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Missouri child care crisis a top priority for governor, bipartisan group of lawmakers

A variety of crayons
A variety of crayons

In early 2020, Peapod Learning Center in Springfield had a waiting list years out.

The nature and farm preschool earned state recognition as it continued to expand after opening more than a decade earlier.

“It was off the charts wonderful,” said owner and director Carly Walton.

Then the pandemic hit. By June 2020, the farm school was forced to close, and enrollment at the nature school dropped to 50% capacity as some parents left the workforce and others struggled to afford care.

“It’s never recovered,” she said.

Now Walton worries what will happen once COVID-era American Rescue Plan Act Child Care Stabilization funds — “instrumental,” she said, to keeping her doors open during the pandemic — dry up at the end of the year.

She’s not the only one concerned. Missouri is facing a child care crisis, with about 200,000 children living in parts of the state considered“child care deserts” where there are one or fewer child care slots for every three children. Even areas not officially deemed deserts often can’t hire enough staff to serve as many kids as their capacity allows.

A bipartisan group of lawmakers, along with Gov. Mike Parson, have once again put this crisis atop their legislative agenda, pushing a package of tax credits they hope will make child care more available and affordable for working families while helping private providers stay afloat.

A package of child care tax credits was on the cusp of passing last year, but Senate filibusters stalled and then killedthe bill before it could come up for a vote.

The legislation, refiled this year by Republican state Rep. Brenda Shields of St. Joseph and Democratic state Sen. Lauren Arthur of Kansas City, would offer three types of credits: for taxpayers who donate to support child care centers, for employers who make investments in child care needs for their employees and for child care providers.

Also among the child care priorities Parson highlighted this year is a $51.7 million budget increase to the child care subsidy program for low-income children, on the heels of a $78 million increase last year.

“Today, we have the capacity to serve just 39% of Missouri children in licensed facilities,” Parson said during last week’s State of the State address. “It’s time for change.”

Arthur, like Parson, said child care is an issue that crosses the political divide. She said bipartisan support of the issue has seemingly grown since last year. But she’s wary of obstacles the legislation could again face.

“There’s a real need, but there are people who are ideologically opposed and there are people who use any bills as leverage to further their own interests and their own agenda,” Arthur said. “That’s what we saw last year, and I think it’s possible we will see it again this year.”

Sam Lee, a long-time anti-abortion lobbyist who has pushed for this bill as pro-life legislation, said he’s hopeful the tax credits succeed, but is worried their prospects could be doomed in a divided Senate.

“This is the year no one really knows what’s going to pass and it’s not because of the lack of merits of the legislation,” Lee said. “It’s just because of the consternation in the Senate.”

Building on momentum

 Rep. Brenda Shields, seen presenting on her child care tax credit legislation earlier this month (Tim Bommel/Missouri House Communications).Child care related funding and legislation last year gained traction primarily as a workforce issue and has garnered wide support from business groups.

Accessibility, quality and cost-related hurdles to child care, a 2021 U.S. Chamber of Commerce Foundation study found, force many Missouri parents out of the workforce or cause disruptions to their work, costing the state more than $1.3 billion annually.

Missourians, like many Americans, confront a limited supply of child care that, when available, can rival the cost of a mortgage or in-state college tuition. An investigation of child care spending by The Independent and MuckRock last year found that almost half of Missouri’s children under age five, or about 202,000 children, live in child care deserts, with one or fewer child care openings for every three children.

The average cost of full-time center-based care for an infant in Missouri was $11,059 as of 2022, according to Child Care Aware. On the other side of the equation, staff at child care facilities often make just over minimum wage, which can make hiring and retention difficult.

Running a high-quality facility is often even more expensive than the fees parents can pay, so providers aren’t generally cashing in, but rather operating on thin profit margins.

“Early care and education providers cannot continue to subsidize care,” Nicci Rexroat, owner of A Place to Grow child care centers in mid-Missouri, testified at a state Senate committee hearing last week. “We just can’t afford it.”

“Without substantial and sustainable investments, the quality that the children deserve will continue to decline or become more and more scarce,” Rexroat added.

Lawmakers last year passed a $78 million boost to child care subsidies to encourage child care providers to offer services to low-income and foster families and another $81 million for state-funded pre-kindergarten targeted at low-income four-year-olds. Both were backed by Parson.

Casey Hanson, director of outreach and engagement at the child advocacy nonprofit Kids Win Missouri, said she sees this session as a chance to build on the momentum from last year.

Hanson called the child care tax credits “an interesting and innovative way we can engage both government, private business and individual and child care providers in a solution.”

‘Child care is infrastructure’

The three components of the legislation include:

  • The “Child Care Contribution” tax credit, which would allow donors to child care providers to receive a credit equal to 75% of a qualifying donation, up to a $200,000 tax credit. The provider must use the donation to “promote child care” including by improving facilities, staff salaries or training. 
  • The “Employer Provided Child Care Assistance,” which would be aimed at creating partnerships between businesses whose employees need child care and providers. It would allow employers to receive tax credits equivalent to 30% of qualifying child care expenditures.
  • The “Child Care Providers Tax Credit,” which would allow child care providers to claim a tax credit equal to the provider’s employer withholding tax and up to 30% of a provider’s capital expenditures on costs like expanding or renovating their facilities. 

Supporters of the tax credits include various chambers of commerce and business groups, child advocacy groups and children’s health organizations. No one testified against the bill at the Senate committee hearing and just one person did at the House hearing, while dozens testified in support.

Rexroat testified that the credits could give providers the opportunity to raise wages and bring back qualified staff who can’t afford to work in the industry now.

“These tax credits could create a buy-in from other businesses and the community, helping to shift the narrative to what those of us have always known in the industry: that child care is infrastructure,” she said.

Some Republicans have raised concerns about tax credits being inefficient.

At a Senate committee hearing last week, state Sen. Rusty Black, a Republican from Chillicothe, said he wanted to make sure “I’m not creating more red tape, more paperwork.”

The bill includes a provision allowing an intermediary nonprofit organization to help providers with the tax credits, which Arthur said is designed to provide technical expertise to those who don’t have the resources. Black wondered whether that intermediary could add additional hurdles to providers’ participation.

“I’m on the side of child care, but we’ve come up with way too many rules and regulations,” Black said, citing the passage of Nathan’s Law, which limited the number of related children that in-home daycares could supervise, for safety reasons.

“Are there gonna be more hidden rules to make it more restrictive?” Black asked, “…Because that scares me.”

Amanda Coleman, vice president of early childhood and family development at the Community Partnership of the Ozarks, said there is a need for hundreds of infant spots in the Springfield area, “an alarming number.”

Coleman has worked with Kids Win Missouri to identify ways businesses can be part of the solution. She said a tax credit would be an immense help. Surveys she’s helped conduct show many parents in the Springfield area have left the workforce or changed jobs to accommodate child care needs. That leaves private child care providers struggling to keep their doors open.

“This is really important because we need adults to come to work, and those parents need to be able to have a safe, high-quality place for their children to go to during the day or while they’re at work,” Coleman said.

Coleman said another area survey found the average cost of full-time care in southwest Missouri is about $14,300 a year for infants and toddlers and $10,400 a year for preschool-age children.

Shields said she spent the summer traveling the state speaking with providers and parents. The stories were the same: parents are paying upwards of $20,000 a year for child care, if they can find it in the first place. Providers are crushed each time they turn down families.

“It breaks their hearts not to be able to provide services to these families that are struggling and who want to go to work,” Shields said.

Shields said she’s hopeful they’ll have success in the House again this year. Her bill cleared a committee on Thursday and could be debated by the full House as early as this week.

“I will work the Senate hard to make sure that that happens, but I think we will do it,” she said.

Subsidy rate increase

Higher state rates means families, generally, would pay less, and can mean subsidy recipients become competitive with parents paying entirely out-of-pocket.

The subsidy increase, Arthur said, may be even more important than the legislation that accompanies it because of how far behind other states Missouri is.

The federal government recommends states pay providers at the 75th percentile of market rates, but few do. A boost last year brought Missouri up to the 58th percentile of what the market rate study found to be the rate of care.

The governor’s proposed increase would bring rates to 100% of the market rate amount for infants and toddlers and the 65th percentile for preschoolers and school-aged children.

Hanson said sustainable, long-term investments are crucial in “making sure those that are taking care of our kids are able to take care of themselves and valuing that it is important work.”

The subsidy rate increase, Shields said, might be a tougher sell than the tax credits, but she’ll continue showing her colleagues how desperate families are for safe, reliable and affordable care.

“The reason the support has grown,” Arthur said. “Is because people have heard from their constituents and businesses in their districts that this has caused major problems.”