for this legislative preview series.
Senate Democrats, saying the law shows some improvement, criticized it for increasing work requirements, and said the funding still is inadequate to address child care staffing shortages and the high cost of keeping Iowans out of the labor force.
House File 707 increases the income limit for child care assistance to 160 percent of the federal poverty level. That equates to a household income of $48,000 for a family of four.
Iowa Democrats note more families qualify for state assistance to send their child to private school than qualify for child care aid, and that the same income threshold — 300 percent of the federal poverty level — should apply for families seeking child care assistance, too.
Senate Minority Leader Pam Jochum, D-Dubuque, said Senate Democrats support raising the poverty level to 200 percent.
“It would mean that a family of two, like a mom and a child, who earns about $39,000 a year would be eligible for some child care assistance from the state,” Jochum said.
Republicans argue the new law will help more Iowa families find affordable child care and return to work, and note Reynolds has approved more than $500 million in state and federal funding to increase access to child care since the start of the pandemic.
Reynolds’ office said the governor is “committed to multi-faceted solutions to child care challenges to provide quality care for children, keep parents working and drive economic development. ”
In addition to issuing more than $218 million in grants to child care providers during the pandemic, the Iowa Department of Health and Human Services has launched programs to fund recruitment and retention bonuses, allow child care workforce to qualify for child care assistance and promoted partnerships between child care centers and local businesses to support wage enhancements for providers.
More than $62 million in grants have been awarded to create more than 6,700 new child care slots in Iowa, the governor’s office said.
Iowa, though, needs hundreds of thousands more child care slots, according to estimates from the Iowa Women's Foundation. It has calculated a shortfall of 350,000 child care slots in the state.
The group estimates Iowa has lost 33 percent of its child care providers over the past five years. And nearly 25 percent of Iowans live in a child care desert with a shortage of options, the group says.
A 2023 Iowa Child Care Workforce Study notes Iowa faces critical challenges in recruiting and retaining providers due to low wages and lack of sustainable educational advancement opportunities.
“We can create all the spaces we want, but they can't staff them,” Jochum said.
Child care workers in Iowa were paid an average of $11.61 per hour, according to 2022 data from the U.S. Bureau of Labor Statistics. Annually, they make an average of $24,140.
The study, led by the Iowa Association for the Education of Young Children and conducted by partners at Iowa’s Integrated Data System for Decision-Making, found more than nearly 37 percent of child care providers in the state used at least one public benefit (like Medicaid, child care assistance or supplemental nutrition assistance) to support their household.
Some Iowa communities have banded together to find creative solutions to raise wages for child care workers and resolve access barriers. Johnson County, for one, used federal American Rescue Plan Act funds and private dollars to raise the pay of child care workers by $2 an hour and pay the increased payroll taxes.
State Sen. Janice Weiner, D-Iowa City, said the program is innovative but would need bipartisan support to develop a statewide model.
Senate Majority Leader Jack Whitver, R-Grimes, said lawmakers have passed “several big initiatives over the last few years” to make child care more accessible and affordable, including trying to eliminate the child care “cliff.” Lawmakers passed a law two years ago that allows Iowans receiving child care assistance to be slowly weaned off that assistance rather than dropped cold turkey when they reach a certain income level.
"Which I think has been largely successful last year,“ Whitver said. ”We worked on changing the some of the (staffing) regulations and ratios to put them more in line with the federal ratios and not have them more stringent. And so at some point we want to make sure and see if those proposals are working, but it is an issue that we know continues to pop up and we're continuing to look for solutions.“
He did not elaborate on solutions Republicans may propose or support in the upcoming session.
House Minority Leader Jennifer Konfrst, D-Windsor Heights, said House Democrats will push to expand a program statewide “that looks at ways that public-private partnerships can create new child care centers and new child care center openings.”
Affordable housing
Nationwide, communities are grappling with how to boost the supply of affordable housing at a time when inflation challenges developers’ ability to finance new projects. State and federal tax credit programs, as well as local financial incentives, help make new projects feasible, but applications exceed funds available.
Doug Neumann, executive director of the Cedar Rapids Metro Economic Alliance, said workforce housing tax credits have certain caps on the level of lease rates or the construction cost per unit. These limitations could make an otherwise ready-to-go project ineligible for funding, Neumann said — so it may be time for lawmakers to revisit eligibility requirements.
Iowa House Democrats sponsored legislation to create a program to allocate up to $15 million a year in tax credits to build affordable housing units, leveraging $23 million in federal incentives. The proposal, which never advanced out of committee, would expand a first-time home savings account, offering a tax-free way to save for a home, and provide home improvement grants based on income.
House Speaker Pat Grassley, R-New Hartford, said rather than increase or create new housing tax credits, House Republicans will look at tailoring and modifying state incentives “to make them work better, especially for rural Iowa.” That could include expanding state assistance to rehabilitate older and blighted homes.
Whitver added much of the gap in affordable housing is market-driven, and there’s only so much government can do.
“I think some of it is getting the government out of the way so that the private sector can solve some of these issues,” he said. “It doesn't help when interest rates are 7.5 percent. And it's become unaffordable often by additional regulations on housing that make the cost of a house more expensive. So in some regards, we're looking for free-market solutions, but it's something that we're aware of where we've supported different programs at different times for affordable housing.”
Konforst said House Democrats have several proposals they plan to introduce to address housing, but could not yet provide details.
Business attraction
A large solar energy manufacturer was looking to build in Iowa but chose Louisiana instead, in part because Iowa could not offer the same incentives, the state’s economic development chief has said.
First Solar Inc. announced in August its plans to build a $1.1 billion manufacturing facility in southwest Louisiana. The project is expected to create about 700 jobs and have an annual payroll of at least $40 million, the Associated Press reported.
Debi Durham, director of the Iowa Economic Development Authority and Iowa Finance Authority, told The Gazette that Iowa was “No. 2” and “we would have won” had Iowa had enough incentives.
A bill proposed by the authority to provide a package of state tax incentives to try to lure a major business development to Iowa stalled in the House on the final day of the 2023 legislative session.
To be eligible for the proposed “Major Economic Growth Attraction” — or MEGA — program, the project would have to be located at a certified site greater than 250 acres, involve an investment of at least $1 billion from a business primarily engaged in research and development, bioscience or advanced manufacturing and create jobs that pay at least 140 percent of the qualifying wage threshold. The proposal also would allow a business based in a foreign country that’s an ally of the United States to buy farmland for the project.
“We’re having conversations with legislators (as well as leadership) with the full intention of bringing it back this next year,” Durham said in September.
The bill cleared the Senate on a 45-2 vote, but House Republicans said they were wary of granting foreign ownership of farmland, and Grassley suggested the size of the tax rebate was a concern.
Grassley said lawmakers will reconsider the package this year, but House Republicans also want to see similar incentives provided for Iowa’s rural communities.
"Why don't we do something like that at a smaller level across the state in more of our rural areas and where we need to have the support?“ he told The Gazette. “Making sure that we're providing the same level of opportunity in rural Iowa that we are in some of our metro areas to make sure that the incentive programs are evenly divided from rural versus urban — I think all of that is going to be on the table for this upcoming session when it comes to keeping Iowa's economy strong.”
Marissa Payne of The Gazette contributed to this report.
Comments: (319) 398-8499; tom.barton@thegazette.com
Legislative previews
In the days leading up to the Jan. 8 start of the 2024 Iowa Legislature session, The Gazette will preview topics of possible discussion by state lawmakers:
Sunday: Tax cuts and state budget
Monday: Social issues
Today: Economic development
Wednesday: K-12 education
Thursday: Higher education
Friday: Government transparency
Saturday: Agriculture and environment
Jan. 7: Health care
Jan. 8: Hot-button issues