A pilot program that combined public funds with private donations in ten Iowa communities increased child care capacity without raising prices for families, according to a report released Tuesday by the Iowa Women’s Foundation and the Common Sense Institute.
They found the program helped create 275 new child care openings in less than a year across the seven communities that submitted data, and it led to the retention or hiring of about 1,200 child care workers.
Deann Cook, president and CEO of the Iowa Women’s Foundation, said the pilot program was very promising, and it showed what a public-private partnership can do for child care.
“Those are impressive numbers if you’re only looking at a handful of communities, so imagine if that was scaled up,” she said.
The state spent $3 million of American Rescue Plan Act funding to match private donations to local Childcare Solutions Funds, with $2 of public funds contributed for every dollar of private funds. Those funds, totaling $5.3 million, have mainly been used to boost wages and benefits for child care workers.
Cook said this helped the pilot communities address the shortage of people working in child care that often leaves child care centers unable to operate at their full capacity.
“They were leaving because you can make more money in a lot of other roles,” she said. “Child care workforce is one of the three lowest paid in our state, so simply encouraging them to use their skills and their passion to take care of kids by raising their wages makes a huge difference.”
Child care providers generally cannot raise wages for their staff without increasing prices for families. Iowa families on average spend 14% of their income on child care, according the report. Child care is considered affordable if it costs no more than 7% of a family’s income.
For the past several years, business leaders in Iowa have been calling for better access to affordable child care as a key strategy for getting parents back into the workforce.
The pilot program included Allamakee, Cerro Gordo, Hamilton, Howard, Johnson and Mitchell counties, as well as the cities of Dubuque, Knoxville, Lisbon and Mount Vernon.
The report estimates that if the Childcare Solutions Fund pilot program was expanded statewide, it would add 11,000 child care slots and enable 5,000 more parents to join the workforce, including 1,000 new child care workers. The report says the program could also increase Iowa’s GDP by $13 billion over ten years.
Pilot program helps Postville keep and expand a child care center
Kristy Turner, executive director of Postville Childcare Services, said she was considering closing the child care center, which her own kids attend. But then her county became involved with the pilot program, and Turner spent hours soliciting donations to the Childcare Solutions Fund.
She said wage increases supported by the fund allowed her to hire more staff, and her staff are more engaged in their work instead of searching for better-paying jobs.
“And now that I see the landscape is a little bit different at our center, I recently — within the last month — brought on eight new children,” Turner said. “And within the last three months, we opened a room that we previously had closed.”
Future of state funding for child care program is unclear
Government funding for the pilot program ended in September. The pilot communities haven’t spent all of the money they raised yet, but they don’t know if they will be able to sustain their Childcare Solutions Funds without more government support.
Turner said the state match encouraged her community to participate.
“It let them know that everyone was a part of this,” she said. “The state is going to contribute the public part, local public leaders would participate, the residents would participate. When everyone is doing it, then everyone feels motivated to invest.”
Jason Passmore, director of Howard County Business and Tourism, said the program has made "an enormous difference” in local child care capacity. He said businesses are motivated to contribute to the Childcare Solutions Funds because lack of child care affects their bottom line.
“They just give a little bit to the whole pool to allow us to keep child care costs down low, so that families can afford to keep sending their kids and not remove themselves from that workforce,” Passmore said.
But he said the government funding was a very important incentive for businesses to contribute.
“That match from the state — that carrot — was huge,” he said.
The report estimates it would take about $28 million of state funding in its first year to expand the program to the whole state.
Cook said she will share the report about the pilot program’s success with state leaders as conversations about putting more funding into the program continue.
