Responses to “Questions for the Record” Following My Senate Finance Committee Testimony
By Katharine B. Stevens
CONGRESSIONAL TESTIMONY
October 4, 2024
Following the Senate Finance Committee’s July 9, 2024 hearing on “Examining the State of Child Care,” Katharine Stevens answered Senators’ questions on how to increase use of the Employer-Provided Child Care Tax Credit (Sec. 45F); whether state employer and family childcare tax credits actually help families; why we should pilot “federal performance partnerships” in ECE; and why using federal childcare certificates — not grants and contracts — is essential to empowering low-income parents.
Question Highlights
Senator Bennet (D-CO): What policy adjustments could increase the uptake of the Employer-Provided Child Care Tax Credit (Sec. 45F), and make it more available for smaller and/or rural businesses?
45F offers a promising approach to address childcare shortages across states. Yet businesses' utilization of 45F remains very low, both because many do not know about it and because of how the credit is currently structured. To increase use of the credit, policymakers should:
Increase employers’ awareness and understanding of the credit.
Make using the credit more financially attractive and feasible for businesses to use.
Shore up employers’ capacity to meet the needs of more employees.
Senator Lankford (R-OK): How effective are state employer and family tax credits at lowering the cost of child care on families? If effective, how should such tax credits be structured?
State tax credits reduce net childcare expenditures for some taxpaying families. But a central policy question is: Which families? Lower-income families aren’t helped by tax credits for expenditures they can’t afford to make in the first place.
In your written testimony, you urge Congress to pilot competitively-awarded “federal performance partnerships” in early care and education (ECE) to give states more flexibility with federal funds. Which flexibilities may be most beneficial for states?
Effectiveness of federal ECE programs is limited by layers of cumbersome, bureaucratic complexity, which has been driven by agency personnel, not the needs of low-income families. The result is a labyrinth of red tape at state and local levels — increasing costs and undermining the impact of federal spending on ECE, especially for the most vulnerable children. Federal performance partnerships are a little-known and highly-promising mechanism to address this persistent problem.
Senator Thune (R-SD): Can you talk about the importance of empowering parents with choice through certificates in the Child Care Development Fund (CCDF)? More specifically, how can home- and faith-based providers offer more choices for working parents?
Empowering parents with choice through CCDF childcare certificates is core to the program’s design. Certificates give parents the flexibility to select childcare that best fits their needs and values, including home-based care, faith-based care, and care that accommodates non-traditional work schedules.
But the US Department of Health and Human Services recently issued a rule requiring that states increase use of grants and contracts instead of certificates — reflecting growing pressure to centralize government control of the childcare field.
See Also
Blog ~ July 15, 2024
Report - April 8, 2021
Policy Brief ~ June 4, 2018